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| 8-K - IndiePub Entertainment, Inc. | v209801_8-k.htm |
Zoo
Entertainment Expects to Report Record 2010 Results and Launches All-New
Division, indiePub Mobile
Cincinnati, OH – January 31, 2011
– Based on preliminary unaudited information, Zoo Entertainment
(NASDAQ:ZOOG), a leading developer and marketer of interactive entertainment
software, expects to report record revenue between $67 million and
$69 million for the fiscal year ended December 31, 2010, which would
represent a 38% to 42% increase compared to the fiscal year ended December 31,
2009.
Adjusted
EBITDA, including non-cash stock-based compensation, is also expected to
increase from $549,000 in 2009 to between $4.5 million and $5.5 million in 2010
(see important discussion of adjusted EBITDA, a non-GAAP financial measure,
below).
“Our
record 2010 results reflect solid execution of our strategic plans to expand our
game offerings and market reach,” said Mark Seremet, CEO of Zoo Entertainment.
“Even with the 20% industry-wide decline of the Wii and DS markets in 2010, we
were still able to achieve record numbers, taking market share in a very
difficult environment. In fact, we generated the highest levels of revenue and
profit in the company’s history. Overall, we believe we achieved much of what we
set out to accomplish: strong top-line growth, margin expansion and
profitability, new direct-to-retail partnerships, and the launch of indiePub, an
innovative online ecosystem for independent game developers.”
“We
believe this has set the stage for 2011 to be a transformative year for Zoo
Entertainment,” continued Seremet, “as we expand our game publication
capabilities to more digital and console platforms than ever before. By
leveraging our innovative approach to content generation through indiePub
and internal development, we are extending beyond the casual console gaming
segment to the rapidly growing digital and mobile landscapes.”
Recognizing
the vast growth and opportunities within the mobile gaming market, Zoo
Entertainment has launched an all-new division, indiePub Mobile, which will
accompany innovative internal development. “With a rise in both independent
video game development and the mobile industry, we conceptualized a dedicated
platform for mobile games and talented developers, and are now seeing that
platform come to life,” added Seremet.
The
designated mobile division follows the recent completion of indiePub’s first
mobile game competition in December 2010. “We were impressed with the quality
and quantity of the mobile games submitted for judging in our recent
competition, and plan to continue its development through indiePub Mobile,”
Seremet stated. “By the end of 2011, Zoo anticipates having an impressive
line-up of mobile content, including 12 games currently in development, which
will be offered across handsets and tablets as a direct result of our
partnerships with talented independent developers.”
“We plan
to continue with our portfolio approach, and intend to release 71 SKUs this
year, including 31 digital titles, 19 mobile and 21 on console; the digital
titles we expect to release in 2011 are exceptionally notable considering only
3% of our titles were released digitally in 2010, and within the fourth quarter.
While the company was once tied to the Wii and DS model with more than 95%
of our titles in 2010 being released on those platforms, we are evolving to
become a leading distributor of digital titles across all major mobile, PC,
console and social media platforms, as well as continuing to maintain our
strong market share of the retail business. With a majority of our 2011 titles
slated for release on mobile and digital platforms, we expect higher margins and
greater profits as our digital model continues to unfold.”
Based on
the company’s current release schedule, Zoo management anticipates its 2011
product mix, by SKU, will be approximately:
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29%
from titles released on console platforms, including Nintendo Wii and DS,
Xbox 360/Kinect, PlayStation 3 and Nintendo
3DS;
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·
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27%
from titles released on mobile devices, including iPhone, iPad, iPod
Touch, Android and Android Tablet;
and
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44%
from titles released digitally, including on PlayStation Network, Xbox
Live Arcade, Steam for PC and Mac, and
Facebook.
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Projected
2011 Release Schedule
The
company plans to provide more in-depth financial results in its complete fourth
quarter and fiscal year 2010 earnings press release and conference call, which
will be announced at a later date.
Non-GAAP
Financial Measures
In
compliance with Regulation G, promulgated pursuant to the Sarbanes Oxley Act,
Zoo Entertainment, Inc. will issue in a press release and post to its investor
relations website (www.zoogamesinc.com) the reconciliation of differences
between GAAP and non-GAAP financial information that may be required in
connection with issuing its audited 2010 financial results, and will do so as
this information becomes available.
As is
common in the industry, the company uses EBITDA, Adjusted EBITDA and Adjusted
Earnings Per Share (“Adjusted EPS”) as measures of performance to demonstrate
earnings exclusive of interest and non-cash events. The company in its
management of its business affairs and analysis of its monthly, quarterly and
annual performance makes decisions based on cash flows. The company, in managing
its current and future affairs, cannot affect the amortization of intangible
assets to any material degree, and therefore uses EBITDA and Adjusted EBITDA as
its primary management guide. Investors are cautioned that EBITDA, Adjusted
EBITDA and Adjusted EPS are not a measure of liquidity or of financial
performance under Generally Accepted Accounting Principles in the United States
(GAAP). The Adjusted EBITDA and the Adjusted EPS numbers presented may not be
comparable to similarly titled measures reported by other companies. EBITDA,
Adjusted EBITDA and Adjusted EPS, while providing useful information, should not
be considered in isolation or as an alternative to net income, net
loss, cash flows or earnings per share as determined under GAAP. See the
"Reconciliation of Income (loss) from operations (GAAP) to Adjusted EBITDA
(Non-GAAP)" table below for further information about this non-GAAP measure for
the periods indicated in this release.
