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Exhibit 99.1
UNITED STATES BANKRUTCY COURT
DISTRICT OF DELAWARE
In re:   Case No. 09-10465 (KG)
Midway Games Inc., et. al.,   Jointly Administered
Debtors   Reporting Period: 02/01/10 - 02/28/10
MONTHLY OPERATING REPORT
             
        Document   Affidavit
REQUIRED DOCUMENTS   Form No.   Attached   Attached
Schedule of Cash Receipts and Disbursements
  MOR -1   X    
Bank Reconciliations, Copies of Bank Statements and Cash Disbursements Journals
  MOR -la       X
Schedule of Professional Fees Paid
  MOR -lb   X    
Statements of Operations
  MOR -2   X    
Balance Sheets
  MOR -3   X    
Status of Postpetition Taxes
  MOR -4       X
Summary of Unpaid Postpetition Accounts Payable
  MOR -4   X    
Accounts Receivable Reconciliation and Aging
  MOR -5   X    
Debtor Questionnaire
  MOR -5   X    
I declare under the penalty of perjury (28 U.S.C. Section 1746) that this report and the attached documents are true and correct to the best of my knowledge and belief.
     
/s/ Ryan G. O’Desky
  5/13/10
 
   
Ryan G. O’Desky
  Date
Chief Financial Officer and Treasurer
   
The Debtors are: Midway Games Inc., Midway Home Entertainment Inc., Midway Amusement Games, LLC, Midway Interactive Inc., Surreal Software Inc., Midway Studios — Austin Inc., Midway Studios — Los Angeles Inc., Midway Games West Inc., Midways Home Studios Inc., and Midway Sales Company, LLC.

1 of 13


 

In re:   Case No. 09-10465 (KG)
Midway Games Inc., et al.,   Jointly Administered
Debtors   Reporting Period: 02/01/10 — 02/28/10
MOR-1: SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS
FOR THE MONTH ENDED FEBRUARY 28, 2010
                                                                                         
    Midway                                                             Midway              
    Home     Midway                                             Midway     Studios —              
    Entertainment     Amusement     Midway     Midway Games     Midway Home     Midway Sales     Surreal     Studios —     Los Angeles     Midway     Current Month  
Debtor   Inc.     Games, LLC     Interactive Inc.     West Inc.     Studios Inc.     Company, LLC     Software Inc.     Austin Inc.     Inc.     Games Inc.     Total  
Cash at beginning of the month
  $ 72,162,031.00     ($14,668,661.08 )   $ (6,332.90 )     ($650.00 )     ($650.00 )     ($650.00 )     ($4,165,506.17 )   $ 380,255.70       ($4,820.71 )     ($14,297,112.04 )   $ 39,397,903.80  
RECEIPTS
                                                                                       
Trade accounts receivable
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00  
Cash held in trust
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00  
Proceeds related to asset sales
    30,000.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       30,000.00  
Other
    185,572.11       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       4.31       185,576.42  
 
                                                                 
Total Receipts
  $ 215,572.11     $ 0.00     $ 0.00     $ 0.00     $ 0.00     $ 0.00     $ 0.00     $ 0.00     $ 0.00     $ 4.31     $ 215,576.42  
 
                                                                 
DISBURSEMENTS
                                                                                       
Cost of goods sold
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00        
Payroll
    292.24       514.54       0.00       0.00       0.00       0.00       0.00       17.66       0.00       29,257.14       48,001.58  
Royalties
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00        
Sales commissions
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00        
Rent — facilities
/equipment/taxes
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       1,000.00       1.000.00  
Utilities
    0.00       6,948.08       0.00       0.00       0.00       0.00       0.00       0.00       0.00       5,921.71       12,869.79  
Benefits
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00        
Insurance
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00  
IT equipment
    0.00       1,114.43       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       1,114.43  
Legal
    0.00       1,938.76       0.00       0.00       0.00       0.00       0.00       0.00       0.00       4,498.70       6,437.46  
Maintenance
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00        
Shipping
    0.00       551.82       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       551.82  
Supplies
    0.00       1,445.94       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       1,445.94  
Consultants and contractors
    0.00       110.11       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       110.11  
Board of Directors
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00  
Employee expense reports
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       1,108.12       1,108.12  
Taxes
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00  
Purchasing curds
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00        
 
                                                                 
Subtotal operating disbursements
    292.24       12,623.68       0.00       0.00       0.00       0.00       0.00       17.66       0.00       41,785.67       54,719,25  
 
