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Non-Tech : Radica Games (RADA)

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To: Jay Tice who wrote (2201)	1/26/1998 12:28:00 AM
From: Wayne	Read Replies (1) of 7111

Jay, Per my notes: Q4 1996 Gross Margins were 45% Q1 1997 Gross Margins were 43% Q2 1997 Gross Margins were 44.5 % Q3 1997 Gross Margins were 51.8 % Q4 1997 Gross Margins were 60 % Q1 1998 Gross Margins estimate 53-54% There was a couple of % drop in Q4 to Q1 97 that I think was due to OEM mix increasing in Q1 vs. Q4 last year. Also, Q4 97 was 3.7% of the 60% due to writen down inventory. There may still be some to use up but don't know for sure so will call it gone and be happy to see it if there is still some in Q1. In 1996 OEM sales accounted for 24.1% and in 1997 that fell to 18.6%. This being said, I still think we should see a larger mix of OEM in the first half then the second, and some adjustment on Gross Margin from the 60% of Q4. Radica has improved margins over the past couple of years. This is fact. However, I think we should compare Q1 to Q1 and looking at the evolution of Radica, assume better margins then Q1 1997. This is keeping apples with apples and will make it easier sort seasonal shifts at a later date. I hope we see about 53-54% Gross Margins. The wild card is OEM mix and maybe some poss. offset by old stock in the casino games. Just my opinion, Wayne

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