CryptoLogic Delivers Strong Results In Q1 2001-Revenue Up 32%, Net Profits Up 25% & Net Margin Improved By 6% To 48%.Business Editors TORONTO--(BUSINESS WIRE)--April 16, 2001 CryptoLogic cryp·tol·o·gy n. The study of cryptanalysis or cryptography. cryp  to·log (NASDAQ NASDAQin 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.) CryptoLogic Exceeds Expectations as Positive Momentum Continues 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. ., 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 first quarter ended March 31, 2001. All financial figures are expressed in U.S. dollars. "2001 is off to a great start for CryptoLogic," 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. . "The first few months were focused on establishing a clear strategy and driving organic growth. We set targets of 20% revenue growth and net margin improvement to 45% for the overall year. We are pleased to have already realized these results in the first quarter, evidencing positive growth in our existing 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. base." Noelting added, "Looking ahead, we continue to target high-quality licensees, initially in the most promising regions of Europe Europe is often divided into regions due to geographical, cultural or historical criteria. Some common divisions are as follows. Directional divisions Groupings by compass directions are the hardest to define in Europe, since (among other issues) the pure geographical criteria , then Asia. As well, CryptoLogic is considering synergistic synergistic /syn·er·gis·tic/ (sin?er-jis´tik) 1. acting together. 2. enhancing the effect of another force or agent. syn·er·gis·tic adj. 1. acquisitions that leverage our cash reserves Cash reserves See: Cash investments cash reserves Investment funds that are held in short-term assets such as Treasury bills and certificates of deposit until more permanent investment opportunities are available. and extend the company into attractive, new gaming areas such as lotteries United Kingdom
Game of chance played with cards having a grid of numbered squares corresponding to numbered balls drawn at random. When a number on the card is drawn, the players cover that number (should they have it); the game is won by covering a certain number of squares in a row and sports betting Sports betting is the general activity of predicting sports results by making a wager on the outcome of a sporting event. Perhaps more so than other forms of gambling, the legality and general acceptance of sports betting varies from nation to nation. for broader mass appeal. New opportunities expected in the next few quarters will reflect successful execution of our plans." Financial Growth on Target (all figures in US dollars) Revenue for the first quarter of 2001 increased 32% to $10.9 million compared to $8.2 million in the corresponding 2000 quarter. This excludes interest income of $0.8 million in 2001 compared to $0.7 million in the prior year quarter. Interest income was historically part of total revenue, but has been reclassified and is shown below income from operations in the consolidated statements of income. Net income for the quarter grew by 25% to $5.2 million or $0.37 per share ($0.34 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 $4.2 million in the prior 2000 quarter or $0.38 per share ($0.27 per share on a fully diluted basis). As a result, net margin for the 2001 first quarter was 48%, an improvement over fourth quarter 2000 at 42%. CryptoLogic continued to be a cash strong organization. For the first quarter of 2001, the company generated $5.7 million in 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 , increasing its total cash position to $61.0 million.
FINANCIAL HIGHLIGHTS
(in millions of US$, except per share disclosure)
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For the three months ended March 31, 2001 2000
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Revenue $10.9 $8.2
Interest income $0.8 $0.7
Net income $5.2 $4.2
Earnings per share $0.37 $0.38
Fully diluted EPS $0.34 $0.27
Weighted average number of common shares 14.0 10.9
Weighted average fully diluted number of shares 15.3 15.3
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Deploying Strong Cash Position CryptoLogic continued to see its own shares as an exceptional investment opportunity. During the quarter, the company announced a substantial issuer bid to purchase up to 1 million common shares, which expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. on April 9, 2001. Subsequent to the quarter, CryptoLogic successfully repurchased approximately 978,000 shares at C$19.00 per share, an investment of around C$18.6 million (US$12.0 million). After giving effect for the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. , there will be approximately 13.1 million shares outstanding. The company's normal course issuer bid, expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. May 16, 2001, remains available and allows the buy back of another 97,000 shares. In March, the company invested US$0.9 million to acquire 1,055,700 shares or 9.9% of dot com dot com - com Entertainment Group Inc., a 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 provider of Java-based bingo and 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. software. Legislative Developments CryptoLogic has always maintained that regulated, responsible Internet gaming is the best solution for consumers, licensees and governments. In the first few months of 2001, CryptoLogic has seen dramatic steps in the UK and the US moving towards a regulated marketplace. The British government introduced tax-friendly legislation to encourage major UK sports books to bring home their Internet operations. 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). and New Jersey tabled legislation that would permit online gaming See gaming. within their states. The Nevada bill has garnered considerable support from regulators, casino operators and 33 of the state's 42 assemblymen and could become the first such law in the US. "CryptoLogic continues to exhibit positive momentum," added Noelting. "As a result, our share price has appreciated in a declining market, but still offers considerable upside Upside The potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside based on strong fundamentals and a promising growth outlook. 2001 will also see CryptoLogic raise barriers to entry by emphasizing marketing, customer care and regulatory compliance to ensure that both our company and licensees are in the top tier of profitability in today's evolving and competitive market. This strategy will become more evident in subsequent quarters and will take CryptoLogic into its next growth phase, fortifying our place as the supplier of choice for regulated Web gaming entertainment." Analyst/Investor Conference Call A conference call has been scheduled for 10:00 a.m. (EST EST electroshock therapy. EST abbr. electroshock therapy ) on Monday Monday: see week. , April 16, 2001. Interested parties should call either 1-800-478-9326 or 416-695-5801. Instant replay will be available until April 23, 2001 by calling 1-800-408-3053 or 416-695-5800, passcode 747221. About CryptoLogic CryptoLogic Inc. is the leading software development company serving the fast-growing 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. as CRY and on Nasdaq as CRYP. There are currently 14.1 million common shares outstanding (16.7 million shares fully diluted). For more information, visit www.cryptologic.com.