                                                                 
US Trustee fees
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00  
Huron Consulting Group
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00  
Blank Rome LLP
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00        
Ernst & Young, LLP — Midway Auditors
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00        
Dewey & LeBoeuf LLP
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00        
Milbank, Tweed, Hadley & McCloy LLP
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00        
Richards, Layton & Finger, P.A.
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       29,788.61       29,788.61  
FTI Consulting, Inc.
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00        
Incentive Bonus
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00  
Lazard Freres and Co. LLC
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00  
De Pardieu Brocas Maffei
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00  
Epiq Bankruptcy Solutions
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       15,207.75       15,207.75  
Kramer Levin Naftalis
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00  
Venturity Financial Partners
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       13,232.55       13,232.55  
 
                                                                 
Subtotal restructuring disbursements
    0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       0.00       58,228.91       58,228.91  
 
                                                                 
Total Disbursements
  $ 292.24     $ 12,623.68     $ 0.00     $ 0.00     $ 0.00     $ 0.00     $ 0.00     $ 17.66     $ 0.00     $ 100,014.58     $ 112,948.16  
 
                                                                 
Receipts less disbursements
  $ 215,279.87       ($12,623.68 )   $ 0.00     $ 0.00     $ 0.00     $ 0.00      $ 0.00       ($17.66 )     ($0.00 )     ($100,010.27 )   102,628.26  
 
                                                                 
Cash at end of the month
  $ 72,377,310.87     $ (14,681,284.76 )   $ (6,332.90 )   $ (650.00 )   $ (650.00 )   $ (650.00 )   $ (4,165,506.17 )   $ 380,238.04     $ (4,820.71 )     ($14,397,122.31 )   $ 39,500,532.06  
 
                                                                 
 
General Notes:
 
1)   Cash balances may not be same as the bank statements or ledger balances as they do not reflect unavailable funds, outstanding checks and other timing differences.
 
2)   Included in the cash at the end of the month is one restricted letter of credit at Midway Studios — Austin Inc. (MSA) for $24,860.
 
3)   Disbursements reflect when the disbursement accounts are funded rather than when the item clears the bank.
 
4)   Timing of receipts and internal accounting can cause period-end discrepancies in respective intercompany reporting.
 
5)   Because there were no transfers to debtors in possession accounts or estate disbursements made by outside sources, the total disbursements line above will be used to calculate U.S. Trustee quarterly fees.
 
6)   U.S. Trustee quarterly fees are paid by Midway Games Inc. (MGI) on behalf of each Debtor and expenses are allocated based on fees calculated for each Debtor.
 
7)    Proceeds form assets sales reported at MHE were recieved upon completion of the sale of certain fixed assets to various third parties.
 
8)   Other cash reciepts reported at MHE includes $129k payment received from Microsoft for Corporate Trade Payment and a double payment of $30k received from Electronics Arts for intellectual property to be returned in May ‘10.
FORM MOR-1

2 of 13


 

In re:
Midway Games Inc., et al.,
Debtors
  Case No. 09-10465 et seq. (KG)
Jointly Administered
Reporting Period: 02/01/10-02/28/10
MOR-1A: BANK RECONCILIATIONS CERTIFICATION
I, Ryan G. O’Desky, Chief Financial Officer and Treasurer of Midway Games Inc., hereby certify that, to the best of my knowledge, information, and belief, all of the Debtors’ bank account balances for the reporting period ended February 28, 2010 have been reconciled to monthly bank statements in an accurate and timely manner. The attached schedule lists each of the Debtors’ bank accounts and the book balance of the respective account as of the end of the reporting period. No bank accounts were opened or closed during the reporting period.
         
     
/s/ Ryan G. O’Desky     5/13/10 
Ryan G. O’Desky     Date 
Chief Financial Officer and Treasurer      
     
 
FORM MOR-1A

3 of 13


 

UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re:
Midway Games Inc., et al.,
Debtors
  Case No. 09-10465 (KG)
Jointly Administered
Reporting Period: 02/01/10 - 02/28/10
MOR-1A: DEBTORS’ BANK ACCOUNTS
                         
Debtor   Bank/Institution     Account Number     Book Balance  
 
 
                       
Midway Home Entertainment Inc.
  Wells Fargo Bank N.A.     #583884     $ 0.00  
Midway Home Entertainment Inc.
  Wells Fargo Bank N.A.     #4030110425     $ 0.00  
Midway Home Entertainment Inc.
  Bank of America     #8765261617     $ 201,289.66  
Midway Home Entertainment Inc.
  Bank of America     #8666525641     $ 211,682.34  
Midway Home Entertainment Inc.
  Bank of America     #8188615313     $ 50,296.84  
Midway Home Entertainment Inc.
  Bank of America     #8188615318     $ 37,902,049.34  
 
