FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of August, 2003
Commission File Number: 0-23696
RADICA GAMES LIMITED
(Translation of registrant's name into English)
Suite R, 6/F., 2-12 Au Pui Wan Street, Fo Tan, Hong Kong
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or 40-F
Form 20-F X Form 40-F
----- -----
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1): ____________
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7): ____________
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
----- -----
If "yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-
Contents:
1. Quarterly Report for the Quarter Ended June 30, 2003
2. Press Release dated August 11, 2003
This Report on Form 6-K shall be deemed to be incorporated by reference
into the Registrant's Registration Statements on Form S-8 (No. 33-86960, No.
333-7000, No. 333-59737 and 333-61260) and on Form F-3 (No. 333-7526 and No.
333-79005).
QUARTERLY REPORT*
For the quarterly period ended June 30, 2003
Commission File Number 0-23696
RADICA GAMES LIMITED
(Exact name of registrant as specified in charter)
Bermuda N/A
(Country of Incorporation) (I.R.S. Employer Identification No.)
Suite R, 6/F., 2-12 Au Pui Wan Street, Fo Tan, Hong Kong
(Address of principal executive offices)
Registrant's telephone number, including area code: (852) 2693 2238
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x_ No___
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at June 30, 2003
--------------------------------------- ----------------------------
Common Stock, par value $0.01 per share 17,999,249
________________________
* As a foreign private issuer, the registrant is not required to file reports on
Form 10-Q. It intends to make voluntary quarterly reports to its stockholders
which generally follow the Form 10-Q format. Such reports, of which this is one,
are furnished to the Commission pursuant to Form 6-K.
2
RADICA GAMES LIMITED
INDEX TO QUARTERLY REPORT ON FORM 6-K
QUARTER ENDED JUNE 30, 2003
ITEMS IN FORM 6-K
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements................................................4
Condensed Consolidated Balance Sheets
June 30, 2003 (unaudited) and December 31, 2002.....................4
Condensed Consolidated Statements of Operations
for the Three Months and Six Months Ended June 30, 2003
(unaudited) and 2002 (unaudited)....................................5
Condensed Consolidated Statements of Shareholders' Equity
(unaudited) for the Six Months Ended June 30, 2003 (unaudited)
and 2002 (unaudited)................................................6
Condensed Consolidated Statement of Cash Flows
for the Six Months Ended June 30, 2003 (unaudited) and 2002
(unaudited).........................................................7
Notes to the Condensed Consolidated Financial Statements............8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..........................................14
Item 3. Quantitative and Qualitative Disclosures about Market Risk.........17
Item 4. Controls and Procedures............................................17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings..................................................18
Item 2. Changes in Securities and Use of Proceeds..........................18
Item 3. Defaults Upon Senior Securities....................................18
Item 4. Submission of Matters to a Vote of Security Holders................18
Item 5. Other Information..................................................18
Item 6. Exhibits and Reports on Form 8-K...................................18
3
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Information
RADICA GAMES LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2003 AND DECEMBER 31, 2002
(US dollars in thousands, except share data) June 30, December 31,
------------------ ------------------
2003 2002
------------------ ------------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 29,247 $ 32,692
Accounts receivable, net of allowances for doubtful accounts
of $218 ($315 as at December 31, 2002) 7,842 15,139
Inventories, net of provision of $2,199 ($4,193 as
at December 31, 2002) 23,546 20,385
Prepaid expenses and other current assets 2,434 1,674
Income taxes receivable 931 931
------------------ ------------------
Total current assets 64,000 70,821
------------------ ------------------
Property, plant and equipment, net 13,291 14,034
------------------ ------------------
Intangible assets 9,551 9,551
------------------ ------------------
Othe assets (Note 6) 885 896
------------------ ------------------
Total assets $ 87,727 $ 95,302
================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short term borrowings $ 846 $ 846
Accounts payable 8,581 9,014
Current portion of long-term debt - 1,825
Accrued payroll and employee benefits 1,069 2,753
Accrued expenses 3,188 5,840
Income taxes payable 4 309
Deferred income taxes 79 79
------------------ ------------------
Total current liabilities 13,767 20,666
------------------ ------------------
Total liabilities 13,767 20,666
------------------ ------------------
Shareholders' equity:
Common stock
par value $0.01 each, 100,000,000 shares authorized,
17,999,249 shares outstanding (17,796,131 as
at December 31, 2002) 180 178
Additional paid-in capital 2,851 2,320
Retained earnings 71,553 72,946
Accumulated other comprehensive loss (624) (808)
------------------ ------------------
Total shareholders' equity 73,960 74,636
------------------ ------------------
Total liabilities and shareholders' equity $ 87,727 $ 95,302
================== ==================
See accompanying notes to the condensed consolidated financial statements.
4
RADICA GAMES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 2003 AND 2002
(US dollars in thousands, Three months ended June 30, Six months ended June 30,
except per share data) --------------------------------- ---------------------------------
2003 2002* 2003 2002*
---------------- --------------- ---------------- ---------------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
Net sales $ 16,944 $ 20,507 $ 32,989 $ 38,010
Cost of goods sold (exclusive of items
shown separately below) (11,297) (14,005) (21,088) (25,400)
---------------- --------------- ---------------- ---------------
Gross profit 5,647 6,502 11,901 12,610
---------------- --------------- ---------------- ---------------
Operating expenses:
Selling, general and administrative expenses (5,183) (4,624) (10,630) (10,250)
Research and development (920) (953) (1,835) (1,986)
Depreciation and amortization (524) (717) (1,116) (1,436)
Restructuring charge (87) - (87) -
---------------- --------------- ---------------- ---------------
Total operating expenses (6,714) (6,294) (13,668) (13,672)
---------------- --------------- ---------------- ---------------
Operating (loss) income (1,067) 208 (1,767) (1,062)
Other income 108 40 163 55
Foreign currency gain, net 147 966 160 724
Net interest income 46 15 106 16
---------------- --------------- ---------------- ---------------
(Loss) income before income taxes (766) 1,229 (1,338) (267)
Provision for income taxes (23) (267) (55) (346)
---------------- --------------- ---------------- ---------------
Net (loss) income (789) 962 (1,393) (613)
================ =============== ================ ===============
Net (loss) income per share:
Basic $ (0.04) $ 0.05 $ (0.08) $ (0.03)
================ =============== ================ ===============
Diluted $ (0.04) $ 0.05 $ (0.08) $ (0.03)
================ =============== ================ ===============
Weighted average number of common and common equivalent shares:
Basic 17,963,983 17,717,795 $ 17,903,140 17,692,695
================ =============== ================ ===============
Diluted 17,963,983 18,366,659 $ 17,903,140 17,692,695
================ =============== ================ ===============
* Reclassified to conform with 2003 presentation.