The
company previously reported product financing costs as part of “Cost of Goods
Sold,” an acceptable reporting method under GAAP. The company is reclassifying
these product financing costs from Cost of Goods Sold to Interest Expense,
effective with the filing of its audited financial statements for the year ended
December 31, 2010. This reclassification is also in accordance with GAAP and is
consistent with the reporting of product financing costs by other companies in
the industry. For the year ended December 31, 2010, approximately $1.1 million
of product financing costs are expected to be reclassified from Cost of Goods
Sold to Interest Expense; for the year ended December 31, 2009, $326,000 of
product financing costs were reclassified from Cost of Goods Sold to Interest
Expense. Accordingly, if the company had reclassified such product financing
costs for 2009, it would have increased its EBITDA, Adjusted EBITDA and earnings
for Adjusted EPS for that year by $326,000.
Zoo
Entertainment, Inc. and Subsidiaries
Unaudited
Reconciliations of GAAP to Non-GAAP Measures
For
the Years Ended December 31, 2010 (projected range) and 2009
(in
thousands)
Reconciliation of Income
(loss) from operations (GAAP) to Adjusted EBITDA
(Non-GAAP)
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Year Ended December 31,
|
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2010 projected range
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2009
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Income
(loss) from operations, as previously reported for 2009
and projected for 2010
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$ | 1,840 | $ | 2,840 | $ | (17,347 | ) | |||||
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Reclassification
of product financing costs - 2009
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- | - | 326 | |||||||||
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Income
(loss) from operations, reclassified
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$ | 1,840 | $ | 2,840 | $ | (17,021 | ) | |||||
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Impairment
of goodwill
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- | - | 14,704 | |||||||||
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Depreciation
and amortization
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2,030 | 2,030 | 1,875 | |||||||||
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EBITDA
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$ | 3,870 | $ | 4,870 | $ | (442 | ) | |||||
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Stock-based
compensation
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630 | 630 | 991 | |||||||||
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Adjusted
EBITDA excluding stock-based compensation
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$ | 4,500 | $ | 5,500 | $ | 549 | ||||||
The 2010
numbers in the table above are based on preliminary, unaudited financial
statements and are subject to the audit and adjustments which may be made during
the audit process. Those adjustments could be material and could have a material
impact on the numbers presented.
About
Zoo Entertainment, Inc.
Zoo
Entertainment (NASDAQ:ZOOG) is a developer, publisher and distributor of
interactive entertainment software targeted to family-oriented mass market
consumers. With a strong network of leading national mass market retailers, its
casual and value-focused titles span categories including sports, family,
racing, game show, strategy and action-adventure, and more. Zoo Entertainment
software is developed for all major consoles, handheld gaming devices, PCs, and
mobile devices as well online and download game services.
Zoo’s
innovative content creation site, indiePub (www.indiepub.com), was designed
to capitalize on opportunities in the emerging and high growth digital
entertainment space. The site fosters the independent gaming community by
playing host to independent game developers and players and providing developers
with the resources they need to collaborate and create great games. A
destination site for gaming enthusiasts and consumers, indiePub takes an active
role in helping independent developers create innovative entertainment
software.
For more
information, visit www.zoogamesinc.com.
Forward-Looking Statements
This
press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 about Zoo Entertainment, Inc.
Forward-looking statements are statements that are not historical facts. Such
forward-looking statements, based upon the current beliefs and expectations of
Zoo Entertainment, Inc.'s management, are subject to various risks and
uncertainties, which could cause actual results to differ materially from the
results indicated by these forward-looking statements, including, without
limitation: general economic conditions; geopolitical events and regulatory
changes; our financial performance; our competitive position; expectations
regarding our potential growth; our ability to implement our business strategy;
expectations regarding the size of our market; the introduction of new products
and market acceptance of new and existing products; requirements or changes
adversely affecting the businesses in which we are engaged; demand for our
products and services. For a further discussion of the risks and uncertainties
we face, please refer to Part I, Item 1A of our Annual Report on Form 10-K, for
the year ended December 31, 2009, originally filed with the Securities and
Exchange Commission (SEC) on March 31, 2010, as amended on May 20, 2010, and
other public reports, including registration statements, that have been filed
with the SEC, all of which are available at www.sec.gov. The information set
forth herein should be read in light of such risks. We assume no obligation to
update any forward-looking statements, whether as a result of new information,
future events or otherwise, and such statements are current only as of the date
they are made.
Company
Contact
Mark
Seremet, CEO
Zoo
Entertainment, Inc.
Tel
513-824-8297
mseremet@zoogamesinc.com
Investor
Relations Contact
Scott
Liolios or Matt Glover
Liolios
Group, Inc.
Tel
949-574-3860
info@liolios.com
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