CryptoLogic Announces First Quarter 2000 Results.Business Editors TORONTO--(BUSINESS WIRE)--April 27, 2000 8% Revenue Growth Consistent with Preliminary Estimates CryptoLogic Inc CryptoLogic Inc. is a Toronto-based online gambling software supplier, one of the four largest in the industry along with Microgaming, Playtech, and Real Time Gaming. CryptoLogic was founded by brothers Andrew and Mark Rivkin in 1995 from the basement of their parent's house. . (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 :CRYP CRYP Cheyenne River Youth Project (Eagle Butte, SD) ) (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CRY.), a leading supplier of software to the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the gaming industry, announced today its financial results for the first quarter of 2000. "Our first quarter 2000 results were consistent with our previously announced estimates," said Andrew Rivkin, President 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 CryptoLogic Inc. "Although not typical of our historical growth levels, we remain proud of our achievements. We continued to realize superior growth performance in our industry as a highly profitable Internet company and positioned our company to sustain long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth." Financial Highlights Total revenue for the first quarter ending March 31, 2000 was $8.9 million, an 8% increase compared to $8.3 million in the 1999 first quarter (all figures stated in US dollars). Net income was $4.2 million compared to $5.4 million in the 1999 first quarter. Earnings per share were $0.38 in the first quarter of 2000 compared to $0.64 in the same 1999 quarter. On a fully 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. basis, earnings per share were $0.27 for the first quarter of 2000 compared to $0.35 in 1999. Net income for the first quarter of 2000 was impacted by increased expenditures, which expenses were important to support and drive the Company's growing organization and long-term success. In order to maintain its market leader position, CryptoLogic cryp·tol·o·gy n. The study of cryptanalysis or cryptography. cryp  to·log invested in key areas
including:
* version 4.0 development to advance the Company's technological
lead;
* an expanded customer service facility in Antigua to support a
growing licensee and user base;
* a new marketing office in the UK to drive increased focus in
international markets for licensees;
* a larger employee base, adding new people in development and
customer service;
* final Nasdaq approval for the Company's listing; and
* heightened business development activities.
At the end of the first quarter of 2000, CryptoLogic had more than $52 million in cash. During the quarter, the Company increased its restricted cash position to $10.5 million compared to $4.9 million in the same 1999 quarter. This restricted cash level is expected to continue to reflect higher processing volumes. CryptoLogic is required by its credit card processors to maintain a percentage of credit card processing levels as reserves with its processors. Restricted cash represents letters of credit in favour Favor or favour (see spelling differences) may be
The dollar amounts, based on reserve ratios, that banks are required to keep on deposit at a Federal Reserve Bank. required reserves . ------------------------------------------------------------------------ FINANCIAL HIGHLIGHTS (US dollars, except per share disclosure) ------------------------------------------------------------------------ For The Three Months Ended March 31, 2000 1999 ------------------------------------------------------------------------ Total revenue $8.9M $8.3M ------------------------------------------------------------------------ Net income $4.2M $5.4M ------------------------------------------------------------------------ Earnings per share $0.38 $0.64 ------------------------------------------------------------------------ Fully diluted EPS $0.27 $0.35 ------------------------------------------------------------------------ Average number of common shares 10.9M 8.5M ------------------------------------------------------------------------ Average fully diluted number of common shares 15.7M 15.4M ------------------------------------------------------------------------ During the quarter, CryptoLogic also commenced trading on the Nasdaq National Market under the symbol CRYP. The company believes listing on this premier stock exchange enhances its profile and credibility Believability. The major legal application of the term credibility relates to the testimony of a witness or party during a trial. Testimony must be both competent and credible if it is to be accepted by the trier of fact as proof of an issue being litigated. with investors and prospective licensees, enables greater US investment and access to a larger capital market. In January January: see month. , a number of prominent US investment firms purchased 2.1 million common shares of CryptoLogic to hold approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 19% of the company's outstanding shares. CryptoLogic is encouraged by its growing shareholder base, which has more than tripled to almost 7,000 from a year ago and the considerable investment activity from major US institutions. Analyst Conference Call An analyst/shareholder conference call to discuss the first quarter 2000 results has been scheduled for 11:00 a.m. on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , April 28, 2000. Interested parties should call either 1-800-273-9672 or 416-695-5806. About CryptoLogic CryptoLogic Inc. is the leading software development company serving the fast-growing adj. 1. tending to spread quickly; - used mostly of plants. Adj. 1. fast-growing - tending to spread quickly; "an aggressive tumor" strong-growing, aggressive Internet gaming market. The company's proprietary technologies enable secure, high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. financial transactions over the Internet. CryptoLogic continues to innovate in·no·vate v. in·no·vat·ed, in·no·vat·ing, in·no·vates v.tr. To begin or introduce (something new) for or as if for the first time. v.intr. To begin or introduce something new. and develop state of the art Internet software applications for both the electronic commerce and Internet gaming industries. CryptoLogic's common shares trade on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. under the symbol CRY and on Nasdaq under the symbol CRYP. There are currently 11.2 million common shares outstanding (15.7 million shares fully diluted). CRYPTOLOGIC 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. DISCLAIMER (networking) disclaimer - Statement ritually appended to many Usenet postings (sometimes automatically, by the posting software) reiterating the fact (which should be obvious, but is easily forgotten) that the article reflects its author's opinions and not necessarily those of the : Statements in this press release which are not historical are forward-looking statements made pursuant to the 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. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including without limitation risks associated with the Company's financial condition and prospects, legal risks associated with Internet gaming and risks of governmental legislation and regulation, risks associated with market acceptance and technological changes, risks associated with dependence on licensees and key licensees, risks associated with competition and other risks detailed in the Company's filings with securities regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities . These risks may cause results to differ materially from those projected in the forward-looking statements.
