RADAF has blowout numbers!
Wednesday December 17, 6:00 am Eastern Time
Company Press Release
SOURCE: Radica Games Limited
Radica Games Limited Reports Record Fourth Quarter
and Fiscal Year Results
HONG KONG, Dec. 17 /PRNewswire/ -- Radica Games Limited (Nasdaq: RADAF - news)
announced today record results for the fourth quarter and the fiscal year ended October 31, 1997.
The Company reported an after tax profit of $29.6 million or $1.36 per share for the year ended
October 31, 1997, versus $1.5 million or $0.07 per share in the prior year. After tax profit for the
fourth quarter ended October 31, 1997, was $17.6 million or $0.79 per share versus $4.2 million or
$0.21 per share in the fourth quarter of 1996.
Total revenues for the year ended October 31, 1997, were $87.8 million, increasing 84.8% from
$47.5 million for the same period last year. Quarterly revenues for the fourth quarter of fiscal 1997
were $40.4 million, increasing 78.8% from $22.6 million for the same quarter last year.
The sales increases for both the fourth quarter and the fiscal year were the result of a strong demand
for several of the Company's products, particularly continuing products such as Bass Fishin'(TM),
Solitaire and King Pin Bowling. Recent product introductions also had a major positive effect on
fourth quarter sales, including Deep Sea Fishin'(TM), Lunker Bass Fishin'(TM), Night Vision Sub
Assault(TM) and Night Vision Tank Assault(TM).
Sales growth occurred both in the U.S. market and other worldwide markets. U.S. sales for the
quarter grew by 70.1% to $26.2 million and full year sales grew by 74.2% to $57.5 million, while
other worldwide markets grew by 442.9% to $7.6 million in the quarter and by 366.7% to $14
million for the year. Japan, other Asian countries and Canada were the leading contributors to that
growth.
The Company's OEM (original equipment manufacturing) business also grew significantly in the
quarter and full year. Quarterly OEM sales grew by 13.8% to $ 6.6 million and fiscal year OEM
sales grew by 41.7% to $16.3 million. The Company manufactures products for the Hasbro Games
Group, which are sold by Hasbro, Milton Bradley and Parker Brothers throughout the world.
The gross profit for fiscal year 1997 was $46.9 million compared to $16.8 million for fiscal 1996, an
increase of 179.2%. The gross margin for the year was 53.4% compared to 35.4% for fiscal year
1996. The gross profit for the fourth quarter increased by $14 million to $24.3 million from $10.3
million in the fourth quarter of 1996 and the gross margin for the fourth quarter was 60.1% compared
to 45.6% for the same quarter last year.
The increase in gross margin was due to higher sales volume of current and new product at historic
margin levels relative to sales of low margin promotional product and OEM production. In addition,
approximately 3.6% of the year end margin or $3.2 million and 3.7% of the fourth quarter margin or
$1.5 million were as a result of sales of product which had previously been written off.
''We are pleased with the continued strength of our Bass Fishin'(TM) product and with the
successful launch of our new Deep Sea Fishin'(TM), Lunker Bass(TM) and Night Vision games, Sub
Assault(TM) and Tank Assault(TM),'' said Bob Davids, CEO. ''Consumer demand in the handheld
game category seems particularly strong this Fall, which is a positive indicator for next year.''
''Our OEM business with the Hasbro Games Group continues to thrive and in fiscal 1998 we expect
to build seven new products for Hasbro to add to the existing line of handheld electronic versions of
their well-known games. The new products will include Trivial Pursuit(TM) which will start to ship in
the first quarter of fiscal 1998. Although OEM business provides low margins, it fills plant capacity
and allows flexibility in balancing our workforce,'' said Davids.
''It is also extremely gratifying that the skill, dedication and teamwork of our employees has paid off
allowing us to give our shareholders a significant improvement in profit this year,'' added Davids.
Davids also stated that the previously announced expansion of the factory was on track with
ground-breaking taking place at the end of November. It was also noted that the Company had
2,485 staff and workers in China at the end of November 1997 compared to 1,223 at the end of
November 1996.
The Company also announced that it is pleased with the response of retail customers to its new
products for Spring of 1998. The Company plans to introduce eight new products for initial shipment
in December and January, including two new fishing products -- Junior Bass Fishin'(TM) for the
younger fishermen and a mass-market edition of Lunker Bass Fishin'(TM), which is an advanced
fishing game that was shipped only to the department store and specialty trade this Fall. A series of
three low-priced casino games, Pocket Poker(TM), Pocket Blackjack(TM) and Pocket Slot(TM),
and two multiple game casino products, Player's Choice Poker(TM) and Player's Choice
Blackjack(TM), were also introduced for Spring. Additionally, a new backlit solitaire game called
Solitaire Lite(TM) was added to the Spring line-up. The Company said that it plans to publicly unveil
its product line for Fall of 1998 in early January at the various toy shows around the world. Included
in this product line will be a product incorporating the NASCAR(R) license, which was announced
earlier this month, plus six other new products.
