Acclaim Entertainment, Inc. Reports Seventh Consecutive Profitable Quarter for the Third Quarter of Fiscal Year 2002.Business/Entertainment Editors Company Maintains Annual Guidance For Fiscal Years 2002-2004 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 earnings before extraordinary items of $2.5 million or $0.03 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, on net revenues of $62.9 million for the third fiscal quarter ended June June: see month. 2, 2002. Compared to the same period of the prior year, this represents a 943% increase over earnings before extraordinary items of $0.2 million and a 63% increase over net revenues of $38.6 million. For the first nine months of fiscal 2002, Acclaim reported earnings before extraordinary items of $24.9 million or $0.28 per diluted share before extraordinary items on net revenues of $214.6 million. Compared to the same period of the prior year, this represents a 115% increase over earnings before extraordinary items of $11.6 million or $0.20 per diluted share, and a 42% increase over net revenues of $151.0 million. In the third quarter of the prior fiscal year, the Company recorded an extraordinary gain of $7.1 million from the early retirement of $13.9 million principal amount of the Company's then outstanding 10% convertible subordinated notes, thus impacting net earnings for the third quarter and the nine months of fiscal 2001. Correspondingly, in the second quarter of the current fiscal year, the Company recorded an extraordinary loss of $1.2 million from the early retirement of $12.7 million principal amount of 10% convertible subordinated notes, thus impacting net earnings for the second quarter and the nine months of fiscal 2002. Net earnings after the extraordinary items were $2.5 million or $0.03 per diluted share for the third quarter of fiscal 2002, compared to net earnings after the extraordinary items of $7.4 million or $0.12 per diluted share, for the same period last year. Net earnings after the extraordinary items for the first nine months of fiscal 2002 were $23.7 million or $0.27 per diluted share compared to net earnings after the extraordinary items of $18.7 million or $0.32 per diluted share, for the same period last year. "The results for the quarter reflect the successful and timely launches of our key releases for the quarter, Headhunter headhunter A popular term for a person–or employment agency who recruits physicians, upper echelon executives or other professionals, matching potential employees with employers (TM) and Aggressive Inline Aggressive Inline is an inline skating video game released in 2002. The game features professional inline skaters, including Chris Edwards, Eito Yasutoko, Franky Morales, and Taïg Khris. (TM), as well as the continued strength of our portfolio which contributed 32% of our net revenues, 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. , Co-Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Acclaim. "While we are disappointed that our Company did not achieve our `top line' guidance, we believe that we will realize this net revenue shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. in the fourth quarter." "We were pleased to have successfully increased our market share according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. NPDFunworld TRSTS Report; achieving a 5.8% share of the PS2 market and 8.4% share of the GameCube market for the month of May. Our overall market share has increased by 22% since December December: see month. 31, 2001. Headhunter(TM) after three weeks in the market was the #5 best-selling best·sell·er also best seller n. A product, such as a book, that is among those sold in the largest numbers. best full-priced title in the PS2 market during the month of May. In addition, we made certain organizational changes in our sales department, which we believe will ensure more predictable results in the future." Third Quarter Fiscal Year 2002 Financial Performance For the third quarter of fiscal 2002, gross profit was 57.5% of net revenues, 5.5% below the Company's planned gross profit of 63%. The gross profit shortfall from the Company's forecast is attributable to greater than planned budget line sales and promotional arrangements in the rental market. The Company forecasts gross profit of 61% for the fourth quarter. Fiscal 2002 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. for the third quarter of $32.8 million increased 32% or $7.9 million from $24.9 million for the same period of the prior fiscal year. The increase was primarily attributable to a $4.1 million increase in marketing and selling expenses for TV, media and print, trade shows (primarily E3) and