See accompanying notes to the condensed consolidated financial statements.
5
RADICA GAMES LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
SIX MONTHS ENDED JUNE 30, 2003 AND 2002
(US dollars in thousands) Common stock Accumulated
-------------------------- Additional Warrants to other Total
Number paid-in acquire Retained comprehensive shareholders'
of shares Amount capital common stock earnings loss equity
-------------- ----------- ----------- ------------- ----------- --------------- --------------
Balance at December 31, 2002 17,796,131 $ 178 $ 2,320 $ - $ 72,946 $ (808) $ 74,636
Stock options exercised 201,739 2 524 - - - 526
Issuance of stock 1,379 - 7 - - - 7
Net loss - - - - (1,393) - (1,393)
Foreign currency translation - - - - - 184 184
-------------- ----------- ----------- ------------- ----------- --------------- --------------
Balance at June 30, 2003 17,999,249 $ 180 $ 2,851 $ - $ 71,553 $ (624) $ 73,960
============== =========== =========== ============= =========== =============== ==============
Balance at December 31, 2001 17,646,740 $ 176 $ 1,549 $ 445 $ 61,012 $ (130) $ 63,052
Issuance of stock 2,526 - 10 - - - 10
Stock options exercised 80,245 1 164 - - - 165
Expiration of stock warrants - - 445 (445) - - -
Net loss - - - - (613) - (613)
Foreign currency translation - - - - - (366) (366)
-------------- ----------- ----------- ------------- ----------- --------------- --------------
Balance at June 30, 2002 17,729,511 $ 177 $ 2,168 $ - $ 60,399 $ (496) $ 62,248
============== =========== =========== ============= =========== =============== ==============
See accompanying notes to the condensed consolidated financial statements.
6
RADICA GAMES LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2003 AND 2002
(US dollars in thousands) 2003 2002
----------- -----------
(unaudited) (unaudited)
Cash flow from operating activities:
Net loss $ (1,393) $ (613)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Deferred income taxes -- 466
Depreciation 1,116 1,226
Amortization -- 210
Loss on disposal and write off of property, plant and equipment 3 18
Changes in assets and liabilities:
Decrease in accounts receivable 7,297 5,762
Increase in inventories (3,161) (7,726)
Increase in prepaid expenses and other assets (749) (1,303)
Increase in accounts payable 197 2,615
(Decrease) increase in accrued payroll and employee benefits (1,684) 55
Decrease in accrued warranty expenses (630) (480)
Decrease in other accrued liabilities (2,652) (1,652)
(Increase) decrease in income taxes (305) 3
-------- --------
Net cash used in operating activities (1,961) (1,419)
-------- --------
Cash flow from investing activities:
Proceeds from sale of property, plant and equipment 2 210
Purchase of property, plant and equipment (378) (452)
-------- --------
Net cash used in investing activities (376) (242)
-------- --------
Cash flow from financing activities:
Funds from issuance of stock 7 10
Funds from stock options exercised 526 165
Repayment of long-term debt (1,825) (1,824)
-------- --------
Net cash used in financing activities (1,292) (1,649)
-------- --------
Effect of currency exchange rate change 184 (366)
-------- --------
Net decrease in cash and cash equivalents (3,445) (3,676)
Cash and cash equivalents:
Beginning of period 32,692 25,810
-------- --------
End of period $ 29,247 $ 22,134
======== ========
See accompanying notes to the condensed consolidated financial statements.
7
RADICA GAMES LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(QUARTER ENDED JUNE 30, 2003)
(US dollars in thousands)
1. BASIS OF PRESENTATION
FINANCIAL STATEMENT PRESENTATION
The Condensed Consolidated Financial Statements of Radica Games Limited
(the "Company") have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial
information and the rules and regulations of the Securities and Exchange
Commission (the "SEC"). Certain information and footnote disclosures
normally included in the financials statements prepared in accordance with
accounting principles generally accepted in the United States of America
have been condensed or omitted pursuant to such rules and regulations. The
accompanying unaudited condensed consolidated financial statements contain
all normal and recurring adjustments, which, in the opinion of management,
are necessary to present fairly the financial position of the Company as of
June 30, 2003, and its results of operations and cash flows for the periods
presented herein. These unaudited condensed consolidated financial
statements should be read in conjunction with the Company's Annual Report
on Form 20-F for the year ended December 31, 2002.
Because the Company's business is seasonal, revenues, expenses, assets and
liabilities can vary during each quarter of the year. Accordingly, the
operating results and trends in these unaudited condensed consolidated
interim financial statements are not necessarily indicative of future
results that may be expected for any other interim period or the full year.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect reported amounts
of certain assets, liabilities, revenues and expenses and the disclosure of
contingent assets and liabilities as of and during the reporting periods.
Significant items subject to such estimates and assumptions include the
carrying amount of goodwill, property, plant and equipment, valuation
allowances for receivables, inventories and deferred income tax assets and
reserves for product returns and warranties, as well as in estimates used
in accounting for legal contingencies. Actual results could differ from the
estimated results. Differences from those estimates are recorded in the
period they become known.
