ACCLAIM DELAYS FISCAL REPORT YET AGAIN
Struggling videogame publisher Acclaim Entertainment said in an SEC filing Tues. that it had to file yet another fiscal report late -- this time its 10-K report for the fiscal year ended March 31. Acclaim said it needed “additional time to complete the disclosures associated with various events” in the period and said its auditors -- KPMG -- hasn’t completed an audit of its financial statements yet. The company declined comment Wed. on what might be holding up the auditors and exactly when it now expects to file the report.
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Acclaim also delayed filing its 10-Q report for the quarter ended Dec. 28 in Feb., saying it was “unable to timely resolve a matter” that it didn’t identify. When Acclaim filed the 10-Q report a few days later, the company revealed that it “became aware of certain transactional documents which were violations of the company’s established sales and sales return policies.” Acclaim said then that, as a result, it started implementing various improvements to its “internal controls and procedures.” The publisher had also delayed its quarterly reports for the 3 prior quarters, as well as for its last fiscal year.
Over the past year, Acclaim faced various lawsuits, including 14 class action suits by shareholders, as well as significant sales declines as key releases underperformed and its slate of games narrowed. Its auditors also said there was “substantial doubt” about Acclaim’s ability to continue as a going concern. But Acclaim CEO Rod Cousens said in Feb. that the $15 million the company raised via the sale of 9% senior subordinated convertible notes to an investor “will have a significant impact” on its ability to execute its business plan (CED Feb 19 p6). The company said last month that it signed a new deal with main lender GMAC Commercial Finance (CED May 6 p5). But it said at the same time that it discovered a $9.5 million accounting error that required it to restate results for fiscal 2001, 2002 and 2003.
Responding to the latest delayed filing Wed., Wedbush Morgan Securities analyst Michael Pachter said “they just can’t seem to get their act together.” But he said that, “in fairness,” the Sarbanes-Oxley Act “changed the time period from 90 days to 75 days, so it made things tough for companies with limited resources.”
Despite Acclaim’s woes, Pachter said he believed the publisher “will make it,” saying it had “a pretty decent lineup this year” and had “already spent the development dollars necessary to get [those games] out.” But RBC Capital Markets analyst Stewart Halpern said he expected that Acclaim “will have an even harder time competing” against publishers including Activision, Take-Two Interactive and THQ “and staying afloat as we head into the next hardware technology cycle.”
Acclaim offered an upbeat forecast for various upcoming games including Combat Elite, 100 Bullets and Red Star at E3 Expo in L.A. last month. An Acclaim spokesman said at E3 that the PS2 price cut made by Sony Computer Entertainment America on the eve of the show (CED May 12 p1) should help boost the installed base of the console and, as a result, help his company sell its games.
Although Acclaim now wasn’t ruling out making any new titles for Nintendo’s GameCube after the sales increase seen on that console after the price dropped to $99.99 in the fall (CED Sept 25 p3), the spokesman said the company would make the decision on “a brand by brand basis.” But he said there were no specific GameCube titles planned now. Acclaim indicated last year that it had no plans to introduce any new franchises on GameCube. Meanwhile, the company is also looking at Nintendo’s upcoming dual-screen “DS” and Sony’s PSP handheld systems but didn’t have anything to report yet regarding support, the spokesman said. Acclaim was trying to figure out “how we can provide meaningful content for both,” he said. But Acclaim had no plans to make any games for Nokia’s N-Gage handheld game decks “at this time,” he said.
After recently shipping its first Xbox Live title, All-Star Baseball, Acclaim was now “looking to do a lot more with online” because it was “a functionality that certainly consumers are looking for,” the spokesman said. Juiced, for instance, “will be a really ambitious online game,” he said. The racing game is slated to ship for PC, PS2 and Xbox in Sept. Despite the company’s bullishness on online gaming, he said it was too early to tell how much of an impact the online capability of All-Star Baseball played in that title’s sales so far.