                       
Midway Amusement Games, LLC
  Bank of America     #8765763067     $ 153,854.55  
Midway Amusement Games, LLC
  Bank of America     #8666305125     $ 54,780.05  
Midway Amusement Games, LLC
  Bank of America     #8666018766     $ 3,292.51  
Midway Amusement Games, LLC
  Wells Fargo Bank N.A.     #4030010797     $ 0.00  
Midway Amusement Games, LLC
  JP Morgan     #806021788     $ 0.00  
 
                       
Surreal Software Inc.
  Bank of America     #8765216044     $ 4,169.23  
 
                       
Midway Studios — Austin Inc.
  Wells Fargo Bank N.A.     #561549       24,860  
Midway Studios — Austin Inc.
  Bank of America     #8765216049     $ 39,198.85  
 
                       
Midway Studios — Los Angeles Inc.
  Bank of America     #8765216063     $ 2,323.40  
 
                       
Midway Games Inc.
  Bank of America     #8666302112     $ 0.00  
Midway Games Inc.
  Bank of America     #8765763147     $ 198,025.67  
Midway Games Inc.
  Bank of America     #8666302112     $ 486,355.26  
Midway Games Inc.
  Bank of America     #8188615332     $ 70.00  
The Debtors affirm that no bank accounts were opened in the period.

4 of 13


 

     
In re:
Midway Games Inc., et al.,
Debtors
  Case No. 09-10465 (KG)
Jointly Administered
Reporting Period: 02/01/10-02/28/10
MOR-1B: SCHEDULE OF PROFESSIONAL FEES AND EXPENSES PAID
                                                                         
    Period     Amount             Check   Amount Paid     Filing to Date  
Payee   Covered     Approved     Payer     Date     Number   Fees     Expenses     Fees     Expenses  
Blank Rome LLP 1
                                                  $ 2,160,331.71     $ 72,468.95  
 
                                                                       
Kramer Levin Naftalis 2
                                                        $ 232,546.50     $ 4,786.13  
 
                                                                       
Mesirow Financial 2
                                                          $ 50,000.00     $ 0.00  
 
                                                                       
Dewey & LeBoeuf LLP 3
                              $ 608,963.85     $ 51,366.96  
 
Ernst & Young, LLP 4
                                                          $ 168,823.80     $ 836.00  
 
                                                                       
Milbank, Tweed Hadley & McCIoy LLP 5
                                                          $ 2,366,481.75     $ 201,848.93  
 
                                                                       
Richards, Layton & Finger, P.A. 6
    11/01/09-11/30/09     $ 15,670.48     Midway Games Inc.     02/18/10     CHK: 75050   $ 11,962.40     $ 3,708.08                  
 
    12/01/09-12/31/09     $ 14,118.13     Midway Games Inc.     02/25/10     CHK: 75053   $ 11,514.80     $ 2,603.33     $ 268,392.20     $ 36,335.55  
 
FTI Consulting, Inc. 7
                                                          $ 1,465,174.07     $ 20,500.87  
 
                                                                       
Lazard Freres & Co. LLC 8
                                                          $ 581,785.71     $ 7,890.64  
 
                                                                       
Huron Consulting Group 9
                                                          $ 94,857.40     $ 0.00  
 
                                                                       
De Pardieu Brocas Maffei 10
                                                          $ 9,210.59     $ 0.00  
 
Venturity Financial Partners LLC 11
    12/01/09-12/31/09     $ 13,232.55     Midway Games Inc.     02/18/10     CHK: 75057   $ 11,980.00     $ 1,252.55     $ 11,980.00     $ 1,252.55  
 
                                                               
 
                                          $ 35,457.20     $ 7,563.96     $ 8,018,547.58     $ 397,286.58  
 
                                                               
 
1   Lead bankruptcy counsel for the Debtors
 
2   Lead counsel and financial advisors working on behalf of Thomas Parties
 
3   Special counsel to the independent members of the post-petition Board of Directors of the Debtors
 
4   Independent auditor to the Debtors
 
5   Counsel to the Official Committee of Unsecured Creditors
 
6   Co-counsel to the Official Committee of Unsecured Creditors
 
7   Financial advisor to the Official Committee of Unsecured Creditors
 
8   Investment banker to the Debtors
 
9   Bankruptcy consultants to the Debtors
 
10   Counsel to the Official Committee of Unsecured Creditors
 
11   Accounting services provider to the Debtors
FORM MOR-1B

5 of 13


 