The foregoing discussion contains forward-looking statements that involve risks and uncertainties that
could cause actual results to differ materially from projected results. Forward-looking statements
include statements about efforts to attract or prospects for additional or increased business, new
product introductions and other statements of a non-historical nature. Actual results may differ from
projected results due to various Risk Factors, including Risks of Manufacturing in China,
Dependence on Product Appeal and New Product Introductions, and Dependence on Major
Customers, as set forth in the Company's Annual Report on Form 20-F for the fiscal year ended
October 31, 1996, as filed with the Securities and Exchange Commission. See ''Item 1. Description
of Business -- Risk Factors'' in such report on Form 20-F.
Radica Games Limited (Radica) is a Bermuda company headquartered in Hong Kong (Nasdaq:
RADAF - news). Radica is a leading developer, manufacturer and distributor of electronic handheld
and table top games. Radica has subsidiaries in the U.S.A., Canada and the U.K., and a factory in
Dongguan, Southern China. More information about Radica can be found on the Internet at
''www.radicagames.com.''
RADICA GAMES LIMITED CONSOLIDATED STATEMENTS OF OPERATIONS
(US Dollars in thousands, Twelve Months Ended Three Months Ended
except per share data) October 31, October 31,
1997 1996* 1997 1996*
REVENUES: (unaudited) (unaudited) (unaudited)
Net sales $87,760 $47,535 $40,385 $22,576
Cost of sales (40,888) (30,696) (16,082) (12,269)
Gross profit 46,872 16,839 24,303 10,307
OPERATING EXPENSES:
Selling, general and
administrative expenses (14,403) (11,752) (6,068) (5,149)
Research and development (2,099) (1,699) (807) (472)
Depreciation and
amortization (2,278) (1,594) (435) (452)
Total operating expenses (18,780) (15,045) (7,310) (6,073)
OPERATING INCOME FROM
CONTINUING OPERATIONS 28,092 1,794 16,993 4,234
OTHER INCOME 915 748 413 22
SHARE OF LOSS OF
AFFILIATED COMPANY (141) --- (80) ---
NET INTEREST INCOME
(EXPENSE) 913 (165) 382 (41)
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND
UNUSUAL ITEM 29,779 2,377 17,708 4,215
UNUSUAL ITEM --- 709 --- ---
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 29,779 3,086 17,708 4,215
(PROVISION) CREDIT FOR
INCOME TAXES (193) 120 (108) 29
INCOME FROM CONTINUING
OPERATIONS AFTER INCOME
TAXES 29,586 3,206 17,600 4,244
DISCONTINUED OPERATION:
LOSS FROM OPERATION OF
PUB POKER BUSINESS (LESS
APPLICABLE INCOME TAX
BENEFIT) --- (1,712) --- ---
NET INCOME $29,586 $1,494 $17,600 $4,244
EARNINGS PER SHARE -- PRIMARY:
Income from continuing
operations $1.36 $0.15 $0.79 $0.21
Effect of discontinued
operation --- (0.08) --- ---
Net earnings per share and
common stock equivalents $1.36 $0.07 $0.79 $0.21
Average number of shares
and common stock
equivalents outstanding21,798,013 21,439,452 22,228,449 20,680,000
EARNINGS PER SHARE --
ASSUMING FULL DILUTION:
Income from continuing
operations $1.34 $0.15 $0.79 $0.21
Effect of discontinued
operation --- (0.08) --- ---
Net earnings per share and
common stock equivalents $1.34 $0.07 $0.79 $0.21
Average number of shares
and common stock
equivalents outstanding22,112,317 21,439,452 22,310,313 20,680,000
* Restated to conform with 1997 presentation.
RADICA GAMES LIMITED
CONSOLIDATED BALANCE SHEETS
ASSETS
OCTOBER 31,
(US Dollars in thousands
except share data) 1997 1996
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $33,504 $8,527
Short-term investments 2,050 77
Accounts receivable, net of allowances
for doubtful accounts of $908 in 1997
and $234 in 1996 and estimated customer
returns of $2,327 in 1997
and $817 in 1996 18,740 9,624
Inventories, net of provision of
$3,479 in 1997 and $8,419 in 1996 11,741 10,984
Prepaid expenses and other current assets 681 547
Total current assets 66,716 29,759
INVESTMENT IN AFFILIATED COMPANY 194 ---
PROPERTY, PLANT AND EQUIPMENT, NET 12,539 12,937
DEFERRED INCOME TAXES --- 29
Total assets $79,449 $42,725
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $--- $99
Accounts payable 10,370 5,535
Accrued payroll and employee benefits 1,249 686
Accrued expenses 5,945 4,547
Income taxes payable 213 45
Deferred income taxes 79 ---
Total current liabilities 17,856 10,912
SHAREHOLDERS' EQUITY:
Common stock
par value $0.01 each, 100,000,000
shares authorized, 20,860,200 shares
outstanding (20,680,000 at Oct. 31, 1996) 209 207
Additional paid-in capital 28,589 28,371
Retained earnings 32,800 3,214
Cumulative translation adjustment (5) 21
Total shareholders' equity 61,593 31,813
Total liabilities and
shareholders' equity $79,449 $42,725
SOURCE: Radica Games Limited |
