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, 2006
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 15, 2006.
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, 333-61260 and 333-122248) and on Form F-3 (No. 333-7526 and No.
333-79005).
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SIGNATURE
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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 18, 2006 /s/ Craig D. Storey
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Craig D. Storey
Chief Accounting Officer
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RADICA GAMES LIMITED
REPORTS FIRST QUARTER RESULTS
FOR IMMEDIATE RELEASE CONTACT: PATRICK S. FEELY
MAY 15, 2006 CHIEF EXECUTIVE OFFICER
(LOS ANGELES, CALIFORNIA)
(626) 744 1150
DAVID C.W. HOWELL
CHIEF FINANCIAL OFFICER
(HONG KONG)
(852) 2688 4201
(HONG KONG) Radica Games Limited (NASDAQ: RADA) announced today its results for
the first quarter ended March 31, 2006. The Company reported a net loss for the
quarter of ($1.0) million or ($0.05) per diluted share compared to a net profit
of $0.5 million or $0.03 per diluted share in Q1 2005.
Sales for Q1 2006 decreased by 18% to $18.5 million from $22.5 million for the
same period in 2005. Sales decreases in the quarter were primarily due to
expected reductions in declining areas of low margin business including declines
of $2.4m in plug and play TV games, $0.7m in video game accessories and $0.8m of
manufacturing services revenues during the quarter. Excluding these areas of
business, sales were about even with last year in spite of a change in shipping
patterns from our largest customer, the later timing of Easter in 2006 and the
comparative pipeline fill of 20Q in early 2005.
Pat Feely, Radica's CEO, commented, "We feel very positively about our prospects
for 2006. Point of sale retail movement at our top North American accounts is
off to a strong start and was 21% above last year in unit sales through April in
total, and even excluding 20Q was up by 4%. As for our shipping in Q1 we had
some comparatives in Q1 of 2005 that are not indicative of our full year
potential for 2006. The declines came in non-core business areas that were
expected. These declining areas were significant contributors to Q1 sales in
2005 but were only a small percentage of sales in the second half of 2005. The
rest of our business was relatively flat, but it should also be noted that heavy
ordering in Q4 of 2005 from our largest customer of handheld games and 20Q
depressed their Q1 orders significantly. Additionally, in Q1 we were up against
earlier Easter timing and pipeline fill of 20Q in Q1 of 2005."
"Our planned growth for 2006 continues to be targeted at the second half where
our key product introductions such as new 20Q Themes, Cube World and Digi
Makeover are all focused. In addition, the ordering pattern of our largest
customer has changed this year as they have notified us of their decision to
significantly increase the percentage of their orders from domestic supply and
to decrease the percentage from import supply in 2006. This shift has the
potential to improve our profits for the full year since domestic business is
more profitable than import business; however, it also means that volume will
shift more to the second half of the year than in recent years," said Feely.
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"We are pleased with our fall product listings at our key domestic accounts and
believe they are on track with our expectations. 20Q continues to show strong
point of sale retail movement in our key accounts and on a year to date basis
was 53% ahead of last year through April in units sold. Promotional plans by
major accounts are meeting our expectations for fall for our expanded 20Q
product line as well as several of our other key product lines, I also want to
note that we reached $60 million in cash and securities this quarter or about
$3.13 per share after paying a recently increased dividend of $0.05 for the
quarter." said Feely.
The following table shows the detailed revenue comparisons for the quarter:
Three months ended March 31,
----------------------------
Product Lines 2006 2005
------------- ----------- -----------
(US Dollars in thousands)
Electronic Games and Toys $ 14,704 $ 16,948
Youth Electronics 2,158 2,446
Video Game Accessories 885 1,594
Manufacturing Services 720 1,486
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TOTAL $ 18,467 $ 22,474
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Gross profit margin for Q1 2006 was 37.6% compared to 38.8% in Q1 2005 due to
closeout sales of $1.1 million compared to $0.9 million in Q1 of 2005 together
with a higher proportion of sales to distributors in Europe and Asia at lower
margin than sales to retailers.
