CryptoLogic Continues Positive Momentum In Q2 2001 Revenue Up 30%, Net Margins On Track At 45%.Business Editors TORONTO--(BUSINESS WIRE)--July 24, 2001 First Half Of 2001 Continues To Exceed Expectations 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 and e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. industries, today announced its financial results for the second quarter ended June June: see month. 30, 2001. All financial figures are expressed in U.S. dollars. "CryptoLogic cryp·tol·o·gy n. The study of cryptanalysis or cryptography. cryp  to·log continues to post solid results, bettering
expectations again in the second quarter," said Jean Noelting,
CryptoLogic's 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. . "Positive organic growth and
high net profit remain well on track. In fact, 30% revenue growth for
the quarter exceeded our guidance of +20% and we still achieved our
projected 45% net margins. CryptoLogic consistently stands out in the
technology sector as an Internet company offering the best of two worlds
- solid "old economy" fundamentals based on earnings and cash
flow together with the exciting potential of a "new economy"
market."
Noelting added, "We continued to actively execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution our strategy in the second quarter. CryptoLogic announced its expansion plans into poker poker, card game, believed to have originated in Asia and first played in the United States in the 19th cent. A traditional cutthroat gambling game at first, it is now also an internationally popular social pastime. , introduced popular progressive jackpot A progressive jackpot is a jackpot (highest payoff) for a gaming machine (usually a slot machine or video poker machine) where the value of the jackpot increases a small amount for every game played. games and enhanced its executive team. As well, the new Nevada Nevada (nəvăd`ə, –vä–), far western state of the United States. It is bordered by Utah (E), Arizona (SE), California (SW, W), and Oregon and Idaho (N). law reflects significant developments at home and abroad favouring regulated reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. , responsible Internet gaming - a position we have always advocated. The first half of 2001 has shown considerable progress for both CryptoLogic and the industry. The next six months are expected to be equally rewarding with exciting opportunities including new licensee licensee n. a person given a license by government or under private agreement. (See: license, licensor) LICENSEE. One to whom a license has been given. 1 M. Q. & S. 699 n. development and acquisitions that are looking very promising." Financial Performance on Track (all figures in US dollars) Revenue for the second quarter of 2001 increased 30% to $10.8 million compared to $8.3 million in the corresponding 2000 quarter. This excludes interest income of $0.6 million in 2001 compared to $0.8 million in the prior year quarter. Interest income was historically part of total revenue, but effective the first quarter of 2001 has been reclassified and is shown below income from operations in the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statements of income. Net income for the quarter grew to $4.8 million or $0.35 per share ($0.33 per share 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) compared to $4.7 million in the 2000 quarter or $0.36 per share ($0.30 per share on a fully diluted basis). While the second quarter in 2001 reflected increased costs, as anticipated, associated with our compliance efforts, the enhancement of the management team and the development of new games, the company maintained strong net margin levels of 45% for the quarter. For the six months ended June 30, 2001, the company's revenue rose 31% to $21.7 million compared to $16.6 million in the prior year period. Net income for the six-month period was up 14% to $10.0 million versus $8.8 million in the same 2000 period. As a result, earnings per share in the first half of 2001 were $0.72 compared to $0.74 in 2000. On a fully diluted basis, earnings per share grew significantly to $0.68 for the first half of 2001 compared to $0.57 in 2000. CryptoLogic continued to generate strong cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses amounting to $5.8 million in the second quarter of 2001. After accounting for the $12.2 million spent for its substantial issuer bid in this quarter, the company remained well 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. with total cash at $55.7 million as at June 30, 2001.
FINANCIAL HIGHLIGHTS
(in millions of US dollars, except per share disclosure)
------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------
2001 2000 2001 2000
------------------- -----------------
Revenue $10.8 $8.3 $21.7 $16.6
------------------------------------------------------------
Interest income $0.6 $0.8 $1.4 $1.5
------------------------------------------------------------
Net income $4.8 4.7 $10.0 $8.8
------------------------------------------------------------
Earnings per
share $0.35 $0.36 $0.72 $0.74
------------------------------------------------------------
Fully diluted
EPS $0.33 $0.30 $0.68 $0.57
------------------------------------------------------------
Weighted
average number
of shares 13.8M 13.1M 13.9M 12.0M
------------------------------------------------------------
Weighted
average fully
diluted number
of shares 14.8M 15.4M 14.7M 15.5M
------------------------------------------------------------
Expanding Game Portfolio CryptoLogic continued to expand its game portfolio for exciting Web entertainment. The company debuted its first progressive slot games linked across 12 of the world's premier online casinos Online casinos, also known as virtual casinos or internet casinos, are online versions of traditional ("brick and mortar") casinos. Online casinos enable gamblers to play and wager on casino games through the Internet. , which offer bonus jackpots that grow faster and larger as more people play - just like favourite jackpot games found in land-based casinos A list of casinos. Antigua and Barbuda
n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. and will extend the company and its licensees into a large, untapped segment of the Internet market. Strengthening the Executive Team CryptoLogic appointed ap·point tr.v. ap·point·ed, ap·point·ing, ap·points 1. To select or designate to fill an office or a position: appointed her the chief operating officer of the company. 2. David Outhwaite to Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. and Israel Israel, in the Bible Israel (ĭz`rēəl, ĭz`rāəl) [as understood by Hebrews,=he strives with God], according to the book of Genesis, name given to Jacob as eponymous ancestor of the Hebrews, the chosen people of God. Ben-Ishai to Chief Technology Officer, in keeping with the company's 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. view to enhance its leadership team with professional management to take the company to its next level. Legislative Developments The international trend favouring online gaming See gaming. within a regulated environment continues to gain momentum. Most notable was the passage of a Nevada law enabling Internet casino casino or cassino (both: kəsē`nō). 1 Card game played with a full deck by two to four players. Its origins are obscure though it probably traces back to the Italian game of Scopa. gaming for the first time in the U.S., which has opened discussions with major American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of operators for CryptoLogic. In Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , the U.K. continued to demonstrate leadership.
