Majesco Entertainment CEO Discusses F3Q2010 Results - Earnings Call Transcript

Majesco Entertainment CEO Discusses F3Q2010 Results - Earnings Call Transcript
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Majesco Entertainment Company (COOL)

F3Q2010 Earnings Call Transcript

September 14, 2010 4:30 pm ET

Executives

Todd Greenwald [ph] – Director of IR and Strategic Planning

Jesse Sutton – CEO

Mike Vesey – CFO

Analysts

Sean McGowan – Needham

David Bench [ph] – Trinidad Capital [ph]

John Taylor – Arcadia

Presentation

Operator

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Good afternoon and welcome to the Majesco Entertainment Company fiscal third quarter 2010 earnings conference call. All participants will be in a listen-only mode. (Operator instructions) After today’s presentation, there will be an opportunity to ask questions. (Operator instructions) Please note this event is being recorded. I would now like to turn the conference over to Mr. Todd Greenwald [ph], Director of Investor Relations and Strategic Planning. Please go ahead, Mr. Greenwald.

Thank you, operator and good afternoon. I'd like to welcome you to Majesco Entertainment's conference call.

Todd Greenwald

Thank you and good afternoon. I would like to welcome you to Majesco Entertainment’s conference call. Before we get started I would like to remind you that the call is being recorded, and an audio broadcast and replay of the teleconference will be available in the Investor Relations section on the Company's website.

As a reminder, this call may contain forward-looking statements, including statements regarding management's intention, hope, expectations, representations, plans or predictions about the future. Such statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results or actual future results to differ materially from the expectations set forth in the forward-looking statements.

Factors that could cause actual results to differ materially are specified in the Company's Annual Report on Form 10-K for the year ended October 31st, 2009, and other filings with the SEC. The Company does not undertake and specifically disclaims any obligation to release publicly the results of any revision that may be made to any forward-looking statements to reflect the occurrences of anticipated or unanticipated events or circumstances after the date of such statements.

To facilitate a comparison between the reported periods, the Company has presented both GAAP and non-GAAP financial measures. GAAP financial measures include expenses related to non-cash compensation, settlement of litigation, changes in the fair value of warrants, the closure of the California development studio, severance, and the benefit from the sale of certain state income tax benefits derived from net operating losses. Operating income, net income, and diluted income per share have been adjusted to report non-GAAP financial measures that exclude these items.

These non-GAAP measures are provided to enhance investors’ overall understanding of the Company's current financial performance and the Company's prospects for the future. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute, or superior to GAAP results. Reconciliation between GAAP and non-GAAP financial measures is included in the press release issued earlier today.

With me on the call are Jesse Sutton, Chief Executive Officer and Mike Vesey, interim Chief Financial Officer. I'd now like to turn the call over to Jesse.

Jesse Sutton

Thanks, Todd. I will open the call with some highlight and an overview of our performance in the third quarter. Mike will follow with the financial review and I will conclude with an update on our product slate for the rest of the year, and then we would be happy to take your questions.

While our revenues were down for the quarter versus last year, they were consistent with our internal expectations. The revenue decline was almost entirely due to a lighter release slate than the same quarter a year ago. This year, our only significant new release in the quarter was Tetris Party Deluxe, compared to last year’s releases of the Night at the Museum, continued strength of Gardening Mama, as well as 11 other releases on the Wii and DS in the quarter.

Going forward, our fourth quarter is off to a strong start and will be driven by Greg Hastings Paintball 2, Crafting Mama, and My Baby 3 and Friends. We are especially excited by this year’s holiday line-up, which includes Babysitting Mama, a significant new addition to the Mama franchise, as well as Zumba Fitness, which is an innovative dance fitness party that will be released on the new Kinect for Xbox 360, PlayStation Move, and the Wii. Initial demand from retailers is shaping up well for both Babysitting Mama and Zumba Fitness.

We continue to make progress with new properties, including Martha Stewart, Zumba Fitness, and My Baby 3. We also have much more in store for next year with many new titles and brands that we have not yet announced. Our efforts to leverage the strength and popularity of our Cooking Mama franchise continue and for the first time, we will be launching two new Mama brand extensions this holiday: Crafting Mama for the DS, and Babysitting Mama for the Wii.

We also continue to control our costs to drive profitability. Our operating expenses are down 42% in total largely due to the closure of our studio and reduction in staff earlier this year. We are committed to achieve, improve, and sustain profitability.

Finally, I would like to point out that we have a strong team in place and have fortified it in the recent months with a new Senior Vice President of Production, a new CFO, and a new Head of IR and Strategic Planning.

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