FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of May, 2006
Commission File Number: 0-23696
RADICA GAMES LIMITED
(Translation of registrant's name into English)
Suite V, 6/F., 2-12 Au Pui Wan Street, Fo Tan, Hong Kong
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or 40-F
Form 20-F X Form 40-F
------ ------
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): ______
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): ______
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
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If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- _________________
Contents:
1. Annual Report to Stockholders.
2. Management Information Circular/Proxy Statement dated
April 20, 2006.
This Report on Form 6-K shall be deemed to be incorporated by reference into the
Registrant's Registration Statements on Form S-8 (No. 33-86960, No. 333-7000,
No. 333-59737, 333-61260 and 333-122248) and on Form F-3 (No. 333-7526 and No.
333-79005).
SIGNATURE
---------
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
RADICA GAMES LIMITED
Date: May 2, 2006 /s/ Craig D. Storey
----------------------- ------------------------------
Craig D. Storey
Chief Accounting Officer
RADICA GAMES LIMITED
ABOUT RADICA
Radica Games Limited (NASDAQ: RADA) is a Bermuda company headquartered in Hong
Kong. Radica is a leading developer, manufacturer and distributor of a diverse
line of electronic entertainment products including electronic games, youth
electronics, video game accessories and high-tech toys. Radica has subsidiaries
in the USA, Canada and the UK, and a factory in Dongguan, southern China. More
information about Radica can be found on the Internet at www.radicagames.com.
FINANCIAL HIGHLIGHTS
OPERATING RESULTS
(US DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 2005 2004 2003 2002 2001
Net Sales $ 162,779 $ 123,399 $ 105,200 $ 124,646 $ 98,554
Net income (loss) $ 10,532 $ 3,456 $ 12,491 $ 11,934 $ (4,374)
Diluted net income (loss) per share $ 0.54 $ 0.18 $ 0.66 $ 0.65 $ (0.25)
Weighted average number of common shares
and common equivalent shares 19,663 19,526 19,060 18,336 17,612
Financial Position at December 31,
(US DOLLARS IN THOUSANDS) 2005 2004 2003 2002 2001
Working capital $ 82,448 $ 71,775 $ 65,616 $ 50,155 $ 36,709
Total assets $ 117,268 $ 109,941 $ 102,214 $ 95,302 $ 88,407
Total liabilities $ 18,873 $ 18,864 $ 13,058 $ 20,666 $ 25,355
Shareholders' equity $ 98,395 $ 91,077 $ 89,156 $ 74,636 $ 63,052
TO OUR SHAREHOLDERS
Fiscal 2005 was a very good year for our company. It was a year when Radica set
the pace in the toy and game industry not just by leading in innovation, as we
have for years, but by leading in sales and profit growth as well. Our
performance proves that our strategy of focusing on electronic entertainment is
the right path to reach today's tech-savvy consumers of all ages. Our solid
execution in 2005 shows that the improvements we made in operating the Company
are starting to payoff. In summary Radica has shown the industry this year what
is possible if you dare to innovate and stick to your convictions.
Looking back on some of the year's more notable accomplishments:
o We achieved record sales of $162.8 million, an increase of 31.9% compared to
the U.S. industry decline of 3.7%
o According to NPD our U.S. retail sales growth was #2 in percentage growth and
#3 in absolute dollar growth in the toy and game industry
o International sales grew by 37.6% allowing us to increase the diversity of our
customer base
o Earnings per share increased by 133% to 84 cents per diluted share before
goodwill impairment charges in 2004 and 2005
o We expanded our factory capacity on schedule and delivered consistently on
time to our customers in the face of major sales growth
o We significantly improved our balance sheet in spite of our growth by lowering
inventory and increasing cash and securities by 33%
o We increased our dividend for the third straight year since instituting our
first dividend in January of 2004
o 20Q(TM) won the coveted Toy Of The Year ("TOTY(TM)") Award for the top
Electronic Entertainment Toy voted by our customers and peer companies
It was also a year when we improved our governance by significantly
strengthening our Board of Directors with the addition of four experienced,
proven executives: John Coulter, Floyd Glisson, Frank O'Connell and Richard
Wenz. We are delighted with the contributions each of these gentlemen, as well
as our continuing outside Directors, have made to the Company in the past year.