The Isle of Man Noun 1. Isle of Man - one of the British Isles in the Irish SeaMan British Isles - Great Britain and Ireland and adjacent islands in the north Atlantic in May 2001 established a regulated jurisdiction in the U.K. for online casinos based on principles similar to the Australian Australian pertaining to or originating in Australia. Australian bat lyssavirus disease see Australian bat lyssavirus disease. Australian cattle dog a medium-sized, compact working dog used for control of cattle. model. Top names from 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. , Europe and Africa have submitted license applications to the Isle of Man, recognizing the jurisdiction as a world-class world-class adj. 1. Ranking among the foremost in the world; of an international standard of excellence; of the highest order: a world-class figure skater. 2. regime under Royal Ascent in the U.K. CryptoLogic embraces these developments that call for regulated and responsible online gaming practices and is finalizing its certification under Australian regulation, which positions the company well for next steps in Europe and the U.S. "We are pleased with CryptoLogic's progress during the first half of 2001," commented Noelting. "Our 2001 report card to date is coming up with high marks. Not only did we meet our financial targets, but we are also positioning the company for solid growth in the future by strengthening our management team and expanding the gaming segments in which we participate. The second half will show continued strength behind the launch of version 5.0, the addition of new licensees and the initial impact of our acquisition program." Analyst/Investor Conference Call A conference call has been scheduled for 10:00 a.m. (EST EST electroshock therapy. EST abbr. electroshock therapy ) on Tuesday Tuesday: see week. , July July: see month. 24, 2001. Interested parties should call either 1-800-273-9672 or 416-695-5806. Instant replay will be available until July 31, 2001 by calling 1-800-408-3053 or 416-695-5800, passcode 854248. About CryptoLogic CryptoLogic Inc. is the leading software development company serving the 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 symbol the CRY and on the Nasdaq National Market under the symbol CRYP. There are currently 13.2 million common shares outstanding (15.8 million shares fully diluted). For information on CryptoLogic and its licensing subsidiary, WagerLogic, please visit www.cryptologic.com and www.wagerlogic.com.
CRYPTOLOGIC INC.
CONSOLIDATED STATEMENTS OF INCOME For the three and
six months ended June 30, 2001 and 2000
(unaudited)
In thousands of U.S.
Dollars, except per For the three months For the six months
share information ended June 30 ended June 30
2001 2000 2001 2000
-------------------------------------------------------------------
Revenue $10,798 $8,318 $21,663 $16,569
-------------------------------------------------------------------
Expenses:
Software development
and support 5,035 3,147 9,998 6,748
General and
Administrative 1,012 674 1,795 1,326
Finance 73 39 148 64
Amortization 71 43 134 80
-------------------------------------------------------------------
6,191 3,903 12,075 8,218
-------------------------------------------------------------------
Income from operations 4,607 4,415 9,588 8,351
Interest income 586 802 1,376 1,477
-------------------------------------------------------------------
Income before income
taxes 5,193 5,217 10,964 9,828
Income taxes 370 565 959 1,025
-------------------------------------------------------------------
Net income $4,823 $4,652 $10,005 $8,803
-------------------------------------------------------------------
-------------------------------------------------------------------
Basic earnings per
share $0.35 $0.36 $0.72 $0.74
Fully diluted earnings
per share $0.33 $0.30 $0.68 $0.57
Basic weighted average
common shares 13,770 13,071 13,903 11,969
Fully diluted weighted
average common shares 14,792 15,413 14,692 15,462
CRYPTOLOGIC INC.
