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 May, 2005
Commission File Number: 0-23696
RADICA GAMES LIMITED
(Translation of registrant's name into English)
Suite V, 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
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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
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If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- _____________________________
Contents:
1. Press Release dated May 9, 2005
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, No. 333-61260 and No. 333-122248) and on Form F-3 (No.
333-7526 and No. 333-79005).
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: May 10, 2005 /s/ Craig D. Storey
---------------------------- -----------------------------
Craig D. Storey
Chief Accounting Officer
2
RADICA GAMES LIMITED
REPORTS FIRST QUARTER PROFITS
FOR IMMEDIATE RELEASE CONTACT: PATRICK S. FEELY
MAY 9, 2005 CHIEF EXECUTIVE OFFICER
(LOS ANGELES, CALIFORNIA)
(626) 744 1150
DAVID C.W. HOWELL
PRESIDENT ASIA OPERATIONS
& CFO
(HONG KONG)
(852) 2688 4201
HIGHLIGHTS:
o Q1 sales grew by 85% due to strong sales of 20Q and 21% growth in other
product lines
o Earnings were 3 cents per diluted share compared to 6 cents loss per share in
Q1 2004
o Operating expenses increased due to sales related variable expenses, timing of
Easter advertising and the timing of certain development expenses
o Branded sales grew by 100% with US branded sales alone growing by 114%
(HONG KONG) Radica Games Limited (NASDAQ: RADA) announced today its results for
the first quarter ended March 31, 2005. The Company reported a net profit for
the quarter of $0.5 million or $0.03 per diluted share compared to a net loss of
($1.1) million or ($0.06) per diluted share in the first quarter of 2004.
Sales for the quarter increased by 85% to $22.5 million from $12.1 million due
to exceptional sales of 20Q ($7.9 million for the quarter) plus growth of other
product lines of 21%. Branded sales grew by 100% with U.S. branded sales
increasing by 114% compared to the sales for the same period in 2004.
Radica's Chief Executive Officer, Pat Feely, said, "We are delighted with our
first quarter results particularly in light of the soft results of most other
companies in our industry. Q1 demonstrated a continuation of the sales momentum
we experienced last fall with not only our 20Q product line but additionally in
most areas of our business. Of particular note is the strength we are seeing
from our newly introduced fourth version of the Girl Tech Password Journal as
well as our lighted series of handheld games including casino and solitaire
games. Our Play TV Legends line of retro plug and play games also performed well
but only represented 13% of our sales for the quarter reflecting our lack of
dependence on this category."
"The strong start on 2005 has also been reflected in our early bookings for the
entire year. However, in looking at Q1 results it is important to remember that
the quarter was influenced by the earlier timing of Easter as well as pipeline
fill for 20Q resulting from our increased production capacity for 20Q. As a
result of these factors and while it is too early to fully predict Q2, we
believe that our second quarter results will be unlikely to exceed first quarter
results. However, the outlook for the full year remains consistent with current
Wall Street estimates," said Feely.
"I also want to comment today that our factory expansion is proceeding ahead of
schedule. We have built ahead early in the year quantities of certain staple
products to ensure that we have plenty of capacity for the fall
season. As a result, we are in an excellent position to respond to any upside
late in the year and avoid extra outsourcing and air freight charges that
plagued us last year. Dealing with growth is a real challenge and one we are
prepared to meet as the year progresses," said Feely.
The following table shows the detailed revenue comparisons for the quarter by
segment:
Three months ended March 31,
----------------------------------
Product Lines 2005 2004
------------- ---------------- ---------------
(US$ in thousands)
Games and Youth Electronics Segment
Electronic Games and Toys $ 16,948 $ 6,512
Youth Electronics 2,446 1,978
Manufacturing Services 1,486 1,309
---------------- ---------------
$ 20,880 $ 9,799
---------------- ---------------
VGA Segment
Video Game Accessories $ 1,594 $ 1,992
Manufacturing Services - 334
---------------- ---------------
$ 1,594 $ 2,326
---------------- ---------------
TOTAL $ 22,474 $ 12,125
================ ===============
Gross profit margin for Q1 2005 was 38.8% compared to 42.4% in Q1 2004 due to
the impact of the sales of lower margin Play TV Legends products in Q1 2005.