     
In re:   Case No. 09-10465 (KG)
Midway Games Inc., et al.,   Jointly Administered
Debtors   Reporting Period: 2/1/10 to 2/28/10
MOR-2: STATEMENTS OF OPERATIONS
FOR THE MONTH ENDED JANUARY 31, 2010
                                                                                                 
            Midway   Midway                                    
    Midway Home   Amusement   Interactive   Midway Games   Midway Home   Midway Sales   Surreal Software   Midway Studios —   Midway Studios —            
    Entertainment, Inc.   Games, LLC   Inc.   West Inc.   Studios Inc.   Company, LLC   Inc.   Austin Inc.   Los Angeles Inc.   Midway Games Inc.   Adjustments and    
Case number for individual Debtors   09-10467   09-10466   09-10468   09-10472   09-10473   09-10474   09-10469   09-10470   09-10471   09-10465   Allocations (1)   Total of All Debtors
     
REVENUES
                                                                                               
Gross sales
  $     $     $     $     $     $     $     $     $     $     $     $  
Royalty and other revenue
          402.29                                                             402.29  
Allowances
                                                                       
     
Net revenues
          402.29                                                             402.29  
COST OF GOODS SOLD
                                                                                             
Product costs and distribution
                                                                       
Royalties
                                                                       
Product development costs
                                                                         
     
Total cost of goods sold
                                                                       
     
Gross profit
          402.29                                                             402.29  
OPERATING EXPENSES
                                                                                               
Rent expense
    (7,483.87 )                                                     600.00             (6,883.87 )
Insurance
                                                                       
Payroll and benefits
                                                          27,581.59             27,581.59  
All other administrative
    2,565.39       4,201.89                                     17.66             35,215.47             42,000.41  
     
Total operating expenses
    (4,918.48 )     4,201.89                                     17.66             63,397.06             62,698.13  
Net Profit (Loss) Before Other Income & Expenses
    4,918.48       (3,799.60 )                                 (17.66 )         (63,397.06 )           (62,295.84 )
OTHER INCOME AND EXPENSES
                                                                                               
Interest income
    (7,266.47 )                                                     (4.31 )           (7,270.78 )
Interest expense
                                                                       
Other (income) and expense, net
    (38,373.68 )                                   (3,267.03 )                             (41,640.71 )
     
Income (loss) before reorganization items
    50,558.63       (3,799.60 )                             3,267.03       (17.66 )         (63,392.75 )           (13,384.35 )
REORGANIZATION ITEMS
                                                                                               
Professional fees (2)
                                                          318,808.40             318,808.40  
U.S. Trustee quarterly fees (3)
                                                          990.00             990.00  
     
Total reorganization expenses
                                                          319,798.40             319,798.40  
Provision for income taxes
                                                                       
     
Net income (loss)
  $ 50,558.63     $ (3,799.60 )   $     $     $     $     $ 3,267.03     $ (17.66 )   $   $ (383,191.15 )   $     $ (333,182.75 )
     
NOTES:
GENERAL — In the ordinary course of business, individual Debtors may make payments to third parties on behalf of other Debtor entities. When this occurs, receivable and payable amounts are recorded at the paying and receiving entities, respectively, for the value of each such payment made. Amounts owed by Debtor entities to other Midway Games Inc. (MGI) subsidiaries are repaid in accordance with company policy. For example, all payroll-related payments are made to employees through Midway Home Entertainment Inc. (MHE) and the related expenses are reported by each employee’s legal entity; each legal entity with employees incurs a liability to MHE for the amounts paid. Also, no Insider Compensation expenses outside of the normal course of business were incurred during the period presented.
(1)   In performing the accounting for its day-to-day operations. MGI and its Debtor and non-Debtor affiliates had previously allocated common expenses among MGI subsidiaries and capitalized qualifying product development expenses in accordance with U.S. generally accepted accounting principles (GAAP). As a result of the reduced amount of these common expenses and the discontinuation of the capitalization of product development expenses, no amounts were reported in the Adjustments and Allocations column for February 2010.
 
(2)   Professional Fees, which are paid by MGI, are recorded as expense when incurred. All of these fees represent accruals and have not been paid as of February 28, 2010. No allocation of the benefits of such fees has been made to any other Debtor or non-Debtor entities. In addition to the amounts reported in this line item, $2,413,078 in fees have either been submitted to the Bankruptcy Court for approval or have been approved by the Bankruptcy Court but payment had not yet been made as of February 28, 2010.
 