ACCOUNTING FOR STOCK BASED COMPENSATION
In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure, an amendment of FASB Statement
No. 123. This Statement amends SFAS No. 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition for a voluntary
change to the fair value method of accounting for stock-based employee
compensation. In addition, this Statement amends the disclosure
requirements of SFAS No. 123 to require more prominent and more frequent
disclosures in financial statements of the effects of stock-based
compensation. The provisions of SFAS are effective for fiscal years ending
after December 15, 2002.
The Company has adopted the disclosure-only provisions of SFAS No. 123 and
SFAS No. 148. As permitted by SFAS No. 123, the Company has elected to
retain the intrinsic-value-based method of accounting. Accordingly, the
Company applies the intrinsic-value-based method of accounting prescribed
by Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock
Issued to Employees, to account for its fixed-plan stock options. Under
this method, compensation expense is recorded on the date of grant only if
the current market price of the underlying stock exceeded the exercise
price.
8
RADICA GAMES LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(QUARTER ENDED JUNE 30, 2003)
(US dollars in thousands except per share data)
1. BASIS OF PRESENTATION (CONTINUED)
In accordance with SFAS No. 148, the following table summarizes the
Company's results on a pro forma basis as if it had recorded compensation
expense based upon the fair value at the grant date for awards under these
plans consistent with the methodology prescribed under SFAS No. 123 for the
three months and six months ended June 30, 2003 and 2002:
Three month ended June 30, Six month ended June 30,
------------------------------- -------------------------------
2003 2002 2003 2002
--------------- -------------- --------------- --------------
Net (loss) income
As reported $ (789) $ 962 $ (1,393) $ (613)
Add: Total stock-based employee compensation
expense determined under fair-value-based
method for all rewards, net of related tax effects (162) (191) (304) (386)
--------------- -------------- --------------- --------------
Pro forma $ (951) $ 771 $ (1,697) $ (999)
=============== ============== =============== ==============
Basic and diluted (loss) income per share
As reported $ (0.04) $ 0.05 $ (0.08) $ (0.03)
Pro forma $ (0.05) $ 0.04 $ (0.09) $ (0.06)
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT
In November 2002, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of Others
("FIN 45"). FIN 45 requires a guarantor to recognize a liability at the
inception of the guarantee for the fair value of the obligation undertaken
in issuing the guarantee and include more detailed disclosure with respect
to guarantees. The types of contracts the Company enters into that meet the
scope of this interpretation are financial and performance standby letters
of credit on behalf of wholly-owned subsidiaries. FIN 45 is effective for
guarantees issued or modified after December 31, 2002. The initial adoption
of this accounting pronouncement did not have a material effect on the
Company's consolidated financial statements.
In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities ("FIN 46"). FIN 46 requires a variable interest
entity to be consolidated by a company if that company is subject to a
majority of the risk of loss from the variable interest entity's activities
or entitled to receive a majority of the entity's residual returns or both.
FIN 46 also requires disclosures about variable interest entities that a
company is not required to consolidate but in which it has a significant
variable interest. The consolidation requirements of FIN 46 apply
immediately to variable interest entities created after January 31, 2003
and to existing entities in the first fiscal year or interim period
beginning after June 15, 2003. Certain of the disclosure requirements apply
to all financial statements issued after January 31, 2003, regardless of
when the variable interest entity was established. Although the Company is
in the process of assessing the impact of adopting FIN 46 on its financial
position and results of operations, the Company believes that it does not
have any interests in variable interest entities that will require
consolidation.
In April 2003, SFAS No. 149, "Amendment of Statement 133 on Derivative
Instruments and Hedging Activities" was issued. SFAS No. 149 amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and
for hedging activities under SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." While the effective date of this
announcement for the Company is not until Q3 2003, the Company does not
believe that the provisions will have any significant impact on the
Company's financial statements.
9
RADICA GAMES LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(QUARTER ENDED JUNE 30, 2003)
(US dollars in thousands except per share data)
1. BASIS OF PRESENTATION (CONTINUED)
In May 2003 SFAS No. 150 "Accounting for Financial Instruments with
Characteristics of Liabilities, Equity or Both" was issued. SFAS No. 150
requires changes to the classification of certain freestanding financial
instruments that are currently classified as equity. This announcement is
effective for instruments entered into after May 31, 2003 and for all
instruments outstanding after June 30, 2003. The Company does not expect
the adoption of SFAS No. 150 to have a material impact on its financial
position or results of operations.
RECLASSIFICATIONS
Certain reclassifications have been made to prior year amounts to conform
to the current year's presentation. These reclassifications had no effect
on net income (loss) or stockholders' equity.
2. EARNINGS PER SHARE
Basic earnings (loss) per share is based on the weighted average number of
shares of common stock, and with respect to diluted earnings (loss) per
share, also includes the effect of all dilutive potential common stock
outstanding. Dilutive potential common stock results from dilutive stock
options and warrants. The effect of such dilutive potential common stock on
net income per share is computed using the treasury stock method. All
potentially dilutive securities were excluded from the computation in loss
making periods as their inclusion would have been anti-dilutive.