Operating expenses increased to $8.3 million for the quarter from $6.3 million
in Q1 2004. The increase was due to sales related variable expenses plus the
impact of $0.5 million of advertising that due to an earlier Easter fell in Q1
this year. During the quarter, the Company also finalized discussions with
Immersion Corporation (NASDAQ: IMMR) for use of its force feedback technology in
video game accessories. This negotiation resulted in an agreement for the past
and future royalties for a technology license. The expense related to the
settlement of past royalties and related legal costs in the quarter was
$250,000. Research and development costs were up from $0.9 million to $1.2
million due to costs related to the development of Play TV software.
At March 31, 2005 the Company had $38.1 million of cash and investment
securities, and net assets of $91.1 million as compared to $40.1 million and
$91.1 million, respectively, at December 31, 2004. There was no debt at March
31, 2005 and December 31, 2004. Inventories increased to $29.7 million from
$26.8 million at December 31, 2004 reflecting the build up of 20Q and other
staple models to help spread the production load for the year. Receivables
decreased to $13.5 million from $18.4 million at December 31, 2004 due to normal
seasonality.
On April 12, 2005, the Company declared a second quarter dividend of $0.045 per
share, which was paid on April 29, 2005.
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, 2004, 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 entertainment products including electronic games,
youth electronics, video game accessories and high-tech toys. Radica has
subsidiaries in the U.S.A., Canada, the U.K. and Macau, and a factory in
Dongguan, Southern China. More information about Radica can be found on the
Internet at www.radicagames.com.
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-- END --
RADICA GAMES LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(US dollars in thousands, Three months ended March 31,
-------------------------------
except per share data) 2005 2004
-------------- --------------
(unaudited) (unaudited)
Revenues:
Net sales $ 22,474 $ 12,125
Cost of goods sold
(exclusive of items shown separately below) (13,758) (6,985)
-------------- --------------
Gross profit 8,716 5,140
-------------- --------------
Operating expenses:
Selling, general and administrative expenses (6,659) (4,989)
Research and development (1,197) (929)
Depreciation and amortization (404) (421)
-------------- --------------
Total operating expenses (8,260) (6,339)
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Operating income (loss) 456 (1,199)
Net interest and other income 219 231
Foreign currency loss, net (25) (28)
-------------- --------------
Profit (loss) before income taxes 650 (996)
Provision for income taxes (155) (116)
-------------- --------------
Net profit (loss) $ 495 $ (1,112)
============== ==============
Net profit (loss) per share:
Basic $ 0.03 $ (0.06)
============== ==============
Diluted $ 0.03 $ (0.06)
============== ==============
Weighted average number of common and common
equivalent shares:
Basic 18,860,682 18,570,938
============== ==============
Diluted 19,571,477 18,570,938
============== ==============
Cash dividends declared per share
(4.5 cents and 4 cents declared and paid for
quarter ended March 31, 2005 and 2004,
respectively) $ 0.045 $ 0.040
============== ==============
RADICA GAMES LIMITED
CONSOLIDATED BALANCE SHEETS
(US dollars in thousands, Three months ended March 31,
-------------------------------
except per share data) 2005 2004
-------------- --------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 25,660 $ 27,614
Investment securities 12,419 12,456
Accounts receivable, net of allowances for
doubtful accounts of $141 ($148 as at
December 31, 2004) 13,455 18,359
Inventories 29,710 26,818
Prepaid expenses and other current assets 3,969 3,374
Income taxes receivable 168 168
Deferred income taxes 1,953 1,850
-------------- --------------
Total current assets 87,334 90,639
Property, plant and equipment, net 12,015 11,480
Goodwill 6,015 6,015
Other assets 849 854
Deferred income taxes, noncurrent 715 953
-------------- --------------
Total assets $ 106,928 $ 109,941
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,615 $ 11,840
Accrued payroll and employee benefits 1,299 1,486
Accrued expenses 4,831 5,251
Income taxes payable 98 287
-------------- --------------
Total current liabilities 15,843 18,864
-------------- --------------
Total liabilities 15,843 18,864
-------------- --------------
Shareholders' equity:
Common stock
par value $0.01 each, 100,000,000 shares
authorized, 18,991,146 shares outstanding
(18,738,112 as at December 31, 2004) 190 187
Additional paid-in capital 5,632 4,610
Retained earnings 85,557 85,909
Deferred compensation (195) -
Accumulated other comprehensive (loss) income (99) 371
-------------- --------------
Total shareholders' equity 91,085 91,077
-------------- --------------
Total liabilities and shareholders' equity $ 106,928 $ 109,941
============== ==============