3DO Posts Losses But Meets Expectations For Quarter
The 3DO Company has announced losses for the fiscal fourth quarter and year ended March 31, 2001. Revenues for the company's fiscal fourth quarter were $19.0 million, compared to $47.3 million in the prior year's fourth fiscal quarter. The consolidated net loss for the quarter was $12.5 million, or a loss of $0.26 per share, compared to a profit of $11.5 million, or $0.26 per diluted share in the same quarter last year. Revenues for the fiscal year were $82.8 million, compared to $122.2 million in fiscal 2000. The company recorded $3.1 million of revenue and $1.1 million in cost of sales for both the prior year and current year balances following the company's implementation of Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" and the requirements of Accounting Principle Board Opinion No. 20 "Accounting Changes." The net loss for this fiscal year was $66.2 million, or $1.59 per share before a non-cash charge for interest associated with warrants and beneficial conversion of debt. The charge of $9.3 million was taken retroactively during the third quarter to comply with the guidance provided by EITF Issue 00-27. The company expects to restate its third quarter financial statements in connection with the charge for this beneficial conversion feature. Including this charge, the loss for the fiscal year totaled $77.0 million, or $1.85 per share, compared to net income of $0.2 million, or $0.01 per diluted share, in fiscal 2000. The company released five new games for the PlayStation 2 during the quarter, including ARMY MEN SARGE'S HEROES 2, ARMY MEN AIR ATTACK 2, WARRIORS OF MIGHT AND MAGIC, GREEN ROGUE and HIGH HEAT MAJOR LEAGUE BASEBALL. The company also released its HIGH HEAT games on the PlayStation game console and PC platforms. Commenting on the results, Trip Hawkins, CEO of 3DO said, "It was a tougher industry transition this past year than expected, and we are glad that the worst appears to be over. We showed notable progress in the fourth fiscal quarter by meeting earnings expectations, by delivering a strong PS2 lineup, and by reducing expenses by 15% versus the prior fiscal quarter. In recent weeks things have improved further, with weekly retail sell-through revenues increasing 100% and gross margins improving with the shift to PS2. And our costs are now in much better alignment with revenue. As a result of significant investments in product development, the company has shipped eight Playstation 2 games, six in the last six weeks. Planned releases for next month include one of the first Game Boy Advance titles being launched, while new MIGHT AND MAGIC releases for the PC are slated for the coming months. Hawkins went on to conclude, "We have now reached an important turning point for 3DO as a leading game technology company and we look forward to improving financial results as the market for next generation hardware expands."