CRYPTOLOGIC INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(In thousands of US dollars, except per share disclosure)
Three Months Ended March 31
2000 1999
------------------------------------------------------------------------
Revenue $8,251 $7,966
Interest income 675 290
------------------------------------------------------------------------
8,926 8,256
------------------------------------------------------------------------
Expenses:
Software development and support 3,601 2,006
General and administrative 652 212
Finance 25 17
Amortization 37 26
------------------------------------------------------------------------
4,315 2,261
------------------------------------------------------------------------
Income before income taxes 4,611 5,995
Income taxes 460 524
------------------------------------------------------------------------
Net income from continuing operations 4,151 5,471
Discontinued operations -- (79)
------------------------------------------------------------------------
Net Income 4,151 5,392
------------------------------------------------------------------------
------------------------------------------------------------------------
Basic Earnings per Share from Continuing
Operations $0.38 $0.65
Basic Earnings per Share $0.38 $0.64
Fully Diluted Earnings per Share from Continuing
Operations $0.27 $0.36
Fully Diluted Earnings Per Share $0.27 $0.35
Basic weighted average common shares 10,867,686 8,477,533
Fully diluted weighted average common
shares 15,684,532 15,394,865
CRYPTOLOGIC INC.
CONSOLIDATED BALANCE SHEETS
As at March 31, 2000 and 1999
(unaudited)
(In thousands of US dollars, except per share disclosure)
2000 1999
------------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents $42,343 $25,810
Restricted cash 10,500 4,890
Reserves and deposits with credit card
processors 985 941
Accounts receivable 472 387
Prepaid expenses and other 550 277
------------------------------------------------------------------------
54,850 32,305
Investments 1,080 400
Capital assets 624 644
------------------------------------------------------------------------
$56,554 $33,349
------------------------------------------------------------------------
------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $1,912 $1,259
Accrued liabilities 808 213
Income taxes payable 1,186 607
Funds held on deposit 1,185 852
------------------------------------------------------------------------
5,091 2,931
------------------------------------------------------------------------
Shareholders' equity
Capital stock 5,137 2,856
Retained earnings 46,326 27,562
------------------------------------------------------------------------
51,463 30,418
------------------------------------------------------------------------
$56,554 $33,349
------------------------------------------------------------------------
------------------------------------------------------------------------
CRYPTOLOGIC INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Three Months Ended March 31, 2000 and 1999
(unaudited)
(In thousands of US dollars, except per share disclosure)
2000 1999
Cash flows from operating activities:
Income from continuing operations $4,151 $5,471
Amortization adjustment to reconcile income to
cash flows 37 26
Changes in operating assets and liabilities:
Restricted cash (5,460) (500)
Reserves and deposits with credit card
processors (354) 1,061
Accounts receivable (174) (14)
Prepaid expenses and other 470 264
Accounts payable 350 2
Accrued liabilities 518 (104)
Income taxes payable 408 525
Funds held on deposit 93 84
------------------------------------------------------------------------
39 6,815
Cash flows used in discontinued operations -- (41)
------------------------------------------------------------------------
39 6,774
------------------------------------------------------------------------
Cash flows from financing activities
Issue of capital stock 1,472 14
------------------------------------------------------------------------
------------------------------------------------------------------------
Cash flows from investing activities
Additions to capital assets (145) (108)
Acquisition of assets of Gamesmania -- (270)
------------------------------------------------------------------------
(145) (378)
------------------------------------------------------------------------
Increase in cash and cash equivalents 1,366 6,410
Cash and cash equivalents, beginning of period 40,977 19,400
------------------------------------------------------------------------
Cash and cash equivalents, end of period $42,343 $25,810
------------------------------------------------------------------------
------------------------------------------------------------------------
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