Majesco Entertainment Company Reports Fourth Quarter and Year-End Fiscal 2010 Financial Results

EDISON, N.J., Jan 18, 2011 /PRNewswire/ -- Majesco Entertainment Company (Nasdaq: COOL), an innovative provider of video games for the mass market, today reported financial results for the fourth quarter and full year ended October 31, 2010.

For the fourth quarter ended October 31, 2010, Majesco's net revenues decreased 2.2 percent to $23.4 million versus $23.9 million in the same period a year ago. During this same period, the Company reported an operating loss of $1.3 million, compared to an operating loss of $5.5 million in the fourth quarter of 2009. Non-GAAP operating loss was $1.2 million versus non-GAAP operating loss of $5.0 million in 2009. Net loss for the quarter was $1.5 million versus net loss of $4.5 million in 2009. On a non-GAAP basis, net loss for the quarter was $1.5 million compared to non-GAAP net loss of $5.4 million last year.

The Company's basic and diluted net loss per share for the quarter ended October 31, 2010 was $0.04 compared to net loss per basic and diluted share of $0.14 in the same period last year. Non-GAAP diluted net loss per share was $0.04 compared to a net loss per share of $0.16 last year.

For the twelve months ended October 31, 2010, the Company's net revenues decreased 20 percent to $75.6 million versus the same period in 2009. During this same period, the Company reported an operating loss of $2.1 million compared to an operating loss of $6.6 million in the same 2009 period. Non-GAAP operating loss for the twelve month period was $0.3 million compared to non-GAAP operating loss of $3.0 million for the comparable 2009 period. Net loss through the twelve months of fiscal 2010 was $1.0 million versus net loss of $7.2 million in the comparable 2009 period. Non-GAAP net loss was $1.3 million for fiscal 2010 compared to net loss of $4.4 million in the same 2009 period.

The Company's basic and diluted net loss per share for the twelve months ended October 31, 2010 was $0.03 compared to net loss per share for the twelve months ended October 31, 2009 of $0.24. The Company's non-GAAP diluted net loss per share for the twelve months ended October 31, 2010 was $0.04 compared to net loss per share of $0.15 in the comparable 2009 period.

Jesse Sutton, Chief Executive Officer of Majesco, said, "In 2010, we significantly reduced our net loss by reducing costs and focusing on our mass market game franchises and the holiday selling season.  We are encouraged by the strong start to fiscal 2011, led by the recent launches of Crafting Mama, Babysitting Mama, and Zumba Fitness for Kinect, PlayStation®Move, and Wii.  In particular, Zumba Fitness is off to a fantastic start and has already sold over 500,000 units in less than two months.  Importantly, nearly all of our key holiday titles launched in our January quarter.  Therefore, our fourth quarter and fiscal year 2010 results do not reflect the successful launches of Zumba Fitness, Babysitting Mama, and a significant number of reorders for Crafting Mama, which was not released until the final week of October.

"In 2011, we expect to continue to publish innovative new titles that cater to the mass-market audience, on whichever platforms they are attracted to.  Development is already well underway for numerous titles on new platforms, including Kinect for Xbox 360, PlayStation®Move, as well as Nintendo 3DS, which is expected to launch this March in North America.  Furthermore, we are also excited about our digital initiative which encompasses Xbox LIVE, PlayStation®Network, iPhone, iPad, and numerous Facebook social games."  

Highlights

• For the twelve months ended October 31, 2010, our GAAP net loss was $1.0 million, a decrease of $6.2 million from the same period last year.
• Fiscal 2010 operating expenses declined to $20.5 million, down 30 percent from the same period in 2009.
• Shipped 'Crafting Mama' for Nintendo DS, which is the latest brand extension of the Cooking Mama franchise that has now sold over 8 million units in North America.  'Crafting Mama' has become another hit for the franchise, selling over 250,000 units in less than three months.  
• In the fourth quarter of 2010, Majesco released 'Swords' for Wii, 'Serious Sam HD: The Second Encounter' for Xbox LIVE Arcade, 'Greg Hastings Paintball 2' for Xbox 360 and Wii, 'Gardening Mama' for the iPhone, 'My Baby 3 & Friends' for DS, 'Flip's Twisted World' for DS, and 'Crafting Mama' for DS.  

