FORM 6-K

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of May 2009

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F   x        Form 40-F   o

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): __

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

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): __

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

 

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

 

 

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EXHIBIT INDEX

 

Exhibit No.	Description
99.1	Press Release dated May 7, 2009

EXHIBIT 99.1

 

 

FOR IMMEDIATE RELEASE

Symbol: TSX: CRY & CXY; NASDAQ: CRYP; LSE: CRP

 

CryptoLogic continues path to profitability amid challenging conditions

 

May 7, 2009 (Dublin, IRELAND) – CryptoLogic, a world leader in Internet casino and branded gaming software, today announced its financial results for the first quarter ending March 31, 2009. The results reflect challenging economic conditions and a continuing transition in the company’s revenue base, coupled with better-than-forecasted cost reductions in line with CryptoLogic’s strategy to return to profitability and cash generation in 2009.

 

Financial highlights:

 

Operating highlights:

 

Outlook:

 

“In very challenging times, CryptoLogic continues to control what we can: containing costs, accelerating innovation and focusing on execution,” said Brian Hadfield, CryptoLogic’s President and CEO. “With our revenue base still in transition, we accelerated CryptoLogic’s cost-reduction program and continued to sign and support deals to bring the world’s best games to the world’s leading Internet casinos. It is a solid foundation for a return to profitability and cash generation this year.”

 

Overview

 

In the first quarter of 2009, CryptoLogic made good progress in executing its strategy to focus on Internet casino hosting and the licensing of its branded gaming and associated software.

These activities provide the company with a competitive advantage by leveraging its position as a leading designer of exciting, character-rich betting games for gaming operators. In PartyGaming, 888.com andBetfair, the company now has three of the world’s largest legal gaming operators on its roster of customers – as well as many of Europe’s other top brands.

 

As announced in March, the company has completed the integration of its poker network with that of GTECH Corporation. This enables a significant reduction in CryptoLogic’s cost base, the full benefit of which will be realized from the second quarter. The company will continue to manage its costs carefully in the light of global economic conditions, which led to reduced wagering in both the casino and poker markets.

 

New customers to drive revenue growth

 

CryptoLogic continued to expand its customer base in the first quarter, signing new licensing deals with various major online gaming brands. The company announced a strategic partnership with Gaming Technology Solutions PLC to make CryptoLogic games available to the many leading gaming operators that use the GTS platform. CryptoLogic also signed an exclusive agreement with The Gaming Network to provide Internet casino software to some of the U.K.’s top gaming sites.

 

Subsequent to the quarter-end, the company announced two more deals licensing its most popular slot games to blue-chip European customers: Gala Coral is a large U.K.-based company that operates four of Europe’s most popular gaming sites, and Betfair is the world’s largest online betting community with over two million customers. SkyBet, who deploy games in the second quarter, will become the first licensee to launch CryptoLogic games through Orbis Technology’s Open Bet Fixed Odds Games platform. The move signals the successful integration of CryptoLogic games on the Orbis platform following a partnership struck in October 2008.

 

CryptoLogic has built a large and diversified licensee base, featuring 18 customers compared with 11 a year ago. BetJacks began offering CryptoLogic-powered games to its subscribers in the first quarter, and PartyGaming launched its first CryptoLogic games earlier this week. CryptoLogic’s customers are planning to roll out some 19 games in the second quarter, which creates significant revenue potential later this year. Recognizing the significant impact of reduced discretionary spending by consumers, CryptoLogic is strengthening support services to its larger licensees for marketing and player acquisition.

 

E-gaming innovation

 

CryptoLogic has also been very active in releasing new games, and in striking deals with owners of more top brands that will appear in future CryptoLogic games.

 

In January, the company released a three-game pack headlined by Spider-Man Revelations, a very popular new game featuring Marvel’s most famous Super Hero. In April, CryptoLogic released a new

 

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downloadable game line-up featuring Call of Duty 4: Modern Warfare, based on one of the world’s most widely played video games, and the eagerly anticipated Millionaire’s Club III.

 

The company announced multi-year licensing agreements with Paramount Digital Entertainment, Warner Bros. and DC Comics to bring characters such as Batman, Superman and Braveheart to leading Internet casinos.

 

The first quarter also featured the unveiling of the CryptoLogic Centre for Innovation, which brings together industry leaders and gaming innovators to create new games and Internet gaming concepts. As announced on May 5, 2009, the first game from this new centre, Jenga, launched in April.