(3)   U.S. Trustee Quarterly Fees are estimated and were invoiced and paid in April 2010 for the period from January-March 2010.
FORM MOR-2

6 of 13


 

     
In re:   Case No. 09-10465(KG)
Midway Games Inc., et al.,   Jointly Administered
Debtors   Reporting Period: 02/01/10 to 02/28/10
MOR-3: BALANCE SHEETS
February 28, 2010
                                                 
    Midway Home     Midway Amusement     Midway Interactive     Midway Games     Midway Home     Midway Sales  
    Entertainment Inc.     Games, LLC     Inc.     West Inc.     Studios Inc.     Company, LLC  
Case number for individual Debtors   09-10467     09-10466     09-10468     09-10472     09-10473     09-10474  
     
ASSETS
                                               
CURRENT ASSETS
                                               
Cash and cash equivalents
  $ 38,365,318.18     $ 211,927.11     $     $     $     $  
Restricted cash
                                   
Receivables, gross
    409,666.00       67,831.98                          
Allowances
    (409,666.00 )     (67,831.98 )                        
     
Receivables, net
                                   
Inventories
                                   
Prepaid expenses and other current assets
    13,647.00       38,960.85                          
     
TOTAL CURRENT ASSETS
    38,378,965.18       250,877.96                          
 
                                               
Property and equipment, net (2)
                                   
Investment in subsidiaries (3)
                29,265,000.00       (29,265,000.00 )            
Due from Debtors
    240,140,302.75       310,078,384.68       430,000.00       32,428,938.86              
Due from non-Debtor MGI subsidiaries
    195,040.77                                
     
TOTAL ASSETS
  $ 278,714,308.70     $ 310,329,272.64     $ 29,695,000.00     $ 3,163,938.86     $     $  
     
 
                                               
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
                                               
 
                                               
LIABILITIES NOT SUBJECT TO COMPROMISE (Post-petition)
Amounts due to Insiders (4)
                                   
Accounts payable
    1,189,855.41       88,724.95                          
Accrued compensation and related benefits (5)
    11,779.46       (72,739.15 )                        
Accrued royalties
    168,188.75                                
Accrued selling and marketing
    1,355.35                                
Deferred revenue
                                           
Current portion of long-term debt
                                   
Convertible senior notes, less unamortized discount
                                   
Other accrued liabilities
    405,159.35       (354,701.44 )                        
     
TOTAL POST-PETITION LIABILITIES
    1,776,338.32       (383,715.64 )                        
LIABILITIES SUBJECT TO COMPROMISE (Pre-Petition) (6)
Secured liabilities
  $ 1,086.71     $     $     $     $     $  
Priority liabilities
    409,119.25       868,739.94                          
Non-priority liabilities
    245,794,138.85       564,106,878.04       22,957,000.00       48,011,629.43              
     
TOTAL PRE-PETITION LIABILITIES
    246,204,344.81       564,975,617.98       22,957,000.00       48,011,629.43              
 
                                               
Due to Debtors
    12,579,843.66       21,929,596.31                          
Due to non-Debtor MGI subsidiaries
                                   
Deferred income taxes
    13,012,498.00                                
 
                                               
STOCKHOLDERS’ EQUITY (DEFICIT)
                                               
Common stock
    1,000.00                                
Additional paid-in capital
    1,704,243.52             2,750,000.00       (186,000.00 )            
Retained earnings (accumulated deficit)
    3,436,040.39       (276,237,226.01 )     3,988,000.00       (44,661,690.57 )            
Postpetition contributions (distributions) (draws) (5)
                                   
Treasury stock
                                   
     
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)
    5,141,283.91       (276,237,226.01 )     6,738,000.00       (44,847,690.57 )            
     
 
                                               
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
  $ 278,714,308.70     $ 310,329,272.64     $ 29,695,000.00     $ 3,163,938.86     $     $  
     

7 of 13


 

     
In re:   Case No. 09-10465(KG)
Midway Games Inc., et al.,   Jointly Administered
Debtors   Reporting Period: 02/01/10 to 2/28/10
MOR-3: BALANCE SHEETS (continued)
February 28, 2010
                                         
            Midway Studios —     Midway Studios —     Midway Games        
    Surreal Software Inc.     Austin Inc.     Los Angeles Inc.     Inc.        
Case number for individual Debtors   09-10469     09-10470     09-10471     09-10465     Total of All Debtors (1)  
     
