CryptoLogic Delivers Strong Results In Q1 2001-Revenue Up 32%, Net Profits Up
FYI, Gator.
25% & Net Margin Improved By 6% To 48%
Business Editors
TORONTO--(BUSINESS WIRE)--April 16, 2001--CryptoLogic
(NASDAQ:CRYP)(TSE:CRY.)
CryptoLogic Exceeds Expectations as Positive Momentum Continues
CryptoLogic Inc., a leading supplier of software to the Internet
gaming and e-commerce 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. "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 base."
Noelting added, "Looking ahead, we continue to target high-quality
licensees, initially in the most promising regions of Europe, then
Asia. As well, CryptoLogic is considering synergistic acquisitions
that leverage our cash reserves and extend the company into
attractive, new gaming areas such as lotteries, bingo and sports
betting 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 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, increasing its total cash position to $61.0 million.
-0-
*T
FINANCIAL HIGHLIGHTS
(in millions of US$, except per share disclosure)
-------------------------------------------------------------------
For the three months ended March 31, 2001 2000
-------------------------------------------------------------------
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
-------------------------------------------------------------------
*T
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 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, there will be approximately 13.1
million shares outstanding. The company's normal course issuer bid,
expiring 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 Entertainment Group Inc., a fast-growing
provider of Java-based bingo and casino 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 and New Jersey tabled legislation that
would permit online 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 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) on
Monday, 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 financial
transactions over the Internet. CryptoLogic continues to innovate 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 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.
*T
CRYPTOLOGIC INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
In thousands of U.S. dollars, except per share information
Three Months Ended March 31
-------------------------------------------------------------------
-------------------------------------------------------------------
2001 2000
-------------------------------------------------------------------
Revenue $10,865 $8,251
-------------------------------------------------------------------
Expenses:
Software development and support 4,963 3,601
General and administrative 783 652
Finance 75 25
Amortization 63 37
-------------------------------------------------------------------
5,884 4,315
-------------------------------------------------------------------
Income from operations 4,981 3,936
Interest income 790 675
-------------------------------------------------------------------
Income before income taxes 5,771 4,611
Income taxes 589 460
-------------------------------------------------------------------
Net income 5,182 4,151
-------------------------------------------------------------------
-------------------------------------------------------------------
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
-------------------------------------------------------------------
-------------------------------------------------------------------
2001 2000
-------------------------------------------------------------------
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
-------------------------------------------------------------------
64,262 54,850
Investments 2,351 1,080
Capital assets 841 624
-------------------------------------------------------------------
$67,454 $56,554
-------------------------------------------------------------------
-------------------------------------------------------------------
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
-------------------------------------------------------------------
5,457 5,091
-------------------------------------------------------------------
Shareholders' equity
Capital stock 6,858 5,137
Retained earnings 55,139 46,326
-------------------------------------------------------------------
61,997 51,463
-------------------------------------------------------------------
$67,454 $56,554
-------------------------------------------------------------------
-------------------------------------------------------------------
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
-------------------------------------------------------------------
2001 2000
-------------------------------------------------------------------
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
-------------------------------------------------------------------
14,047 6,835 11,200 5,115
-------------------------------------------------------------------
Series C warrants:
Balance, beginning and
end of period 160 22 160 22
-------------------------------------------------------------------
Total capital stock 14,207 6,857 11,360 5,137
-------------------------------------------------------------------
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) --
-------------------------------------------------------------------
55,140 46,326
-------------------------------------------------------------------
Total shareholders' equity $61,997 $51,463
-------------------------------------------------------------------
-------------------------------------------------------------------
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
-------------------------------------------------------------------
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
-------------------------------------------------------------------
5,749 39
-------------------------------------------------------------------
Cash flows from financing activities
Issue of capital stock 420 1,472
Repurchase of common shares (1,215) --
-------------------------------------------------------------------
(795) 1,472
-------------------------------------------------------------------
Cash flows from investing activities
Additions to capital assets (65) (145)
Investment in dot com Entertainment (921) --
-------------------------------------------------------------------
(986) (145)
-------------------------------------------------------------------
Increase in cash and cash equivalents 3,968 1,366
Cash and cash equivalents, beginning of period 42,696 40,977
-------------------------------------------------------------------
Cash and cash equivalents, end of period $46,664 $42,343
-------------------------------------------------------------------
-------------------------------------------------------------------
*T
CRYPTOLOGIC FORWARD LOOKING STATEMENT DISCLAIMER:
Statements in this press release which are not historical are
forward-looking statements made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act 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. These
risks may cause results to differ materially from those projected in
the forward-looking statements.
--30--se/in*
CONTACT: CryptoLogic
Jean Noelting, 416/545-1455
or
Nancy Chan-Palmateer, 416/545-1455 x701
E-mail: investor.relations@cryptologic.com
or
Environics Communications
Dan Tisch or Allison Morris, 416/920-9000, ext 260 or 239
E-mail: dtisch@pr.environics.ca/amorris@pr.environics.ca
KEYWORD: INTERNATIONAL CANADA
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS GAMING INTERNET SOFTWARE
EARNINGS |
