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Midway Games Inc. Reports Fourth Quarter And Fiscal Year Results

Midway Games Inc. announced its results of operations for the fiscal fourth quarter and fiscal year ended June 30, 2001.The company also reported preliminary details of its product release schedule for the period September 2001 through December 2002. Fiscal 2001 fourth quarter revenues were $20,215,000 compared with revenues of $24,724,000 in the prior year period. After adjusting for a restructuring charge and an income tax credit of $0.21 per share, the June 30, 2001 quarter pro forma loss applicable to common stock was $0.35 per share, compared with a pro forma loss applicable to common stock of $0.39 per share in the prior year period (excluding unusual charges). Before adjusting for these items, Midway had a fiscal 2001 fourth quarter loss applicable to common stock of $30,521,000, $0.81 per share, compared with a loss applicable to common stock (including unusual charges) of $30,735,000, $0.82 per share, in the prior year period. During the fiscal 2001 fourth quarter the company released two new products for the PlayStation 2 computer entertainment system: GAUNTLET DARK LEGACY and C.A.R.T. FURY. The company also introduced a launch title, READY 2 RUMBLE BOXING: ROUND 2, for the popular new Game Boy Advance handheld platform. For the fiscal year ended June 30, 2001, revenues were $168,208,000 compared with revenues of $333,865,000 in fiscal 2000. Including the restructuring charges and the imputed dividend and excluding a tax credit for operations after December 31, 2000, the loss applicable to common stock for fiscal 2001 was $69,335,000, $1.84 per share. The decrease in revenues and increase in loss applicable to common stock are a result of the company's previously announced downsizing of, and exit from, the coin-operated games business and the home console transition strategy that was implemented in response to the difficult market conditions during the industry's transition from 32 and 64-bit consoles to the new, advanced technology consoles including PlayStation 2, GameCube and Xbox. As a result of the exit from coin-op and the home transition strategy, the company cancelled several coin-op and 32 and 64-bit home products scheduled for release during fiscal 2001 in order to significantly increase the number of new next-generation products scheduled for release during the year ending December 31, 2002, when there is expected to be a major increase in demand for next-generation software. Canceling products resulted in decreased revenue, and the overall impact of the transition strategy on profitability was compounded by the need to increase research and development spending during fiscal 2001 in order to have top-quality products available in the year ending December 31, 2002 and beyond. The company is now confident that the industry platform transition will soon be complete, and the benefits of this transition strategy will soon be apparent with a major increase in new next-generation product introductions and significant increases in revenues and profits. Midway now has over 45 next-generation console products scheduled for release between September 2001 and December 2002.

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