ASSETS
                                       
CURRENT ASSETS
                                       
Cash and cash equivalents
  $ 4,169.23     $ 39,198.85     $ 2,323.40     $ 684,450.93     $ 39,307,387.70  
Restricted cash
                      24,860.00       24,860.00  
Receivables, gross
                            477,497.98  
Allowances
                            (477,497.98 )
     
Receivables, net
                             
Inventories
                             
Prepaid expenses and other current assets
                      1,200.00       53,807.85  
     
TOTAL CURRENT ASSETS
    4,169.23       39,198.85       2,323.40       710,510.93       39,386,055.55  
 
                                       
Property and equipment, net (2)
                             
Investment in subsidiaries (3)
                      21,472,773.11       21,472,773.11  
Due from Debtors
          253,368.44       156,098.20       659,659,980.37       1,243,147,073.30  
Due from non-Debtor MGI subsidiaries
                      3,798,333.69       3,993,374.46  
     
TOTAL ASSETS
  $ 4,169.23     $ 292,567.29     $ 158,421.60     $ 685,641,598.10     $ 1,307,999,276.42  
     
 
                                       
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
                                       
 
                                       
LIABILITIES NOT SUBJECT TO COMPROMISE (Post-petition)
                                       
Amounts due to Insiders (4)
                             
Accounts payable
    10,980.05       83,036.70       (2,906.34 )     91,629.24       1,461,320.01  
Accrued compensation and related benefits (5)
    11,216.52       (30,601.51 )     (5,894.61 )     2,691.63       (83,547.76 )
Accrued royalties
                            168,188.75  
Accrued selling and marketing
                            1,355.35  
Deferred revenue
                             
Current portion of long-term debt
                             
Convertible senior notes, less unamortized discount
                             
Other accrued liabilities
    (16,103.22 )     113,621.75       11,871.31       3,617,091.81       3,776,939.56  
     
TOTAL POST-PETITION LIABILITIES
    6,093.35       166,056.94       3,070.36       3,711,412.68       5,324,256.01  
 
                                       
LIABILITIES SUBJECT TO COMPROMISE (Pre-Petition) (6)
                                       
Secured liabilities
  $     $ 4,029.62     $     $     $ 5,116.33  
Priority liabilities
    172,202.55       47,932.43       4,884.62       228,056.03       1,730,934.82  
Non-priority liabilities
    49,191,595.71       64,740,369.34       30,531,064.78       338,089,036.87       1,363,421,713.02  
     
TOTAL PRE-PETITION LIABILITIES
    49,363,798.26       64,792,331.39       30,535,949.40       338,317,092.90       1,365,157,764.17  
 
                                       
Due to Debtors
    3,714,858.98       725,934.94       32,792.16       42,335,144.33       81,318,170.38  
Due to non-Debtor MGI subsidiaries
                             
Deferred income taxes
                            13,012,498.00  
 
                                       
STOCKHOLDERS’ EQUITY (DEFICIT)
                                       
Common stock
                      935,403.55       936,403.55  
Additional paid-in capital
    4,187,009.00       2,575,167.27       3,594,163.08       522,497,846.03       537,122,428.90  
Retained earnings (accumulated deficit)
    (57,267,590.36 )     (67,966,923.25 )     (34,007,553.40 )     (212,172,266.62 )     (685,089,209.82 )
Postpetition contributions (distributions) (draws) (5)
                             
Treasury slock
                      (9,783,034.77 )     (9,783,034.77 )
     
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)
    (53,080,581.36 )     (65,391,755.98 )     (30,413,390.32 )     301,277,948.19       (156,813,412.14 )
     
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
  $ 4,169.23     $ 292,567.29     $ 158,421.60     $ 685,641,598.10     $ 1,307,999,276.42  
     

8 of 13


 

     
In re:   Case No. 09-10465(KG)
Midway Games Inc., et. al.,   Jointly Administered
Debtors   Reporting Period: 2/1/10 to 2/28/10
MOR-3: BALANCE SHEETS
 
NOTES:
 
GENERAL — In the ordinary course of business, individual Debtors may make payments to third parties on behalf of other Debtor entities. When this occurs, receivable and payable amounts are recorded at the paying and receiving entities, respectively, for the value of each such payment made Amounts owed by Debtor entities to other Midway Games Inc. (MGI) subsidiaries are repaid in accordance with company policy. For example, all payroll-related payments are made to employees through Midway Home Entertainment Inc. (MHE) and the related employee’s legal entity; each legal entity with employees incurs a liability to MHE for the amounts paid.
 