The following table sets forth the computations of basic and diluted (loss)
income per share as of June 30:
Three months ended June 30, Six months ended June 30,
------------------------------- -------------------------------
2003 2002 2003 2002
--------------- -------------- --------------- --------------
Numerator for basic and diluted (loss)
earnings per share:
Net (loss) income $ (789) $ 962 $ (1,393) $ (613)
=============== ============== =============== ==============
Denominator :
Basic weighted average shares 17,963,983 17,717,795 17,903,140 17,692,695
Effect of dilutive options and warrants -- 648,864 -- --
--------------- -------------- --------------- --------------
Diluted weighted average shares 17,963,983 18,366,659 17,903,140 17,692,695
=============== ============== =============== ==============
Net (loss) income per share:
Basic $ (0.04) $ 0.05 $ (0.08) $ (0.03)
=============== ============== =============== ==============
Diluted $ (0.04) $ 0.05 $ (0.08) $ (0.03)
=============== ============== =============== ==============
10
RADICA GAMES LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(QUARTER ENDED JUNE 30, 2003)
(US dollars in thousands)
3. BUSINESS SEGMENTS
The Company is a worldwide designer, producer and marketer of electronic
entertainment devices. The Company has two reportable segments from which
it derives its revenues: the Games and Youth Electronics business that
sells product under the Company's Radica(R) and Girl Tech(R) brand names,
and the Video Game Accessory ("VGA") business that sells product under the
Company's Gamester(R) brand name. The Company also sources certain VGA and
other electronic products through third party manufacturers for retailers
to sell under their own brands; this is also included in the VGA segment.
The reportable segments are strategic businesses that offer different
products.
The Company measures segment performance based on net income before
interest and other income and income taxes. Inter-segment sales and
transfers have been eliminated and are not included in the following table.
Certain corporate expenses are managed outside of the operating segments.
Corporate expenses consist primarily of costs related to business
integration and other general and administrative expenses. All corporate
and indirect costs have been apportioned on the basis of corresponding
sales and direct costs.
A summary of the Company's two reportable segments is set forth below.
Three months ended June 30, Six months ended June 30,
-----------------------------------------------------------------
2003 2002 2003 2002
--------------- -------------- --------------- --------------
Revenues from external customers
Games and Youth Electronics $ 13,697 $ 16,608 $ 25,747 $ 29,034
VGA 3,247 3,899 7,242 8,976
--------------- -------------- --------------- --------------
Total revenues from external customers $ 16,944 $ 20,507 $ 32,989 $ 38,010
=============== ============== =============== ==============
Segment (loss) income
Games and Youth Electronics $ (226) $ 1,263 $ (37) $ 1,090
VGA (694) (89) (1,570) (1,428)
--------------- -------------- --------------- --------------
Total segment (loss) income $ (920) $ 1,174 $ (1,607) $ (338)
Corporate
Net interest and other income 154 55 269 71
Provision for income taxes (23) (267) (55) (346)
--------------- -------------- --------------- --------------
Total consolidated net (loss) income $ (789) $ 962 $ (1,393) $ (613)
=============== ============== =============== ==============
4. GOODWILL
At June 30, 2003 and December 31, 2002, the Company's cost in excess of
fair value of assets purchased ("goodwill") related primarily to the 1999
acquisition of Leda Media Products Limited, now called Radica UK Limited
("Radica UK"). The Company adopted SFAS No. 142, Goodwill and Other
Intangible Assets, on January 1, 2002. Under SFAS 142, goodwill is required
to be tested for impairment on an annual basis thereafter or an interim
basis if an event or change in circumstances indicates that the asset might
be impaired. Goodwill is deemed to be impaired if the carrying amount of a
reporting unit's goodwill exceeds its estimated fair value.
The Company has undertaken goodwill impairment testing to determine whether
the goodwill carried on the books was impaired and the extent of such
impairment. The goodwill arising from the 1999 acquisition of Radica UK was
allocated to the VGA reporting unit. In December 2002, the Company
completed its annual goodwill impairment assessment, which indicated no
impairment of goodwill. There have been no events since December 31, 2002,
which would cause the Company to change this assessment.
11
RADICA GAMES LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(QUARTER ENDED JUNE 30, 2003)
(US dollars in thousands)
5. INVENTORIES
Inventories by major categories are summarized as follows:
June 30, December 31,
2003 2002
--------------- --------------
Raw materials $ 4,325 $ 3,004
Work in progress 4,345 3,462
Finished goods 14,876 13,308
Consigned finished goods - 611
--------------- --------------
$ 23,546 $ 20,385
=============== ==============
6. PROPERTY, PLANT AND EQUIPMENT
Property and Plant and Equipment consists of the following:
June 30, December 31,
2003 2002
--------------- --------------
Land and buildings $ 12,221 $ 12,230
Plant and machinery 7,488 7,520
Furniture and equipment 7,424 7,303
Leasehold improvements 2,960 2,879
--------------- --------------
Total 30,093 29,932
Less: Accumulated depreciation
and amortization (16,802) (15,898)
--------------- --------------
Total, net $ 13,291 $ 14,034
=============== ==============
In November 2002, the AICPA international practices task force (the "Task
Force") discussed an issue relating to accounting for land use rights in
the People's Republic of China ("PRC"). The Task Force view is that PRC
land use rights generally would be considered operating leases, as they are
long-term leases of lands, which do not transfer title. On January 1, 2003,
the Company followed this guidance and reclassified $885 and $896 to other
assets from property, plant and equipment as of June 30, 2003 and December
31, 2002, respectively.
7. OTHER ACCRUED LIABILITIES
Other accrued liabilities consist of the following:
June 30, December 31,
2003 2002
--------------- --------------
Accrued advertising expenses $ 943 $ 1,243
Accrued license and royalties 651 1,479
Commissions payable 45 191
Other accrued liabilities 1,549 2,927
--------------- --------------
Total $ 3,188 $ 5,840
=============== ==============
12
RADICA GAMES LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(QUARTER ENDED JUNE 30, 2003)
(US dollars in thousands)
8. PLEDGE OF ASSETS
At June 30, 2003, the Company's loan agreements and general banking
facilities including overdraft and trade facilities were collateralized as
follows:
Leasehold land and buildings $ 8,081
Bank balances 3,173
Inventories 10,904
Other assets 885
---------------
$ 23,043
===============
9. LITIGATION
The Company is subject to pending claims and litigation. On April 4, 2000,
a lawsuit was filed by the Lemelson Foundation ("Lemelson") against the
Company in Arizona Court for patent infringement. Lemelson claims to be
owners of nearly 800 issued and pending patents, including the patent on
Machine Vision and Automatic Identification ("Auto ID") operations. The
Auto ID operation is used in machines that are part of the Company's
bonding and heat-sealing manufacturing processes. Lemelson is contesting
that the use of machines that incorporate this patented technology
infringes on their IP rights and therefore the Company is obligated to pay
a royalty based on the use of this technology.
