Radica Games Limited (Radica) manufactures and markets a diverse line of electronic entertainment products including handheld and tabletop games, high-tech toys and video game accessories 

Sales for Q1 2006 decreased by 18% to $18.5 million from $22.5 million for the same period in 2005. Sales decreases in the quarter were primarily due to expected reductions in declining areas of low margin business including declines of $2.4m in plug and play TV games, $0.7m in video game accessories and $0.8m of manufacturing services revenues during the quarter. Excluding these areas of business, sales were about even with last year in spite of a change in shipping patterns from our largest customer, the later timing of Easter in 2006 and the comparative pipeline fill of 20Q in early 2005.

Pat Feely, Radica's CEO, commented, "We feel very positively about our prospects for 2006. Point of sale retail movement at our top North American accounts is off to a strong start and was 21% above last year in unit sales through April in total, and even excluding 20Q was up by 4%. As for our shipping in Q1 we had some comparatives in Q1 of 2005 that are not indicative of our full year potential for 2006. The declines came in non-core business areas that were expected. These declining areas were significant contributors to Q1 sales in 2005 but were only a small percentage of sales in the second half of 2005. The rest of our business was relatively flat, but it should also be noted that heavy ordering in Q4 of 2005 from our largest customer of handheld games and 20Q depressed their Q1 orders significantly. Additionally, in Q1 we were up against earlier Easter timing and pipeline fill of 20Q in Q1 of 2005."

"Our planned growth for 2006 continues to be targeted at the second half where our key product introductions such as new 20Q Themes, Cube World and Digi Makeover are all focused. In addition, the ordering pattern of our largest customer has changed this year as they have notified us of their decision to significantly increase the percentage of their orders from domestic supply and to decrease the percentage from import supply in 2006. This shift has the potential to improve our profits for the full year since domestic business is more profitable than import business; however, it also means that volume will shift more to the second half of the year than in recent years," said Feely.

"We are pleased with our fall product listings at our key domestic accounts and believe they are on track with our expectations. 20Q continues to show strong point of sale retail movement in our key accounts and on a year to date basis was 53% ahead of last year through April in units sold. Promotional plans by major accounts are meeting our expectations for fall for our expanded 20Q product line as well as several of our other key product lines, I also want to note that we reached $60 million in cash and securities this quarter or about $3.13 per share after paying a recently increased dividend of $0.05 for the quarter." said Feely.