 

Financial performance

 

Total revenue: CryptoLogic saw a moderate decline in revenue from $11.4 million in the fourth quarter of 2008 to $10.1 million in the first quarter of 2009. This included casino revenue of $6.5 million and poker revenue of $2.0 million. Revenue was affected by lower spending from the most avid players, coupled with the continued impact of the strong U.S. dollar. As noted above, CryptoLogic is responding not just by signing new customers, but also by strengthening support services to its larger customers for marketing and player acquisition.

 

Earnings and Earnings per Diluted Share: The company recorded a loss of $1.3 million for the quarter, or $0.10 per fully diluted share (based on a weighted average of 13,820,000 outstanding shares), an improvement on the three prior quarters. Operating expenses were down substantially, from $13.3 million in the fourth quarter of 2008 to $8.2 million in Q1. The company also recorded $0.5 million in reorganization charges in the first quarter.

 

Balance Sheet and Cash Flow: CryptoLogic continues to have a strong balance sheet, ending the quarter with $38.7 million in net cash (comprising cash and cash equivalents, restricted cash and security deposits), or $2.80 per diluted share (December 31, 2008: $43.8 million, or $3.15 per diluted share). The decrease in net cash was due largely to movements in working capital and funds paid to secure the royalty rights of DC Comics including Superman and Batman. The company continues to be debt-free. CryptoLogic’s working capital at March 31, 2009 was $39.8 million or $2.88 per diluted share (December 31, 2008: $41.2 million or $2.97 per diluted share).

 

Dividend: On May 5, CryptoLogic declared a dividend of $0.03 per share for the quarter, unchanged from the fourth quarter of 2008. The dividend will be paid on June 15, 2009 to shareholders of record of CryptoLogic Limited and CryptoLogic Exchange Corporation as at June 8, 2009.

 

Outlook

 

As indicated previously, the company continues to take a conservative view of its revenue outlook, as economic conditions remain volatile and consumer spending remains sluggish. CryptoLogic is focused on the factors it can control: its operating costs, robust new business activity, customer service and marketing support, and the company’s innovation pipeline.

 

Management believes the combination of new customers and lower costs positions the company for a return to profitability and cash generation in 2009, in line with previous guidance.

 

CryptoLogic will hold its annual general meeting in Toronto on Wednesday June 3, 2009. Details are available on the company’s website.

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Investor/analyst conference call

 

CryptoLogic will hold a conference call today at 8:30 a.m. Eastern time (1:30 p.m. BST) to update investors on the company’s earnings in Q1 2009. The details of the call are as follows:

 

 

To participate, please callfive to ten minutes prior to the start of the teleconference. This conference call will be recorded and available for replay approximately one hour after the completion of the call, up until midnight May 14, 2009. To listen to the replay, please dial 416-695-5800 or 1-800-408-3053, passcode 6303411#. A transcript of the call will also be made available on CryptoLogic’s website at www.cryptologic.comunder Investor Information.

 

About CryptoLogic® (www.cryptologic.com)

Focused on integrity and innovation, CryptoLogic Limited is a leading public developer and supplier of Internet gaming software. Its leadership in regulatory compliance makes it one of the very few companies with gaming software that is certified to strict standards similar to land-based gaming. WagerLogic® Limited, a wholly-owned subsidiary of CryptoLogic, is responsible for the licensing of its gaming software and services to blue-chip customers who offer their games to non-U.S. players around the world. For information on WagerLogic, please visit www.wagerlogic.com.

 

CryptoLogic’s common shares trade on the Toronto Stock Exchange (CRY, CXY), the NASDAQ Global Select Market (CRYP) and the Main Market of the London Stock Exchange (CRP).

 

For more information, please contact:

 

 

CRYPTOLOGIC FORWARD LOOKING STATEMENT DISCLAIMER:

Statements in this news release which are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainties including, without limitation, risks associated with the company’s financial condition and prospects, legal risks associated with Internet gaming and risks of governmental legislation and regulation, risks associated with market acceptance and technological changes, risks associated with dependence on licensees and key licensees, risks relating to international operations, risks associated with competition and other risks detailed in the Company’s filings with securities regulatory authorities. These risks may cause results to differ materially from those projected in the forward-looking statements.

 

 

 

 

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CRYPTOLOGIC LIMITED

CONSOLIDATED BALANCE SHEETS

 

(In thousands of US dollars)

 

 

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CRYPTOLOGIC LIMITED

CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME

(In thousands of US dollars, except per share data)

(Unaudited)

 

 

 

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CRYPTOLOGIC LIMITED

CONSOLIDATED STATEMENTS OF CASHFLOWS

(In thousands of US dollars)

(Unaudited)