CONSOLIDATED BALANCE SHEETS
As at June 30, 2001 and 2000
(unaudited)
In thousands of U.S. dollars June 30
-------------------------------------------------------------------
2001 2000
-------------------------------------------------------------------
ASSETS
Current assets
Cash and cash
equivalents $40,901 $39,767
Restricted cash 14,800 14,000
Reserves with credit card
processor 1,488 1,233
Accounts receivable 581 165
Prepaid expenses and other 807 1,004
-------------------------------------------------------------------
58,577 56,169
Investments 2,480 1,080
Capital assets 968 684
-------------------------------------------------------------------
$62,025 $57,933
-------------------------------------------------------------------
-------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities
Accounts payable $2,062 $1,722
Accrued liabilities 991 459
Income taxes payable 1,051 505
Funds held on deposit 2,317 1,336
-------------------------------------------------------------------
6,421 4,022
-------------------------------------------------------------------
Shareholders' equity
Capital stock 7,499 6,301
Retained earnings 48,105 47,610
-------------------------------------------------------------------
55,604 53,911
-------------------------------------------------------------------
$62,025 $57,933
-------------------------------------------------------------------
-------------------------------------------------------------------
CRYPTOLOGIC INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY For the
three and six months ended June 30, 2001 and 2000
(unaudited)
In thousands of U.S. dollars For the three months ended June 30
2001 2000
----------------------------------------------------------------------
No. of Stated No. of Stated
Shares Value Shares Value
(000's) (000's)
Common shares:
Balance, beginning of period 14,047 6,835 11,200 5,115
Repurchase of shares (984) (316) (182) (62)
Exercise of stock options 119 958 23 122
Exercise of Class A purchase
warrant -- -- 3,300 1,104
----------------------------------------------------------------------
13,182 7,477 14,341 6,279
----------------------------------------------------------------------
Series C warrants
Balance, beginning and end of
period 160 22 160 22
----------------------------------------------------------------------
Total capital stock 13,342 7,499 14,501 6,301
----------------------------------------------------------------------
Retained earnings, beginning of
period 55,140 46,326
Net income 4,823 4,652
Excess of repurchase price of common
shares over stated value (11,858) (3,368)
----------------------------------------------------------------------
48,105 47,610
----------------------------------------------------------------------
Total shareholders' equity 55,604 53,911
----------------------------------------------------------------------
----------------------------------------------------------------------
In thousands of U.S. dollars For the six months ended June 30
2001 2000
----------------------------------------------------------------------
No. of Stated No. of Stated
Shares Value Shares Value
(000's) (000's)
Common shares:
Balance, beginning of period 14,079 6,455 8,974 3,643
Repurchase of shares (1,103) (356) (182) (62)
Exercise of stock options 206 1,378 149 867
Exercise of Class A purchase
warrant -- -- 5,400 1,831
----------------------------------------------------------------------
13,182 7,477 14,341 6,279
----------------------------------------------------------------------
Series C warrants:
Balance, beginning and end of
period 160 22 160 22
----------------------------------------------------------------------
Total capital stock 13,342 7,499 14,501 6,301
Retained earnings, beginning of
period 51,133 42,175
Net income 10,005 8,803
Excess of repurchase price of common
shares over stated value (13,033) (3,368)
----------------------------------------------------------------------
48,105 47,610
----------------------------------------------------------------------
Total shareholders' equity 55,604 53,911
----------------------------------------------------------------------
----------------------------------------------------------------------
CRYPTOLOGIC INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three and six months ended June 30, 2001 and 2000
(unaudited)
In thousands of U.S. dollars For the For the
three months six months
ended June 30 ended June 30
2001 2000 2001 2000
Cash flows from (used in)
operating activities
Income $4,823 $4,652 $10,005 $8,803
Amortization adjustment to
reconcile income to cash
flows 71 43 134 80
Changes in operating assets
and liabilities:
Restricted cash (300) (3,500) (800) (8,960)
Reserves with credit card
processor (65) (248) (271) (602)
Accounts receivable (125) 307 854 133
Prepaid expenses and other 412 (454) 32 16
Accounts payable 524 (190) (92) 159
Accrued liabilities (92) (349) 115 170
Income taxes payable 424 (681) 1,049 (272)
Funds held on deposit 108 151 503 244
----------------------------------------------------------------------
5,780 (269) 11,529 (229)
----------------------------------------------------------------------
Cash flows from (used in)
financing activities
Issue of capital stock 958 1,226 1,378 2,698
Repurchase of common shares (12,174) (3,430) (13,389) (3,430)
----------------------------------------------------------------------
(11,216) (2,204) (12,011) (732)
----------------------------------------------------------------------
Cash flows from (used in)
investing
activities
Additions to capital assets (198) (103) (263) (249)
Investments (129) -- (1,050) --
----------------------------------------------------------------------
(327) (103) (1,313) (249)
----------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents (5,763) (2,576) (1,795) (1,210)
Cash and cash equivalents,
beginning of period 46,664 42,343 42,696 40,977
----------------------------------------------------------------------
Cash and cash equivalents,
end of period 40,901 $39,767 $40,901 $39,767
----------------------------------------------------------------------
----------------------------------------------------------------------
CRYPTOLOGIC FORWARD-LOOKING STATEMENT 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. |
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