sales commissions; a $0.9 million increase in general and administrative employee related expenses resulting from increased headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. ; and a $2.9 million increase in research and development expenses. Operating expenses for the first nine months of fiscal 2002 of $99.4 million were $15.3 million or 18% higher than the same period of the prior fiscal year primarily due to $14.5 million in increased marketing, advertising, trade show (primarily E3) and royalty expenses; $2.0 million in general and administrative expenses from increased headcount; partially offset by a $1.2 million decrease in research and development expenses as a result of a greater number of titles under development meeting the criteria for software capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. . At June 2, 2002, the balance of capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. software development costs was $13.7 million, as compared to $8.2 million at March 3, 2002. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the Company's business plan, capitalized software costs are expected to be approximately $14.5 million at August 31, 2002. Third Quarter Fiscal Year 2002 Gross Revenues By Console Gross revenues by console during the third quarter of fiscal 2002, primarily consisted of 128-bit software (86.0%); 32-bit software (3.0%); portable cartridges
Personal Computer Games was a multi-format UK computer games mag of the early/mid eighties. and other (2.0%). 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 approximately 70.0% and 30.0% of net revenues, respectively. In addition, Acclaim's six internal studios generated 37.0% of the Company's gross revenues during the quarter. The following top- top- pref. Variant of topo-. 5 selling titles, contributed approximately 61% of the total gross revenue in the third quarter of fiscal 2002: Burnout Burnout Depletion of a tax shelter's benefits. In the context of mortgage backed securities it refers to the percentage of the pool that has prepaid their mortgage. (TM) (18.0%); 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. (TM) (15.0%); 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. (TM) 2003 (10.0%); Aggressive Inline (9.0%); and Headhunter (9.0%). Profitable performance for the third quarter of fiscal 2002 was highlighted by the releases of eleven SKU's. Aggressive Inline(TM) and Headhunter(TM) for the PlayStation A video game console from Sony that was introduced in the U.S. in 1995. CD-ROM based and using a 32-bit MIPS CPU, the original PlayStation was the first of a family of desktop and handheld units. (R)2 computer entertainment system; Burnout(TM), Legends of Wrestling(TM) and ZooCube ZooCube is a video game of the puzzle genre released in 2002 by PuzzleKings. External links
(2) (Analog TV) Refers to the NTSC, PAL and SECAM analog TV standads. : Quad Power Racing(TM) and the Mary-Kate and Ashley brands, continued to contribute to a profitable quarter. Company's Improved Financial Condition The Company continues to report a strengthening balance sheet. As of June 2, 2002, the end of the third fiscal quarter, the Company reported cash on hand of $40.7 million, working capital of $17.1 million and stockholder's equity Stockholder's equity The residual claims that stockholders have against a firm's assets, calculated by subtracting all current liabilities and debt liabilities from total assets. of $47.2 million. The Company generated cash from operations of $ 3.1 million and $9.2 million for the three and nine months ended June 2, 2002, respectively. The Company's accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). improved to 59 days at June 2, 2002 from 69 days at August 31, 2001. The Company's inventory turnover improved to 18 times at June 2, 2002 over the August 31, 2001 turnover of 14 times. Fourth Quarter and Fiscal Year 2002 Net Revenue and Earnings Guidance The Company is maintaining its previously stated annual guidance for fiscal year 2002 net revenue of $306.8 million, a 56% increase over the prior year and non-taxed earnings before extraordinary items guidance of $38.6 million or $0.39 per diluted share, which represents 166.0% and 77.0% increases, respectively, over fiscal year 2001. The following chart reflects the Company's fiscal year 2002 guidance for the fourth quarter and fiscal year. The Company has increased its guidance for the fiscal fourth quarter from $90.0 million to $92.2 million in net revenues and earnings from $13.2 million to $13.7 million, while maintaining its EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. guidance for the fourth fiscal quarter of $.14 per share.