Announced Product Line-up

First Quarter Fiscal 2011 Ending January 31, 2011

To date, the Company has announced the following titles that were or are expected to be released during its fiscal first quarter 2011, which includes the holiday sales period:

• Babysitting Mama for Wii stars the iconic Mama from the best-selling Cooking Mama franchise and features an exciting new play mechanic. This innovative simulation game is delivered to consumers with an adorable plush baby doll into which the babysitter tucks the Wii Remote™ in order to interact with the doll and game at the same time in 40 different activities.
• Zumba Fitness® for Wii, Kinect for Xbox 360, and PlayStation®Move is a one-of-a-kind exercise program that pairs Latin rhythms with red-hot international dance steps so you can have a blast as you party your way into shape. Through invigorating, high calorie-burning fitness classes, the Zumba® program has helped melt the pounds and inches off 10 million Zumba-enthusiasts in more than 110 countries.  Released on November 18, 2010, Zumba Fitness has already sold over 500,000 units in less than two months.  
• Cooking Mama Friends' Cafe for Facebook Platform features the same accessible, recipe-based mini-game formula that has helped the Mama franchise exceed 8 million units sold in North America. On Facebook Platform, that mechanic is combined with new menu and customer management within an economy driven cafe. Players first buy ingredients, then chop, mix, pour, and bake with their mouse to create delectable dishes like holiday ham, fried rice and chicken parm that they can then share with friends and sell to Cafe customers.
• Left Brain Right Brain for iPhone, iPad and iPod Touch is based on the best-selling Nintendo DS ambidextrous brain game franchise that lets players sharpen their mental skills by training the left and right hemispheres of their brain with activities based on speed, accuracy, association, recognition, memory and strategy.

Fiscal 2011

To date, the Company has announced the following titles that are expected to be released during the rest of fiscal 2011:

• Monster Tale for Nintendo DS is being developed by the key leads behind the critically acclaimed Henry Hatsworth in the Puzzling Adventure. The game mixes platform game play on the top screen with a deep pet-raising game on the Touch Screen to create a dynamic, one-of-a-kind adventure. The heroes of this intriguing tale are little Ellie and a mysterious young monster named Chomp who together set out to reclaim the Monster World from the Kid Kings and their enslaved creature pets.
• Greg Hastings Paintball 2 for PlayStation®Network is the most realistic paintball experience to date from the #1 name in the sport. The game introduces more than 10 single and multiplayer game modes, each staged in all-new paintball locations based on 62 actual fields around the world. Featuring three new event branches -- Tournament Speedball, Recball, and Tournament Woodsball -- players can build and develop their team of professional ballers to conquer the field. Support for the PlayStation®Move motion controller ensures precise targeting in online battles with up to 14 friends.
• Cake Mania Main Street for Nintendo DS is based on the best-selling Cake Mania franchise that has been downloaded more than 200 million times and sold more than 700,000 copies worldwide on DS and Wii. The game features 100 new levels of fast-paced gameplay marked by the series' signature time management mechanic, but this time players must run entirely new businesses, including a burger barn, flower shop and sushi restaurant.
• Face Kart: Photo Finish for Nintendo 3DS literally puts YOU in the driver's seat of an arcade style kart racer; players take photos of their face with their Nintendo 3DS camera and use them as avatars for their custom 3D racers, billboards and power-ups.
• Pet Zombies in 3D for Nintendo 3DS lets players reanimate their very own zombies with a range of customizations and then care for (or torment!) their pets as they play with them in creepy 3D environments.  
• Summer Camp Showdown for Wii is a motion-based adventure where players vie for the upper hand in sports and pranks to determine who rules the woods.