Moving forward to 2006, we are confident that we are on the right track to build
shareholder value in the future. Since 2001, when we refocused our strategy to
diversify and expand our own branded product line, we have grown our branded
product line sales at a compound annual growth rate of 20% per year. As a result
of this focus on our own brands, low margin manufacturing services sales have
decreased as expected, yet our combined total sales have still increased at a
compound annual rate since 2001 of 13% per year at much higher profit margins.
This growth has been driven by innovation and technology. We believe we are the
only company in our industry with meaningful expertise in creating, engineering
and manufacturing games and toys based on technology. Our competitors seem to
rely exclusively on outside resources, which often lead to poor quality and hit
or miss innovation. From our perspective we are the only "pure play" in the
tech-toy, game and gadget business. We are passionate about creating the most
exciting, innovative and high quality electronic products that are possible at
low prices and accessible to consumers of all ages and economic brackets. It is
really fun for our employees to pursue this mission, since each of us and our
families are consumers for these great games and gadgets. We believe this focus
gives us a competitive advantage that no other company seems to have.
Our passion for innovative games and gadgets is demonstrated in products such as
our hit 20Q product line. In 2006, we will push the envelope again with 20Q
languages and themed products. We are already up to 9 language versions and are
hoping to ship a total of 20 by the end of the year. We are also planning on 4
new 20Q versions including Rock & Pop Music, Movies/TV, Sports and 20Q Junior.
Since the development of these new themes takes many months of testing on the
internet, we may not complete all of these by Christmas of 2006 but we are
making solid progress toward our development goals already on the first of these
products.
We think that Cube World(TM) could be the next great gadget from Radica. After a
successful test late last year, we will roll out nationally by the fall of 2006.
We have 3 different series coming in 2006 of these interactive virtual stick
people. With Cube World, consumers will be able to build their own worlds of
stick people, play games with them, enjoy their crazy antics and have fun
showing their friends.
We have also received a lot of attention on our newest Sega(TM) joint
development project, Digi Makeover(TM). This Girl Tech(R) item allows girls to
experiment with new looks for themselves, using an actual digital photo of their
face on their own TV set, by changing their hair, makeup and jewelry.
These are just a few examples of our use of technology to create new forms of
fun for kids and adults of all ages. We are very excited about our 2006 product
line and our prospects for financial performance in 2006. But, what excites us
the most is our increasing access to new technologies and great ideas that seem
to be growing year by year. For example, while it is still early in our
development cycle, 2007 is shaping up to be the most innovative and technology
driven year in our history.
Much of our focus for the future will be on the "casual gamer." This is a market
that addresses the desires of tech-savvy consumers of all ages for simple,
accessible, casual entertainment that does not require expensive hardware or
complicated software as provided by today's video game platforms. It is
considered one of the fastest growing sectors in electronics as consumers are
increasingly looking to electronic gadgets as sources of entertainment. We are
already a leader in this market with our electronic handheld, tabletop and Play
TV games and are looking to expand our market leadership as this category
continues to develop and grow.
We also believe the Youth Electronic category is ripe for strong growth that
will allow us to leverage our market position in this category with our Girl
Tech product line. The decreasing costs of new technologies continue to amaze us
every year and open up opportunities at an
amazing pace. Finding these opportunities are what we are good at doing and what
we love to do as well.
We are optimistic and excited about the future at Radica. We hope you share our
enthusiasm for our mission as well as for the opportunities it creates. As we
move forward, we'd like to thank you for your continued and future support.