ACTUAL GUIDANCE
Q1 Q2 Q3 Q4 Total
----- ------ ----- ---- -----
Net Revenue $81.0 $70.7 $62.9 $92.2 $306.8
Earnings $17.4 $5.0 $2.5 $13.7 $38.6
EPS (Fully Diluted) $0.21 $0.06 $0.03 $0.14 $0.39
Diluted Shares 88.1M 86.9M 97.3M 98.0M 98.0M
Fiscal Year 2003 Net Revenue and Earnings Guidance For fiscal year 2003, the Company is maintaining its previously stated annual net revenue and earnings guidance of $379.0 million and $66.0 million, respectively. The Company projects that net revenue for the first quarter of fiscal 2003 is estimated to range between $110.0 and $120.0 million, a 36% to 48% increase over the previous fiscal year. For the second quarter, the Company projects net revenue to range between $80.0 and $90.0 million, a 13% to 27% increase over the previous fiscal year. Net earnings for the first quarter of fiscal year 2003 are projected to range between $23.0 and $25.0 million, or $0.23 to $0.26 per diluted share. For the second quarter, net earnings are projected to range between $8.0 and $9.0 million, or $0.08 to $0.09 per diluted share. Fiscal Year 2004 Net Revenue and Earnings Guidance On May 23, 2002, the Company announced projected net revenue for fiscal year 2004 of $502.0 million, a 32% increase over its fiscal year 2003 net revenue guidance. The Company also forecasted that net earnings and EPS would grow to $85.0 million and $0.87 per diluted share, a 29% earnings increase over its fiscal 2003 guidance. The following chart outlines the Company's estimated guidance for FY 2003 and FY 2004:
First Quarter Second Quarter FY 03
Range Range 1st Half
Net Revenue $110.0 - $120.0 $80.0 - $90.0 $ 190.0
Earnings $23.0 - $25.0 $8.0 - $9.0 $ 31.0
EPS $0.23 - $0.26 $0.08 - $0.09 $ 0.32
Diluted Shares (MM) 98 98 98
FY 03 FY 03 FY 04
2nd Half Full Year Full Year
Net Revenue $ 189.0 $ 379.0 $ 502.0
Earnings $ 35.0 $ 66.0 $ 85.0
EPS $ 0.36 $ 0.67 $ 0.87
Diluted Shares (MM) 98 98 98
Q4 Fiscal Year 2002 Release Schedule During the fourth quarter of fiscal year 2002, the Company intends to release 13 SKU's on the annotated dates: PlayStation 2: - Dave Mirra BMX XXX(TM)- 11/26 - Legends of Wrestling(TM)2 - 11/12 - Mary-Kate & Ashley Sweet 16(TM)- 11/29 GameCube: - Dave Mirra BMX XXX(TM)- 11/26 - Legends of Wrestling(TM)2 - 11/12 - Mary-Kate & Ashley Sweet 16(TM)- 11/29 Xbox: - Dave Mirra BMX XXX(TM)- 11/26 - Legends of Wrestling(TM)2 - 11/12 - Mary-Kate & Ashley Sweet 16(TM)- 11/29 Game Boy Advance: - Dave Mirra BMX XXX(TM)- 11/26 - Legends of Wrestling(TM)2 - 11/12 - Mary-Kate & Ashley Sweet 16(TM)- 11/29 (a) - Denotes international release Driving the Company's global launch of Turok: Evolution on 9-01-02 across all four gaming platforms, is a highly strategic integrated marketing campaign, which includes: - Dave Mirra BMX XXX(TM)- 11/26 - Legends of Wrestling(TM)2 - 11/12 - Mary-Kate & Ashley Sweet 16(TM)- 11/29 "Our marketing campaign behind Turok: Evolution underscores our enthusiasm and consumer demand for the product," added Fischbach. "Retail is very excited by the innovative ways that we are supporting our flagship brand, and are working in concert with us to make this launch a major event for consumers." Fiscal Year 2003 Release Schedule In fiscal 2003, the Company intends to release 56 SKU's: 17 for PlayStation(R)2; 14 for Nintendo's GameCube(TM); 18 for Microsoft's Xbox(TM) and 7 for Nintendo's Game Boy(R) Advance. During the first quarter of fiscal year 2003, Acclaim intends on releasing 15 SKU's on the annotated dates: PlayStation 2: - Dave Mirra BMX XXX(TM)- 11/26 - Legends of Wrestling(TM)2 - 11/12 - Mary-Kate & Ashley Sweet 16(TM)- 11/29 GameCube: - Dave Mirra BMX XXX(TM)- 11/26 - Legends of Wrestling(TM)2 - 11/12 - Mary-Kate & Ashley Sweet 16(TM)- 11/29 Xbox: - Dave Mirra BMX XXX(TM)- 11/26 - Legends of Wrestling(TM)2 - 11/12 - Mary-Kate & Ashley Sweet 16(TM)- 11/29 Game Boy Advance: - Dave Mirra BMX XXX(TM)- 11/26 - Legends of Wrestling(TM)2 - 11/12 - Mary-Kate & Ashley Sweet 16(TM)- 11/29 Fiscal Year 2004 Release Schedule In fiscal 2004, the Company intends to release 62 SKU's: 20 for PlayStation(R)2; 17 for Nintendo's GameCube(TM); 16 for Microsoft's Xbox(TM), 6 for Nintendo's Game Boy(R) Advance and 3 for PC. "We are very pleased with our holiday portfolio, which is highlighted by Turok: Evolution, VEXX, Burnout 2, Legends of Wrestling 2 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. BMX XXX  The of this article or section may be compromised by "weasel words".You can help Wikipedia by removing weasel words. ," concluded Fischbach. "The portfolio is reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of our creative leadership and we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that it will enable our organization to continue to increase its market share and shareholder value." 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . 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. Such statements regarding future events and/or the future financial performance of the Company are subject to certain risks and uncertainties, such as delays in the completion or release of products, the continued support of the Company's lead lender and vendors, the achievement of sales assumptions as projected, the continuation of savings from expense reductions, the risk of war, terrorism and similar hostilities, 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 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., Acclaim Entertainment, Inc., is a leading worldwide developer, publisher and mass marketer of software for use with interactive entertainment game consoles See video game console. including those manufactured by Nintendo, Sony Computer Entertainment 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 six 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 which includes a motion capture and recording studio in the U.S., and publishes and distributes its software through its subsidiaries 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 and Spain. The Company uses regional distributors worldwide. 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. "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.