The suit by Lemelson has been stayed pending the outcome of Lemelson vs.
Cognex, a similar suit filed by Lemelson, which will have some bearing on
the Radica case with Lemelson. As of the reporting date, no judgment had
been handed out in the Cognex case. The Company has other pending
litigation against it. While these matters are substantially covered by
insurance, the Company cannot predict the outcome of the Lemelson case or
the effect of such litigation on the financial results of the Company. No
accrual has been recorded at June 30, 2003, in respect of the Lemelson case
or other claims or legal actions, in accordance with the Company's
accounting policy. Management does not believe that the ultimate
disposition of the other matters will have a material adverse effect on the
Company's consolidated financial position, results of operations or
liquidity.
10. RESTRUCTURING CHARGE
In June 2003, the Company recorded a restructuring charge of $87 for
personnel costs relating to the closure of the UK R&D office, Radica
Innovations (UK) Limited. The restructuring resulted in a workforce
reduction of approximately 5 positions. The reductions in workforce are
permanent and affected the Company's VGA segment. As of June 30, 2003, the
Company has completed the process of closing the UK R&D office. There was
no restructuring reserve as at June 30, 2003.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the attached
financial statements and notes thereto, and with the audited financial
statements, accounting policies and notes included in the Company's Annual
Report on Form 20-F for the year ended December 31, 2002, as filed with the
United States Securities and Exchange Commission.
DESCRIPTION OF BUSINESS
Radica Games Limited (NASDAQ: RADA) manufactures and markets a diverse line of
electronic entertainment products covering three product lines - electronic
games carrying the Radica and Play TV brand names, youth electronics carrying
the Girl Tech and Barbie(TM) brand names, and Gamester branded video game
controllers & accessories. Radica also provides "Manufacturing Services"
including manufacturing for other companies in the electronic game industry and
provides sourcing services for retail customers. The business is divided into
two reportable segments: Games, which includes the electronic games and youth
electronics product lines as well as Manufacturing Services, and Video Game
Accessories ("VGA") which relates to the Gamester product line.
Founded in 1983 by Americans living in Hong Kong, the Company is headquartered
in Hong Kong and manufactures its products in its factory in southern China. The
Company markets its products through subsidiaries in the United States, the
United Kingdom, Canada and Hong Kong. Its largest market is in the United States
where in 2002 it had the second largest market share in the electronic handheld
and tabletop electronic games according to industry data source, The NPD Group,
Inc. In 1994 the Company went public when its shares began trading on the NASDAQ
exchange and are traded under the RADA symbol. A complete description of
Radica's product line and company information can be found on its website
(www.radicagames.com).
RESULTS OF OPERATIONS
The following table sets forth items from the Company's Consolidated Statements
of Operations as a percentage of net revenues:
Three month ended June 30,
-------------------------------
2003 2002
--------------- --------------
Net sales 100.0% 100.0%
Cost of sales (66.7%) (68.3%)
Gross margin 33.3% 31.7%
Selling, general and administrative expenses (30.6%) (22.6%)
Research and development (5.4%) (4.6%)
Depreciation and amortization (3.1%) (3.5%)
Restructuring charge (0.5%) 0.0%
Operating (loss) income (6.3%) 1.0%
Other income 0.6% 0.2%
Foreign currency gain, net 0.9% 4.7%
Interest income, net 0.3% 0.1%
(Loss) income before income taxes (4.5%) 6.0%
Provision for income taxes (0.2%) (1.3%)
Net (loss) income (4.7%) 4.7%
The Company reported a net loss for the second quarter of ($0.8) million or
($0.04) per diluted share compared to a net profit of $1.0 million or $0.05 per
diluted share in the second quarter of 2002.
14
Summary of sales achieved from each category of products:
Three months ended June 30,
-----------------------------------------------------------------------
2003 2002
--------------------------------- ----------------------------------
% of Net Net % of Net Net
Product Lines Sales Value Sales Value Sales Value Sales Value
----------------------------------------------- --------------- ---------------- ----------------
(US dollars in thousands)
Electronic Games 49.2% $ 8,329 42.0% $ 8,607
Youth Electronics 12.9% 2,196 8.8% 1,802
VGA 15.0% 2,537 15.1% 3,101
Manufacturing Services 22.9% 3,882 34.1% 6,997
--------------- --------------- ---------------- ----------------
Total 100.0% $ 16,944 100.0% $ 20,507
=============== =============== ================ ================
Gross profit margin for the second quarter of 2003 was 33.3% as compared to
31.7% in the second quarter of 2002 due to a change in product mix to higher
margin business offset by the effect of terminating our French and German
consignment arrangements for the VGA business. This resulted in closeout sales
of $0.7 million without which the gross margin would have been 34.9% for the
quarter. A new French non-consignment distribution arrangement was established
with Nobilis S.A. to replace these relationships and substantially reduce
inventory risk in those markets. The Company's continued movement away from
lower margin manufacturing services business toward higher margin, Radica
branded business was the primary reason that total sales in the second quarter
of 2003 decreased by $3.6 million to $16.9 million compared to $20.5 million in
the second quarter of 2002. Manufacturing Services sales decreased by 44.5% for
the quarter and 43.7% on a year to date basis. Electronic Games sales decreased
by 3.2% for the quarter due to a change in timing of shipments from last year to
a particular customer but increased 7.5% year-to-date. Youth Electronics grew by
21.9% for the quarter and 1.6% year to date. Video Game Accessories ("VGA")
decreased by 18.2% for the quarter and 14.7% year to date mainly because there
were no new platform launches in the first half of 2003 to drive sales unlike
the first half of 2002 which included the European launches of Xbox and
GameCube.