(1)   Each individual entity’s balances are presented in their respective columns, this “Total of All Debtors” column is provided 10 show the balances of the bined Debtor entities as a whole for information purposes only.
 
(2)   As a result of the sales of assets to WBEI and THQ Inc., the remaining fixed assets of the Debtors except for those being used at its corporate offices (recorded at MGI) were determined to have a value of zero; therefore, these balances have been written down to zero.
 
(3)   Investment in subsidiaries represent amounts invested by certain MGI subsidiaries in other MGI subsidiaries. Negative amounts are reported in this line item by the investee subsidiary to represent the amounts invested in that subsidiary.
 
(4)   Insiders are defined as directors and officers of any Debtor entities or non-Debtor MGI subsidiaries. There were no amounts due to Insiders outside of the normal course of business as of February 28, 2010.
 
(5)   Accrued compensation and related benefits exclude amounts owed as of the petition date for paid time off, severance, relocation and supplemental insurance; these amounts are included in the Pre-petition Liabilities section. Certain amounts have been paid post-petition related to these pre-petition amounts owed. The accruals for paid time off fluctuate based on employees’ usage of paid time off earned. Similarly, the liability for paid time off for MGI employees is recorded by Midway Amusement Games, LLC (MAG), but is reported as a pre-petition liability by MGI. In both of these instances, accrued compensation and related benefits reported by the Debtor entities that incurred the liability have been reduced by these amounts. The accrued compensation and benefits amounts owed to employees who were hired by WBEI and THQ Inc. in connection with those asset sales have been removed from the books as these amounts are now the responsibility of the purchasers.
 
(6)   Pre-petition liabilities as of the current balance sheet date include post-petition amounts paid or applied, pursuant to Bankruptcy Court orders, to claims previously reported as of the petition date in the Schedules of Assets and Liabilities.

9 of 13


 

In re:
Midway Games Inc., et al.,
Debtors
  Case No. 09-10465 et seq. (KG)
Jointly Administered
Reporting Period: 02/01/10-02/28/10
MOR-4: DECLARATION REGARDING THE STATUS OF POSTPETITION TAXES
FOR THE REPORTING PERIOD ENDED FERUARY 28, 2010
Ryan G, O’Desky hereby declares and states:
1. I am Chief Financial Officer and Treasurer for Midway Games Inc. and its affiliated debtors and debtors in possession (the “Debtors”) in Case No. 09-10465 et seq. (KG) (Jointly Administered). I am familiar with the Debtors’ day-to-day operations, business affairs and books and records.
2. All statements in this Declaration are based on personal knowledge, review of the relevant documents, discussions with other employees of the Debtors, or my opinion based upon my experience and knowledge of the Debtors’ operations and financial condition. I am authorized to submit this Declaration on behalf of the Debtors.
3. To the best of my knowledge, information, and belief, during the reporting period the Debtors filed all necessary federal, state, and local tax returns and made all required and undisputed postpetition tax payments in connection therewith on a timely basis or, the Debtors have promptly addressed any late tax filings (and made any corresponding payments) that may have been missed during the reporting period due to unintentional oversight.1
         
5/13/10
  /s/ Ryan G. O’Desky  
 
     
Date
  Ryan G. O’Desky  
Chicago, Illinois
  Chief Financial Officer and Treasurer  
 
1   The Debtors use Paychoice, a third party payroll processor, for the remittance of payroll taxes, Paychoice is responsible for remitting both the employee and employer portion of payroll tax liabilities to the appropriate jurisdictions. Moreover, by first day orders entered by the Court on February 13, 2009, the Debtors received authority to pay certain prepetition payroll and “trust fund” taxes.
FORM MOR-4

10 of 13


 

In re:
Midway Games Inc., et al.,
Debtors
  Case No. 09-10465 (KG)
Jointly Administered
Reporting Period: 02/01/10 - 02/28/10
MOR-4: SUMMARY OF UNPAID POSTPETITION ACCOUNTS PAYABLE
                                                 
    Number of Days Past Due  
    Current     1-30     31-60     61-90     over 90     Total  
Accounts Payable
  $ 250.00   $ 50,874.68     $ 865.00     $ 0.00     $ 146,686.37     198,676.05  
Professional Fees 1
  $ 0.00     $ 134,782.75     $ 37,209.60     $ 0.00     $ 57,344.35     229,336.70  
 
                                   
 
Total Postpetition Accounts Payable
  $ 250.00     $ 185,657.43     $ 38,074.60     $ 0.00     $ 204,030.72     $ 428,012.75  
 
                                   
Notes
The postpetition accounts payable reported represents open and outstanding trade vendor invoices that have been entered into the Debtors’ accounts payable system during the period that the Debtors intend to pay in accordance with the various orders of the Bankruptcy Court. This summary does not include any accruals for invoices not yet received or approved which may be included in accounts payable on the balance sheet.
 
