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Midway Financial Report Reveals 'UT 2007' Release Window

by Rainier on Feb. 23, 2006 @ 5:28 p.m. PST

Today Midway released its quaterly results and dispite the fact that net revenues dropped 9% it remains optimistic for the coming year with an estimated 3& revenue increase. In the subsequent conference call Midway revealed Epic Games' Unreal Tournament 2007 is currently scheduled for Winter 2007 (Dec. 2006 - March 2007). End of last year Midway closed Australian developer Ratbag, but predicts it will hire an additional 100 over the coming year and plans to steamline its production by improving tech sharing amongst internal studios.

Net revenues for the 2005 fourth quarter were $69.8 million, down 9.6% from 2004 fourth quarter net revenues of $77.2 million. The 2005 fourth quarter loss applicable to common stock was $37.8 million, or a loss of $0.42 per basic and diluted share, compared with a 2004 fourth quarter income applicable to common stock of $17.6 million, or $0.19 per diluted share. The 2005 fourth quarter results include a $10.8 million charge related to the restructuring announced in December 2005.

Other recent operating and financial highlights include:

  • Midway's top-selling title for the fourth quarter was Blitz: The League for PlayStation 2 and Xbox. Blitz: The League ranked as a Top 5 Xbox title for October and November and Top 10 PlayStation 2 title in November, according to NPD Funworld. In addition, Blitz: The League was named the Best Alternative Sports Game of 2005 by GameSpot.com.
  • During the fourth quarter of 2005, Midway also launched worldwide L.A. RUSH for PlayStation 2 and Xbox, and Ed, Edd n Eddy: The Mis-Edventures for PlayStation 2, GameBoy Advance, and PC. In North America only, Midway launched Ed, Edd n Eddy: The Mis-Edventures for Xbox and GameCube, Midway Arcade Treasures 3 for GameCube, Gauntlet: Seven Sorrows for PlayStation 2 and Xbox, Midway Arcade Treasures: Extended Play for PlayStation Portable (PSP), and Earth 2160 for PC.
  • Midway expanded its international operations with the formation of a new sales and marketing subsidiary in Paris, France.
  • It was announced this week that Midway will co-publish and distribute Turbine, Inc.'s, The Lord of the Rings Online(TM): Shadows of Angmar(TM) in North America. The Lord of the Rings Online is the world's first and only massively multiplayer online (MMO) role-playing game based upon the literary works of J.R.R. Tolkien.
  • Midway announced a collaboration between Vin Diesel's Tigon Studios and Viacom's MTV Films, Paramount Pictures and MTV Games to produce a groundbreaking action-entertainment game and movie called The Wheelman(TM).

FULL YEAR RESULTS

Net revenues for the year ended December 31, 2005, were $150.1 million, down 7.1% from the $161.6 million for the year ended December 31, 2004. The loss applicable to common stock for the year ended December 31, 2005, was $112.8 million, or $1.30 per basic and diluted share, compared to a loss applicable to common stock of $24.7 million or $0.34 per basic and diluted share for the year ended December 31, 2004. The results for the year ended December 31, 2005, include a $10.8 million charge related to the restructuring announced in December 2005.

David F. Zucker, president and chief executive officer, commented, "Midway's fourth quarter results reflect the challenging industry environment that has affected nearly all software publishers at this point in the console transition. Nevertheless, Blitz: The League achieved breakout success for us, and our first Cartoon Network release, Ed, Edd n Eddy, performed well in the quarter."

Mr. Zucker continued, "Operationally, we continued to invest significant resources in our internal product development efforts and we believe we are establishing a best-in-class next generation product development platform across all of our internal studios. We expect our investments in these areas in the fourth quarter and throughout last year to benefit our future next generation releases."

OUTLOOK

For the year ending December 31, 2006, Midway expects revenues to grow approximately 3% to $155 million with a reduction in net loss to approximately $66 million, which includes approximately $3 million of stock option expense. For the first quarter ending March 31, 2006, the Company expects net revenues of approximately $13 million, with a net loss of approximately $22 million. For the first quarter of 2006, Midway has already released, Midway Arcade Treasures: Deluxe Edition and L.A. RUSH, both for the PC, and we anticipate releasing Midway Arcade Treasures: Extended Play for PSP and Gauntlet: Seven Sorrows for PlayStation 2 and Xbox in Europe only, and NBA Ballers: Rebound for PSP in late March.

Mr. Zucker concluded, "We remain focused on making the right decisions to become a top tier publisher in the next generation. We have expanded our international presence with new sales, marketing and distribution subsidiaries in France and Germany which are expected to contribute to greater sales and better margins in those regions. We believe our re-emergence as a creator of top-quality products has enabled us to attract valuable partners and licensors such as Warner Brothers, MTV, Turbine, TNA Wrestling, Cartoon Network, the NBA, John Woo, and stars such as Vin Diesel, Chow Yun Fat and Dwayne "The Rock" Johnson. Finally, we intend to continue to build new incremental revenue streams through emerging technologies such as dynamic in-game advertising, and through the monetization of our library of intellectual property on platforms such as the Microsoft Xbox Live Arcade for the Xbox 360. We firmly believe that the progress we are making in these areas is laying the foundation for long-term success as we enter the next console cycle."

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