Operating expenses for the quarter were $6.7 million as compared to $6.3 million
in Q2 2002. The increase in expenditure was as a result of a restructuring
charge of $87,000 due to the closure of the UK R&D office and the timing of
advertising expenditure for Easter which fell into Q2 in 2003 but Q1 in 2002. In
Q2 2003 advertising expenditure was $0.6 million and in Q2 2002 it was $0.1
million. For the six months ended June 30, 2003, operating expenses fell
slightly from the comparative period in 2002 and included an increase in
advertising expenditure of $172,000 due to the timing of commercial production
expense compared to the prior year.
The following table shows the major operating expenses:
Three months ended June 30,
-------------------------------
(US dollars in millions) 2003 2002
--------------- --------------
Advertising expenses 0.6 0.1
Other selling and promotion expenses 0.7 0.8
Indirect salaries and wages 2.1 2.0
Research and development expenses 0.9 1.0
Depreciation and amortization 0.5 0.7
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2003 the Company had $29.2 million of cash and net assets of $74.0
million as compared to $32.7 million and $74.6 million, respectively at December
31, 2002. Total debt stood at $0.8 million at June 30, 2003 compared to $2.7
million at December 31, 2002 and long-term debt fell to zero. Inventories
increased to $23.6 million from $20.4 million at December 31, 2002, but were
lower than June 2002 inventories by $1.4 million. Receivables were $7.8 million
at June 30, 2003 as compared to $15.1 million at December 31, 2002 and $7.6
million at June 30, 2002. The Company's business is inherently seasonal.
Normally, the Company's sales have been lowest during the first and second
quarters and highest
15
during the third and fourth quarters. Receivables have been lowest during the
succeeding first and second quarters. Likewise, inventory buildup is seasonal
and total inventories are generally highest during the third quarter of the
fiscal year.
The Company generates the majority of its cash from its normal operations but
seasonal cash requirements have been met with the use of short-term borrowings,
which included borrowings under secured lines of credit. At June 30, 2003, cash
and cash equivalents, net of short-term borrowings, were $28.4 million of which
$3.2 million of cash deposits have been pledged as security for undrawn or
substantially repaid banking facilities. Management does not consider that there
are any significant restrictions on its ability to gain access to these deposits
given the significant excess of pledged assets over outstanding borrowings. This
compares with cash and cash equivalents, net of short-term borrowings of $30.0
million at December 31, 2002.
Net cash used in operating activities was $2.0 million in the six months ended
June 30, 2003 as compared to net cash used in operating activities of $1.4
million in 2002. The increase in cash used by operating activities for 2003 is
mainly attributable to net loss in 2003 of $1.4 million as compared to a loss of
$0.6 million in 2002.
Net cash used in investing activities was a net utilization of $0.4 million and
$0.02 million in the six months ended June 30, 2003 and 2002, respectively.
Net cash used in financing activities was $1.3 million in the six months ended
June 30, 2003 compared with $1.6 million in the six months ended June 30, 2002.
In 2003, the Company repaid all long-term debt.
Current liabilities were $13.8 million at June 30, 2003 compared to $20.7
million at December 31, 2002. The decrease was the result of reduction in
accrued payroll & employee benefits, license and royalties payable and current
portion of long-term debt from 2002.
The Company commits to inventory production, advertising and marketing
expenditures prior to the peak third and fourth quarter retail-selling season.
Accounts receivable increase during the third and fourth quarter as customers
increase their purchases to meet customer demand during the holiday season. Due
to the concentrated time frame of this selling period, payments for these
accounts receivable are generally not due until the fourth quarter or early in
the first quarter of the subsequent year. This timing difference between
expenses paid and revenues collected sometimes makes it necessary for the
Company to borrow cash during the year. As of June 30, 2003, the Company had
more than $5.0 million of various lines of credit available. A breakdown of the
Company's short-term and long-term financing during 2003 is as follows:
Bank Jan. 1, 2003 Repayment Jun. 30, 2003 Maturity
-------------------------- ------------------ --------------- ------------------ ---------------
(US$ in thousands)
China Construction Bank $ 846 $ -- $ 846 Aug 7, 2003
(Humen, China)
HSBC $ 1,825 $ (1,825) $ -- --
Management believes that the Company's existing credit lines are sufficient to
meet future short-term cash demands. The Company funds its operations and
liquidity needs primarily through cash flow from operations, as well as
utilizing borrowings under the Company's secured and unsecured credit facilities
when needed. During 2003, the Company expects to continue to fund its working
capital needs through operations and its revolving credit facility and believes
that the funds available to it are adequate to meet its needs. However,
unforeseen circumstances, such as severe softness in or a collapse of the retail
environment may result in a significant decline in revenues and operating
results of the Company, thereby causing the Company to exhaust its cash
resources. If this were to occur, the Company may be required to seek
alternative financing of its working capital. In addition, this may cause the
Company to be in non-compliance with its debt covenants and to be unable to
utilize its revolving credit facility.
The Company had no derivative instruments or off balance sheet financing
activities during the second quarter of 2003. The Company believes that its
existing cash and cash equivalents and cash generated from operations are
sufficient to satisfy the current anticipated working capital needs of its core
business.
16
CRITICAL ACCOUNTING POLICIES
For a discussion of the Company's critical accounting policies, see "Item 5,
Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's 2002 Form 20-F.
RECENTLY ISSUED ACCOUNTING STANDARDS
A discussion of certain recently issued accounting standards and the estimated
impact on the Company is set out in note 1 to the condensed consolidated
financial statements.
RISK FACTORS
For a discussion of the Company's risk factors, see "Item 3. Key Information -
Risk Factors" and "Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Risk Factors" in the Company's 2002 Form
20-F and Form 6K for the first quarter of 2003, respectively.