CRYPTOLOGIC INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
In thousands of U.S. dollars, except per share information
Three Months Ended March 31
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2001 2000
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Revenue $10,865 $8,251
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Expenses:
Software development and support 4,963 3,601
General and administrative 783 652
Finance 75 25
Amortization 63 37
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5,884 4,315
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Income from operations 4,981 3,936
Interest income 790 675
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Income before income taxes 5,771 4,611
Income taxes 589 460
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Net income 5,182 4,151
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Basic earnings per share $0.37 $0.38
Fully diluted earnings per share $0.34 $0.27
Basic weighted average common shares 14,038 10,868
Fully diluted weighted average common shares 15,252 15,321
CRYPTOLOGIC INC.
CONSOLIDATED BALANCE SHEETS
As at March 31, 2001 and 2000
(unaudited)
In thousands of U.S. dollars March 31
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2001 2000
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ASSETS
Current assets
Cash and cash equivalents $46,664 $42,343
Restricted cash 14,500 10,500
Reserves with credit card processor 1,423 985
Accounts receivable 456 472
Prepaid expenses and other 1,219 550
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64,262 54,850
Investments 2,351 1,080
Capital assets 841 624
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$67,454 $56,554
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $1,538 $1,912
Accrued liabilities 1,083 808
Income taxes payable 627 1,186
Funds held on deposit 2,209 1,185
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5,457 5,091
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Shareholders' equity
Capital stock 6,858 5,137
Retained earnings 55,139 46,326
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61,997 51,463
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$67,454 $56,554
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CRYPTOLOGIC INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the three months ended March 31, 2001 and 2000
(Unaudited)
In thousands of U.S. dollars For the three months ended March 31
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2001 2000
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Number Stated Number Stated
of shares value of shares value
(000's) (000's)
Common shares:
Balance, beginning of period 14,079 $6,455 8,974 $3,643
Repurchase of shares (119) (40) -- --
Exercise of stock options 87 420 126 745
Exercise of Class A purchase
warrant -- -- 2,100 727
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14,047 6,835 11,200 5,115
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Series C warrants:
Balance, beginning and
end of period 160 22 160 22
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Total capital stock 14,207 6,857 11,360 5,137
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Retained earnings, beginning of period 51,133 42,175
Net income 5,182 4,151
Excess of repurchase price of common
shares over stated value (1,175) --
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55,140 46,326
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Total shareholders' equity $61,997 $51,463
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CRYPTOLOGIC INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2001 and 2000
(unaudited)
In thousands of U.S. dollars 2001 2000
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Cash flows from (used in) operating activities:
Income $5,182 $4,151
Amortization adjustment to reconcile
income to cash flows 63 37
Changes in operating assets and liabilities:
Restricted cash (500) (5,460)
Reserves with credit card processor (206) (354)
Accounts receivable 979 (174)
Prepaid expenses and other (380) 470
Accounts payable (616) 350
Accrued liabilities 207 518
Income taxes payable 625 408
Funds held on deposit 395 93
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5,749 39
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Cash flows from financing activities
Issue of capital stock 420 1,472
Repurchase of common shares (1,215) --
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(795) 1,472
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Cash flows from investing activities
Additions to capital assets (65) (145)
Investment in dot com Entertainment (921) --
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(986) (145)
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Increase in cash and cash equivalents 3,968 1,366
Cash and cash equivalents, beginning of period 42,696 40,977
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Cash and cash equivalents, end of period $46,664 $42,343
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CRYPTOLOGIC FORWARD LOOKING STATEMENT 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 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. 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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