ACCLAIM ENTERTAINMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Nine Months Ended
June 2, June 2,
------------------ -----------------
2002 2001 2002 2001
---- ---- ---- ----
Net revenues $ 62,863 $ 38,642 $ 214,633 $ 151,039
Cost of revenues 26,691 11,264 85,164 48,918
-------- -------- -------- --------
Gross profit 36,172 27,378 129,469 102,121
-------- -------- -------- --------
Operating expenses
Marketing and
selling 13,068 8,927 39,335 24,786
General and
administrative 10,413 9,530 31,894 29,900
Research and
development 9,367 6,492 28,211 29,480
-------- -------- -------- --------
Total operating
expenses 32,848 24,949 99,440 84,166
-------- -------- -------- --------
Earnings from
operations 3,324 2,429 30,029 17,955
-------- -------- -------- --------
Total other
expense, net (764) (2,176) (6,055) (6,156)
-------- -------- -------- --------
Earnings before
income taxes 2,560 253 23,974 11,799
-------- -------- -------- --------
Income tax
provision
(benefit) 25 10 (944) 208
-------- -------- -------- --------
Earnings before
extraordinary
gain (loss) 2,535 243 24,918 11,591
Extraordinary
gain (loss) - 7,124 (1,221) 7,124
-------- -------- --------- --------
Net earnings $ 2,535 $ 7,367 $ 23,697 $ 18,715
======== ======== ========= ========
Basic per share data:
Earnings before
extraordinary
gain (loss) $ 0.03 $ - $ 0.30 $ 0.20
Extraordinary gain
(loss) - 0.12 (0.02) 0.13
-------- -------- --------- --------
Net earnings $ 0.03 $ 0.12 $ 0.28 $ 0.33
======== ======== ========= ========
Weighted average
common shares
outstanding 91,595 59,334 83,529 57,295
======== ======== ========= =========
Diluted per share data:
Earnings before
extraordinary
gain (loss) $ 0.03 $ - $ 0.28 $ 0.20
Extraordinary
gain (loss) - 0.12 (0.01) 0.12
--------- -------- ---------- ---------
Net earnings $ 0.03 $ 0.12 $ 0.27 $ 0.32
========= ======== ========== =========
Weighted average
common shares
outstanding 97,312 60,542 88,595 58,518
========= ======== ========== ==========
ACCLAIM ENTERTAINMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 2, August 31,
2002 2001
------- -----------
(Unaudited)
Assets
Current Assets
Cash and cash equivalents $ 40,704 $ 26,797
Accounts receivable, net 72,187 49,074
Inventories 6,440 4,043
Prepaid expenses 7,959 4,816
------- -----------
Total Current Assets 127,290 84,730
------- -----------
Other assets 47,005 40,900
------- -----------
Total Assets $ 174,295 $ 125,630
======= ===========
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Convertible notes $ - $ 29,225
Short-term borrowings 37,629 25,428
Trade accounts payable 30,703 33,630
Accrued expenses 41,835 39,560
------- ----------
Total Current Liabilities 110,167 127,843
------- ----------
Long-term liabilities 16,943 18,142
------- ----------
Total Liabilities 127,110 145,985
------- ----------
Stockholders' Equity (Deficit)
Common stock 1,846 1,546
Additional paid-in capital 311,136 267,436
Accumulated deficit (263,876) (287,573)
Accumulated other comprehensive loss (1,921) (1,764)
------- ---------
Total Stockholders' Equity (Deficit) 47,185 (20,355)
------- ---------
Total Liabilities and Stockholders'
Equity (Deficit) $ 174,295 $ 125,630
======= =========
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