FORWARD-LOOKING STATEMENTS AND CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS
(CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995)
Certain written and oral statements made or incorporated by reference from time
to time by the Company or its representatives in this Form 6-K, other filings or
reports filed with the Securities and Exchange Commission, press releases,
conferences, or otherwise, contain certain "forward-looking" statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. You can identify these forward-looking
statements by the fact they use words such as "should", "expect", "anticipate",
"estimate", "may", "will", "project", "guidance", "intend", "plan", "believe"
and other words and terms of similar meaning and expression in connection with
any discussion of future operating or financial performance. One can also
identify forward-looking statements by the fact that they do not relate strictly
to historical or current facts. Such forward-looking statements are based on
current expectations and involve inherent risks and uncertainties, including
factors that could delay, divert or change any of them, or depend on the outcome
of contingencies such as legal proceedings. Management cautions you that
forward-looking statements involve risks and uncertainties that may cause actual
results to differ materially from the forward-looking statements. For a more
complete discussion of the Company's risk factors, you are referred to the
sections in the Company's Form 20-F and Form 6-K identified above under the
caption "Risk Factors". The forward-looking statements made in this Form 6-K
speak only as of the date on which the statements are made.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The market risk disclosures have not materially changed from those
appearing in the Company's 2002 Form 20-F (see Item 5).
ITEM 4. CONTROLS AND PROCEDURES
Not Applicable.
17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See Note 9 to the accompanying Financial Statements.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
18
SIGNATURE
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
RADICA GAMES LIMITED
Date: August 29, 2003 /s/ Craig D. Storey
------------------------ -----------------------------------
Craig D. Storey
Chief Accounting Officer
19
RADICA: Investor Information
RADICA GAMES LIMITED REPORTS SECOND QUARTER RESULTS
HONG KONG, Aug. 11 /PRNewswire-FirstCall/ -- Radica Games Limited (Nasdaq: RADA)
announced today its results for the second quarter ended June 30, 2003. The
Company reported a net loss for the quarter of ($0.8) million or ($0.04) per
diluted share compared to net income of $1.0 million or $0.05 per diluted share
in the second quarter of 2002. Net loss for the six-month period ended June 30,
2003 was ($1.4) million or ($0.08) per diluted share compared to a loss of
($0.6) million or ($0.03) per diluted share for the same period in 2002.
For comparative purposes the Company noted that in the current quarter it made a
currency gain of $0.1 million (or 1 cent per share) compared to a $1.0 million
(or 5 cents per share) currency gain in the second quarter of 2002. For the six
months ended June 30, 2003 the Company made a currency gain of $0.2 million (or
1 cent per share) compared to $0.7 million (or 4 cents per share) in the six
months ended June 30, 2002. The reduction in foreign currency gains is due to
differences arising from inter-company foreign currency transactions that have
been restructured during 2003 as long term in nature. The Company does not
expect to have any further material foreign exchange losses or gains as a result
of inter-company debts.
Pat Feely, Chief Executive Officer of Radica, said, "Retail buying patterns
continued to be sluggish in the toy and game industry until June when we saw an
improvement as retailers began to take in stocks once again at normal seasonal
levels in anticipation of the fall selling season. This recent positive buying
trend appears to be continuing; so, we are becoming increasingly optimistic that
the industry will rebound in the second half. Even so, we believe it is prudent
to lower our earnings targets for the full year to a growth rate compared to
2002 in the range of 5% to 10%. Achieving this level of earnings growth will
depend on a continuation of the improvement that we have seen recently."
As a result of the Company's continued movement away from lower margin
manufacturing services business toward higher margin, Radica branded business,
total sales for the quarter decreased to $16.9 million as compared to $20.5
million in Q2 2002, a drop of $3.6 million of which $3.1 million related to
Manufacturing Services. As a result Manufacturing Services sales decreased by
44.5% for the quarter and 43.7% on a year to date basis. Electronic Games sales
decreased by 3.2% for the quarter due to a change in timing of shipments from
last year to a special customer and increased 7.5% year-to-date. Youth
Electronics grew by 21.9% for the quarter and 1.6% year to date. Video Game
Accessories ("VGA") decreased by 18.2% for the quarter and 14.7% year to date.
There were no new platform launches in the first half of 2003 to drive the sales
such as there were in the first half of 2002 with the European launches of Xbox
and GameCube. The following table shows the detailed comparisons for the quarter
and the year:
Three months ended Six months ended
June 30, June 30,
Product Lines 2003 2002 2003 2002
(US$ in thousands)
Electronic Games 8,329 8,607 16,594 15,437
Youth Electronics 2,196 1,802 3,874 3,813
VGA 2,537 3,101 5,771 6,764
13,062 13,510 26,239 26,014
Manufacturing Services 3,882 6,997 6,750 11,996
Total $16,944 $20,507 $32,989 $38,010
Feely added, "As we have previously mentioned, we expect our Manufacturing
Services sector to play a less significant role in our results as our volume
shifts to higher margin Radica branded products. We expect our second half
Manufacturing Services sales to decrease by about $11 million compared to 2002,
with $9 million of that decrease coming from the third quarter alone. On the
other hand, sales of Radica branded products appear likely to grow in the second
half in the range of 7 to 10%. Since gross margin percentages on Radica branded
products are in the mid to upper 40s compared to the mid teens for Manufacturing
Services, our gross profits should benefit."
"Our Electronic Games sector showed sales and market share growth in the first
half even during the difficult market environment that the industry experienced.
We expect this positive trend to continue in the second half due to the solid
trade support of several new product launches for this fall including Play TV
Huntin'2, Play TV Rescue Heroes and Big Screen Tetris as well as the
international expansion of our Skannerz line. While Youth Electronics sales were
relatively flat for the first half, the fall launch of Girl Tech Dare Ya and the
Barbie Secret Diary should provide growth in this sector during the second half.