1)   Includes $128,913.45 to Milbank, Tweed, Hadley, & McCloy; $5,869.30 to Richards, Layton, & Finger; $34,214.60 to Blank Rome LLP; $2,995 to Venturity Financial Partners, $35,000.00 to FD-Ashton Partners, and $22,344.35 to Huron Consulting for Restructuring Professional Fees not included on MOR-1b because the Debtors were not yet authorized to pay these amounts.
FORM MOR-4

11 of 13


 

     
In re:    
Midway Games Inc., et. al.,   Case No. 09-10465 (KG)
Debtors   Jointly Administered
    Reporting Period: 02/1/10 - 02/28/10
MOR-5: ACCOUNTS RECEIVABLE RECONCILATION AND AGING
         
ACCOUNTS RECEIVABLE RECONCILATION   Amount
Total trade accounts receivable at the beginning of the reporting period
    $409,666.00  
+ Amounts billed during the period
     
- Amounts collected and adjusted during the period
  $ 0.00  
Total trade accounts receivable at the end of the reporting period
  $ 409,666.00  
         
ACCOUNTS RECEIVABLE AGING   Amount
0 -30 days old
  $ 0.00  
31 - 60 days old
    0.00  
61-90 days old
     
90 + days old
  $ 409,666.00  
Total trade accounts receivable
  $ 409,666.00  
Royalty receivables
    67,831.98  
Other receivables
     
Allowance for doubtful accounts
    (477,497.98 )
Net receivables
  $ 0.00  
 
General Notes
 
1)   All trade accounts receivable and related allowances are reported at Midway Home Entertainment Inc.
 
2)   Trade accounts receivable are aged from invoice date based on individual customer credit terms.
 
3)   Royalty receivables are not aged and are reported at Midway Amusement Games, LLC.
 
4)   Receivable allowances are not aged.
 
5)   All trade accounts receivable from customers with invoiced amounts outstanding, net of discounts and allowances, were sold to Warner Bros. Entertainment Inc. on July 10, 2009. The remaining trade accounts receivable amounts relate to customers for which only credit memos and/or outstanding price protection remained that had not been previously applied to invoices.
 
    All customer credits were moved to current liabilities in October 2009.
MOR-5: DEBTOR QUESTIONNAIRE
             
Must be completed each month   Yes   No
1.
  Have any assets been sold or transferred outside of the normal course of business this reporting period? If yes, provide an explanation below.   X — see (1) below and Exhibit A    
 
           
2.
  Have any funds been disbursed from any other account than a debtor in possession account this reporting period? If yes, provide an explanation below.       X
 
           
3.
  Have all post petition tax returns been timely filed? If no, provide an explanation below.   X    
 
           
4.
  Are workers compensation, general liability, and other necessary insurance coverages in effect? If no, provide an explanation below.   X    
 
           
5.
  Has any bank account been opened during the period? If yes, provide documentation identifying the opened account(s). If an investment account has been opened provide the required documentation pursuant to Delaware Local Rule 4001-3.       X
 
(1)   Property, plant and equipment and other miscellaneous assets previously used by certain of the Debtors were sold pursuant to the Court’s de minimus asset sale order during February 2010 for a total of $30,000.00 in cash. See attached detail for these sales. These assets were no longer usable by the Debtors.
FORM MOR-5

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In re:    
Midway Games Inc., et. al.,   Case No. 09-10465 (KG)
Debtors   Jointly Administered
    Reporting Period: 02/01/10 - 02/28/10
MOR-5: ACCOUNTS RECEIVABLE RECONCILATION AND AGING
EXHIBIT A — ASSET SALES DETAIL
                 
            AMOUNT OF
PURCHASER / ADDRESS   SALE DATE   ASSETS SOLD (QUANTITY)   CASH RECEIVED
 
               
Electronic Arts
  2/19/2010   Game Code & Other Intellectual   $ 30,000.00 (1)
 
               
Total of all sales
          $ 30,000.00  
 
Notes
 
1)   Amounts paid were a single amount for all items purchased and were not assigned values per item.

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