Sincerely,
/s/ Patrick S. Feely /s/ Jon N. Bengtson
Chief Executive Officer Chairman of the Board
March 17, 2006 March 17, 2006
DIRECTORS AND OFFICERS
BOARD OF DIRECTORS
JON N. BENGTSON PATRICK S. FEELY
Chairman of the Board and Director Chief Executive Officer and Director
TIMOTHY R. BUSCH FLOYD W. GLISSON
Director Director
JOHN A.F.H. COULTER FRANK J. O'CONNELL
Director Lead Director and Deputy Chairman
ALBERT J. CROSSON RICHARD E. WENZ
Director Director
CORPORATE OFFICERS
PATRICK S. FEELY LOUIS S.W. KWOK
Chief Executive Officer and Director General Manager, Factory
DAVID C.W. HOWELL ERIC K.W. CHAN
Executive Vice President, and Chief Financial Quality Director
Officer
JEANNE M. OLSON RICK C.K. CHU
President North American Operations Director of Customer Service
DENIS HORTON MARTIN FRAIN
President International, and Managing U.K. Marketing Director
Director, Radica U.K.
JAMES M. ROMAINE QUEENIE S.F. LAU
Senior Vice President Sales Director of International Sales
LAURENCE M. SCOTT JR. SEAN C.W. LEE
Senior Vice President of Asian Operations Finance Director - Asia
CRAIG D. STOREY DONNY K.W. SO
Vice President and Chief Accounting Officer Director of Project Management
LARRY C.N. CHENG BENEDICT K.S. TANG
Vice President Engineering Engineering Director
ROBERT E. ESTERBROOK HERMEN H.L. YAU
Vice President, UK Finance & Operations MIS Director
PAUL FOGARTY KENNETH K.C. YU
Vice President U.K. Sales Engineering Director
CORPORATE OFFICE
RADICA GAMES LIMITED
SUITE V, 6th Floor, 2-12 AU PUI WAN ST.
FO TAN, HONG KONG
TEL: HONG KONG 852.2693.2238
FAX: HONG KONG 852.2695.9657
INVESTOR RELATIONS
180 SOUTH LAKE AVENUE, SUITE 440
PASADENA, CA 91101
Tel: USA 1.626.744.1150
Fax: USA 1.626.744.1155
WEB SITES
WWW.RADICAGAMES.COM
WWW.GAMESTERUSA.COM
WWW.GAMESTERUK.COM
WWW.GIRLTECH.COM
WWW.SKANNERZ.COM
CORPORATE COUNSEL
SULLIVAN & CROMWELL LLP
1888 CENTURY PARK EAST, SUITE 2100
LOS ANGELES, CA 90067-1725
INDEPENDENT AUDITORS
KPMG
8TH FLOOR PRINCE'S BUILDING
10 CHATER ROAD
HONG KONG
REGISTRAR AND TRANSFER AGENT
U.S. STOCK TRANSFER CORPORATION
1745 GARDENIA AVENUE
GLENDALE, CA 91204
COMMON STOCK
NASDAQ NATIONAL MARKET SYSTEM
COMMON STOCK SYMBOL: RADA
RADICA GAMES LIMITED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 22, 2006
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of
Radica Games Limited (the "Company") will be held at The Westin Pasadena Hotel,
191 North Los Robles Avenue, Pasadena, California 91101 on Monday, May 22, 2006
commencing at 10:00 a.m., to consider and act upon the following proposals or
matters:
(1) To elect directors;
(2) To appoint KPMG as Independent Registered Public Accounting Firm
and to authorize the directors to fix the Independent Registered Public
Accounting Firm's remuneration; and
(3) To transact such further or other business matters as may properly
come before the meeting or any adjournments thereof.
Only shareholders of record at the close of business on March 31, 2006
will be entitled to notice of the meeting.
The Annual Report containing the Financial Statements of the Company
and the Report of the Independent Registered Public Accounting Firm thereon, the
Management Information Circular/Proxy Statement and a form of proxy are enclosed
with this Notice of Meeting.
By order of the Board of Directors,
DAVID C.W. HOWELL
Executive Vice President and
Chief Financial Officer
April 20, 2006
Fo Tan, Hong Kong
Note: If you are unable to be present at the meeting in person, please fill
in, date and sign the enclosed proxy and return it to the Chief
Executive Officer of the Company in the enclosed envelope.
