EGAM otc bb .10/.12........nice turnaround going on here:
B: eGames Announces Fiscal 2002 Financial Results Fiscal 2002 R
B: eGames Announces Fiscal 2002 Financial Results Fiscal 2002 Results Benefit
from the Company's Strategic Decision to End Sales And Distribution
Relationships With National Drug Store Retailers
LANGHORNE, Penn., Jul 29, 2002 /PRNewswire-FirstCall via COMTEX/ -- eGames,
Inc. (OTC Bulletin Board: EGAM), a publisher and developer of Family
Friendly(TM), value-priced consumer entertainment PC software games, today
announced its financial results for the three and twelve months ended June 30,
2002.
Financial Results:
For the three months ended June 30, 2002, net sales increased by $2,228,000, or
309%, to $2,950,000 compared to $722,000 for the same quarter a year earlier.
For the twelve months ended June 30, 2002, the Company's net sales increased by
$4,023,000, or 59%, to $10,879,000 compared to $6,856,000 for the same period a
year ago.
For the three months ended June 30, 2002, the Company reported net income of
$1,171,000, or $0.12 per diluted share, compared to a net loss of ($3,439,000),
or ($0.35) per diluted share, for the same period last year. For the twelve
months ended June 30, 2002, the Company reported net income of $2,181,000, or
$0.22 per diluted share, compared to a net loss of ($5,933,000), or ($0.61) per
diluted share, for the same period last year.
Net sales, net income, and net income per diluted share for the three and twelve
month periods ended June 30, 2002 benefited significantly from the Company's
strategic decision at the outset of fiscal 2002 to end its sales and
distribution relationships with national drug store retailers and from
agreements reached with two national drug store retailers during fiscal 2002.
These agreements, among other things, modified the terms relating to previous
product shipments, which made all prior sales to these retailers final and
eliminated any further right of product return. As a result of these agreements,
the Company recognized net sales of $1,119,000 and net income of $983,000 during
the three months ended June 30, 2002 and net sales of $3,234,000 and net income
of $2,105,000 for the twelve months ended June 30, 2002. These amounts had been
deferred in accordance with the Company's revenue recognition policy requiring
the Company to recognize sales relating to product shipments to drug store
retailers based on reported product sell- through.
The following table presents the net sales, net income (loss), and net income
(loss) per diluted share for the three and twelve month periods ended June 30,
2002 and 2001, as reported and then excluding the benefit recognized as a result
of the agreements with the two national drug store retailers discussed above:
Three Months Ended June 30, Twelve Months Ended June 30,
(000's omitted, except per (000's omitted, except per
share amounts) share amounts)
2002 2001 Increase 2002 2001 Increase
As reported:
Net sales $2,950 $722 $2,228 $10,879 $6,856 $4,023
Net income (loss) $1,171 ($3,439) $4,610 $2,181 ($5,933) $8,114
Net income (loss)
per diluted
share $0.12 ($0.35) $0.47 $0.22 ($0.61) $0.83
Excluding agreements
with drug store
retailers:
Net sales $1,831 $722 $1,109 $7,645 $6,856 $789
Net income (loss) $188 ($3,439) $3,627 $76 ($5,933) $6,009
Net income (loss)
per diluted
share $0.02 ($0.35) $0.37 $0.01 ($0.61) $0.62
Although these agreements did not have an impact on the Company's cash balance
during fiscal 2002, these agreements did improve the Company's working capital
deficiency and stockholders' deficit balances by approximately $2.1 million.
Also during fiscal 2002, the Company adopted the Emerging Issues Task Force -
EITF 00-25, "Vendor Income Statement Characterization of Consideration Paid to a
Reseller of the Vendor's Products", which requires that certain promotional
costs, such as slotting fees charged by retailers, previously reported as
operating expenses be reclassified as reductions to net sales. Accordingly, net
sales amounts presented for prior year periods have been reduced to reflect the
adoption of EITF 00-25. For the three and twelve months ended June 30, 2001,
these amounts were $23,000 and $316,000, respectively.
Comments:
Jerry Klein, President and CEO of eGames, stated "Our fiscal 2002 financial
results represent the culmination of the seasoned guidance of our outside
directors, the focused and determined hard work of our employees, and the
support and cooperation of our vendors, distributors and retail customers. We've
made significant progress in fiscal 2002 in strengthening our balance sheet
through very focused initiatives, such as: successfully converting accounts
receivable balances and slow-moving inventory amounts into cash, reducing both
trade and bank debt, returning to operational profitability, and improving both
our stockholders' deficit and our working capital deficiency balances to
positive surplus levels primarily as a result of the agreements with the two
national drug store retailers discussed above."
Mr. Klein further commented, "Additionally, the Company has successfully
transitioned its direct distribution relationships with drug store retailers to
a low-risk, high-margin licensing model with a third-party distributor who
assumes the responsibilities and costs of inventory production, distribution,
promotion and merchandising of the Company's products to these retailers. The
cost savings from this transition, combined with decreases in the provisions for
inventory obsolescence and in reclamation costs, has enabled us to improve our
gross profit margin to 50% for fiscal 2002 from 12% for fiscal 2001. Other cost
saving initiatives such as: reductions in our labor force, marketing promotional
expenses, bad debt expense and professional service fees, have enabled us to
reduce our operating expenses to $3.1 million in fiscal 2002 compared to $6.5
million for fiscal 2001, an annual reduction of $3.4 million or 52%."
"During fiscal 2002, we refocused our efforts to serve our core value- priced PC
gaming software consumers. We have accomplished this transition by increasing
third-party distribution of our products through our primary North American
distributor, Infogrames, Inc., who services mass-merchant retailers, such as
Wal-Mart, K-Mart, Target, and specialty retailers like Best Buy. We've also
improved our direct distribution relationships with major PC software retailers
such as CompUSA and Office Depot. These mass-merchant, specialty, and PC
software retailers have historically merchandised the Company's products
successfully to our target consumers. During fiscal 2003 our goal is to grow our
business collectively with these retailers by providing them with PC gaming
software titles containing greater entertainment value to the end consumer, and
at prices, which should benefit the profit margins of our retailers,
distributors, and the Company. As we begin fiscal 2003, we're confident that we
have strengthened our critical customer and vendor relationships, effectively
restructured our limited resources, and reduced our operating expenses to levels
that should enable us to achieve profitability and positive cash flows in the
current market conditions and environment."
About the Company:
eGames, Inc., headquartered in Langhorne, PA, develops, publishes and markets a
diversified line of Family Friendly(TM), value-priced consumer entertainment PC
software games. The Company promotes the eGames(TM), Game Master Series(TM), and
Outerbound(TM) brands in order to generate customer loyalty, encourage repeat
purchases and differentiate eGames software products to retailers and consumers.
eGames - Where the "e" is for Everybody! Additional information regarding
eGames, Inc. can be found on the Company's Web site at www.egames.com . |