Fiscal 2011 Outlook

The Company expects fiscal 2011 full year net revenue in a range of $85 to $90 million, and Non-GAAP EPS of $0.06 to $0.10.  The Company's guidance assumes the release of approximately 19 SKUs in 2011, including six for the 3DS, four for Kinect for the Xbox 360, three for Wii and three for DS. The Company's results are also impacted by seasonality from the December holiday period and variability based on release schedules.

Conference Call

At 4:30 p.m. (EST) today, management will host an earnings conference call. To access the call in the U.S., please dial 1-800-860-2442.  Please dial in approximately 10 minutes prior to the start of the conference call. The conference call will also be broadcast live over the Internet and available for replay for 90 days from the "Investor Info" section of the Company's Web site at http://www.majescoentertainment.com. In addition, a replay of the call will be available via telephone for seven days beginning approximately two hours after the call. To listen to the telephone replay in the U.S., please dial 1-877-344-7529 and for international callers, dial 1-412-317-0088. Enter access code 447221.

Generally Accepted Accounting Principles (GAAP) and Non-GAAP Metrics

To facilitate a comparison between the three and twelve months ended October 31, 2010 and 2009, the Company has presented both GAAP and Non-GAAP financial results. GAAP financial measures, including operating income, net income, and basic and diluted earnings per share, have been adjusted to report certain Non-GAAP financial measures.

These Non-GAAP financial measures exclude the following items from the Company's consolidated statements of operations:

• Expenses related to non-cash compensation
• Net proceeds from sale of certain state income tax net operating loss carryforwards
• Settlement charges related to the settlement of class action litigation
• Change in fair value of warrants
• Expenses for the California studio which was closed in the fourth quarter fiscal 2009

These Non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance and the Company's prospects for the future. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results.

For more information on these Non-GAAP financial measures, please see the tables in this release captioned "Reconciliation of GAAP and Non-GAAP Financial Measures".

About Majesco Entertainment Company

Majesco Entertainment Company is a provider of video games for the mass market.  Building on more than 20 years of operating history, the company is focused on developing and publishing a wide range of casual and family oriented video games on Kinect for Xbox 360®, PlayStation®Move motion controller, Wii™, Nintendo 3DS™ and DS™, Facebook® Platform, mobile and other leading platforms. Product highlights include Cooking Mama™, Babysitting Mama™, TETRIS® Party Deluxe and Zumba Fitness®. The Company's shares are traded on the Nasdaq Stock Market under the symbol: COOL.  Majesco is headquartered in Edison, NJ and has an international office in Bristol, UK. More info can be found online at www.majescoentertainment.com or on Twitter at www.twitter.com/majesco.

Safe Harbor

Some statements set forth in this release, including the estimates under the headings "Fiscal 2011 Outlook" contain forward-looking statements that are subject to change. Statements including words such as "anticipate", "believe", "estimate" or "expect" and statements in the future tense are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. Some of the factors which could cause our results to differ materially from our expectations include the following: consumer demand for our products, the availability of an adequate supply of current-generation and next-generation gaming hardware, including but not limited to Nintendo's DS and Wii™ platforms; our ability to predict consumer preferences among competing hardware platforms; consumer spending trends; the seasonal and cyclical nature of the interactive game segment; timely development and release of our products; competition in the interactive entertainment industry; developments in the law regarding protection of our products; our ability to secure licenses to valuable entertainment properties on favorable terms; our ability to manage expenses; our ability to attract and retain key personnel; adoption of new accounting regulations and standards; adverse changes in the securities markets; our ability to comply with continued listing requirements of the Nasdaq stock exchange; the availability of and costs associated with sources of liquidity; and other factors described in our filings with the SEC, including our Annual Report on Form 10-K for the year ended October 31, 2009. We do not undertake, and specifically disclaim any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

SOURCE Majesco Entertainment Company