Operating expenses for the quarter increased to $8.6 million from $8.3 million
for the same period last year. The increase was due to an increase of
advertising from $0.8 million to $1.0 million, professional fees of $0.1 million
related to Sarbanes Oxley, increased research and development costs for
programming charges for new product and increased depreciation and amortization
due to increased capital expenditure in 2005. The increase was also due to
recognition of stock based compensation of $79,000 in respect of compensation
cost for share-based payment awards in connection with the adoption of Statement
of Financial Accounting Standards No. 123 (revised 2004), Share-based Payment,
on January 1, 2006. These expense increases were offset by decreases in variable
costs.
At March 31, 2006 the Company had $60.0 million in cash and investment
securities, and net assets of $96.4 million as compared to $53.3 million and
$98.4 million, respectively, at December 31, 2005. There was no debt at March
31, 2006 and December 31, 2005. Inventories at March 31, 2006 increased to $22.3
million from $21.4 million at December 31, 2005 and receivables decreased to
$7.5 million from $18.7 million at December 31, 2005 reflecting normal
seasonality.
On March 30, 2006, the Company declared a second quarter dividend for fiscal
2006 of $0.05 per share, which was paid on April 28, 2006.
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
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Dependence on Major Customers, as set forth in the Company's Annual
Report on Form 20-F for the fiscal year ended December 31, 2005, 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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RADICA GAMES LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(US dollars in thousands, Three months ended March 31,
except per share data) -----------------------------
2006 2005
------------ ------------
(unaudited) (unaudited)
Revenues:
Net sales $ 18,467 $ 22,474
Cost of goods sold
(exclusive of items shown separately below) (11,526) (13,758)
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Gross profit 6,941 8,716
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Operating expenses:
Selling, general and administrative expenses (6,650) (6,659)
Research and development (1,405) (1,197)
Depreciation and amortization (558) (404)
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Total operating expenses (8,613) (8,260)
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Operating (loss) income (1,672) 456
Net interest and other income 513 219
Foreign currency gain (loss), net 92 (25)
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(Loss) profit before income taxes (1,067) 650
Credit (provision) for income tax 55 (155)
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Net (loss) profit $ (1,012) $ 495
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Net (loss) earnings per share:
Basic $ (0.05) $ 0.03
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Diluted $ (0.05) $ 0.03
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Weighted average number of common and
common equivalent shares:
Basic 19,174,785 18,860,682
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Diluted 19,174,785 19,571,477
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Cash dividends declared per share
(5.0 cents declared and paid for March 31, 2006;
4.5 cents per quarter in 2005) $ 0.050 $ 0.045
============ ============
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RADICA GAMES LIMITED
CONSOLIDATED BALANCE SHEETS
(US dollars in thousands, except per share data) March 31, December 31,
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2006 2005
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(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 43,954 $ 37,358
Investment securities 16,046 15,928
Accounts receivable, net of allowances for doubtful accounts of $107
($165 as at December 31, 2005) 7,523 18,703
Inventories 22,307 21,420
Prepaid expenses and other current assets 5,241 4,196
Income taxes receivable 276 479
Deferred income taxes 3,295 3,237
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Total current assets 98,642 101,321
Property, plant and equipment, net 14,496 14,542
Other assets 828 833
Deferred income taxes, noncurrent 581 572
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Total assets $114,547 $117,268
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,231 $ 8,636
Accrued payroll and employee benefits 3,070 3,833
Accrued expenses 5,177 5,987
Income taxes payable 638 417
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Total current liabilities 18,116 18,873
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Total liabilities 18,116 18,873
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Shareholders' equity:
Common stock
par value $0.01 each, 100,000,000 shares authorized,
19,282,341 shares outstanding (19,080,004 as at
December 31, 2005) 193 191
Additional paid-in capital 6,818 6,122
Retained earnings 90,095 93,025
Deferred compensation -- (203)
Accumulated other comprehensive loss (675) (740)
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Total shareholders' equity 96,431 98,395
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Total liabilities and shareholders' equity $114,547 $117,268
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