Radica's VGA sector suffered from negative comparisons to 2002 sales where
European launches of Xbox and GameCube, and related pipeline fill, happened in
the first half of last year. While the second half should provide more
normalized comparatives and we are excited about the launch of several new
innovative products, it should be noted that distressed pricing in this sector
is negatively impacting margins as manufacturers seek to reduce excess
inventories of commodity items. We expect this trend in the VGA sector to
continue in the second half and are hoping for a more positive market
environment in VGA in future years when our strategy to focus primarily on
higher margin, innovative items begins to fully take hold," said Feely.
Gross profit margin for Q2 2003 grew to 33.3% as compared to 31.7% in Q2 2002
and to 36.1% for the year to date compared to 33.2% for the comparable period in
2002. This was due to a change in product mix to higher margin business offset
by the effect of terminating our French and German consignment arrangements for
the VGA business. This resulted in closeout sales of $0.7 million without which
the gross margin would have been 34.9% for the quarter. A new French
non-consignment distribution arrangement was established with Nobilis S.A. to
replace these relationships and substantially reduce inventory risk in those
markets.
Operating expenses for the quarter were $6.7 million as compared to $6.3 million
in Q2 2002. The increase in expenditure was as a result of a one time
restructuring charge of $87,000 due to the closure of the UK R&D office and
the timing of advertising expenditure for Easter which fell into Q2 in 2003 but
Q1 in 2002. In Q2 2003 advertising expenditure was $0.6 million and in Q2 2002
it was $0.1 million. For the six months ended June 30, 2003, operating expenses
fell slightly from the comparative period in 2002 and included an increase in
advertising expenditure of $172,000 due to the timing of commercial production
expense compared to the prior year.
At June 30, 2003 the Company had $29.2 million of cash and net assets of $74.0
million as compared to $32.7 million and $74.6 million, respectively at December
31, 2002. Total debt stood at $0.8 million at June 30, 2003 compared to $2.7
million at December 31, 2002 and long-term debt fell to zero. Inventories
increased to $23.6 million from $20.4 million at December 31, 2002, but were
lower than June 2002 inventories by $1.4 million. Receivables were at $7.8
million at June 30, 2003 as compared to $15.1 million at December 31, 2002 due
to normal seasonality.
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 December 31, 2002, as
filed with the Securities and Exchange Commission. See "Item 3. Key
Information - Risk Factors" in such report on Form 20-F.
Radica Games Limited (Radica) is a Bermuda company headquartered in Hong Kong
(Nasdaq: RADA). Radica is a leading developer, manufacturer and distributor of a
diverse line of electronic products including handheld and tabletop games,
girls' lifestyle products, high-tech toys and video game accessories. 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,
except per share data)
Three months ended Six months ended
June 30, June 30,
2003 2002* 2003 2002*
(unaudited)(unaudited) (unaudited)(unaudited)
Revenues:
Net sales $16,944 $20,507 $32,989 $38,010
Cost of goods sold
(exclusive of items
shown separately
below) (11,297) (14,005) (21,088) (25,400)
Gross profit 5,647 6,502 11,901 12,610
Operating expenses:
Selling, general
and administrative
expenses (5,183) (4,624) (10,630) (10,250)
Research and development (920) (953) (1,835) (1,986)
Depreciation and
amortization (524) (717) (1,116) (1,436)
Restructuring charge (87) -- (87) --
Total operating expenses (6,714) (6,294) (13,668) (13,672)
Operating (loss) income (1,067) 208 (1,767) (1,062)
Other income 108 40 163 55
Foreign currency gain, net 147 966 160 724
Net interest income 46 15 106 16
(Loss) income before
income taxes (766) 1,229 (1,338) (267)
Provision for income taxes (23) (267) (55) (346)
Net (loss) income (789) 962 (1,393) (613)
Net (loss) income per share:
Basic $(0.04) $0.05 $(0.08) $(0.03)
Diluted $(0.04) $0.05 $(0.08) $(0.03)
Weighted average number
of common and common
equivalent shares:
Basic 17,963,983 17,717,795 $17,903,140 17,692,695
Diluted 17,963,983 18,366,659 $17,903,140 17,692,695
* Reclassified to conform with 2003 presentation.
RADICA GAMES LIMITED
CONSOLIDATED BALANCE SHEETS
(US Dollars in thousands, except share data)
June 30, December 31,
2003 2002
(unaudited)
Assets
Current assets:
Cash and cash equivalents $29,247 $32,692
Accounts receivable, net of allowances
for doubtful accounts of $218
($315 as at December 31, 2002) 7,842 15,139
Inventories, net of provision of $2,199
($4,193 as at December 31, 2002) 23,546 20,385
Prepaid expenses and other current assets 3,319 2,570
Income taxes receivable 931 931
Total current assets 64,885 71,717
Property, plant and equipment, net 13,291 14,034
Intangible assets 9,551 9,551
Total assets $87,727 $95,302
Liabilities and Shareholders' Equity
Current liabilities:
Short term borrowings $846 $846
Accounts payable 8,581 9,014
Current portion of long-term debt -- 1,825
Accrued payroll and employee benefits 1,069 2,753
Accrued expenses 3,188 5,840
Income taxes payable 4 309
Deferred income taxes 79 79
Total current liabilities 13,767 20,666
Total liabilities 13,767 20,666
Shareholders' equity:
Common stock
par value $0.01 each, 100,000,000
shares authorized, 17,999,249 shares
outstanding (17,796,131 as at
December 31, 2002) 180 178
Additional paid-in capital 2,851 2,320
Retained earnings 71,553 72,946
Accumulated other comprehensive loss (624) (808)
Total shareholders' equity 73,960 74,636
Total liabilities and shareholders'
equity $87,727 $95,302
SOURCE Radica Games Limited
Copyright 2003 by Radica Games Limited. All rights reserved.