RADICA GAMES LIMITED
MANAGEMENT INFORMATION CIRCULAR/PROXY STATEMENT
This Management Information Circular/Proxy Statement ("this Circular")
is furnished to shareholders of Radica Games Limited (the "Company") in
connection with the solicitation by and on behalf of the management of the
Company of proxies to be used at the Annual Meeting of Shareholders (the
"Meeting") of the Company to be held at The Westin Pasadena Hotel, 191 North Los
Robles Avenue, Pasadena, California 91101 on Monday, May 22, 2006 at 10:00 a.m.,
and at any adjournments, for the purposes set forth in the attached Notice of
Annual Meeting of Shareholders (the "Notice").
This Circular, the attached Notice and the accompanying form of proxy
are first being mailed to shareholders of the Company on or about April 20,
2006. The Company will bear all costs associated with the preparation and
mailing of this Circular, the Notice and form of proxy as well as the cost of
solicitation of proxies. The solicitation will be primarily by mail; however,
officers and regular employees of the Company may also directly solicit proxies
(but not for additional compensation) by telephone or telegram. Banks, brokerage
houses and other custodians and nominees or fiduciaries will be requested to
forward proxy solicitation material to their principals and to obtain
authorizations for the execution of proxies and will be reimbursed for their
reasonable expenses in doing so.
No person is authorized to give any information or to make any
representations other than those contained in this Circular and, if given or
made, such information must not be relied upon as having been authorized.
APPOINTMENT AND REVOCATION OF PROXIES
The persons named as proxies in the enclosed form of proxy are
directors or officers of the Company. A shareholder has the right to appoint a
person (who need not be a shareholder of the Company) as proxy to attend and act
for and on such shareholder's behalf at the Meeting other than the management
proxies named in the accompanying form of proxy. This right may be exercised
either by striking out the names of the management proxies where they appear on
the front of the form of proxy and by inserting in the blank space provided the
name of the other person the shareholder wishes to appoint, or by completing and
submitting another proper form of proxy naming such other person as proxy.
A shareholder who has given a proxy, in addition to revocation in any
other manner permitted by applicable law, may revoke the proxy within the time
periods described in this Circular by an instrument in writing executed by the
shareholder or by his/her attorney authorized in writing or, if the shareholder
is a body corporate, by an officer or attorney thereof duly authorized.
Shareholders desiring to be represented at the Meeting by proxy or to
revoke a proxy previously given, must deposit their form of proxy or revocation
of proxy at the office of Radica Enterprises, Ltd. ("Radica USA") at 13628-A
Beta Road, Dallas, Texas 75244, addressed to the Chief Executive Officer of the
Company, at any time up to and including the last business day preceding the day
of the Meeting, or any adjournment thereof, at which the proxy is to be used, or
on the day of the Meeting with the chairman of the Meeting prior to the Meeting,
or any adjournment thereof. If a shareholder who has completed a proxy attends
the Meeting in person, any votes cast by the shareholder on a poll will be
counted and the proxy will be disregarded.
- 1 -
VOTING OF PROXIES
THE SHARES REPRESENTED BY ANY VALID PROXY IN FAVOR OF THE MANAGEMENT
PROXIES NAMED IN THE ACCOMPANYING FORM OF PROXY WILL BE VOTED FOR, AGAINST OR
WITHHELD FROM VOTING (ABSTAIN) ON THE ELECTION OF DIRECTORS AND ON THE
REAPPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND THE
AUTHORIZATION OF THE DIRECTORS TO FIX THE REMUNERATION OF THE INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM, IN ACCORDANCE WITH ANY SPECIFICATIONS OR
INSTRUCTIONS MADE BY A SHAREHOLDER ON THE FORM OF PROXY. IN THE ABSENCE OF ANY
SUCH SPECIFICATIONS OR INSTRUCTIONS, SUCH SHARES WILL BE VOTED FOR THE ELECTION
AS DIRECTORS OF THE MANAGEMENT NOMINEES NAMED IN THIS CIRCULAR AND FOR THE
APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND THE
AUTHORIZATION OF THE DIRECTORS TO FIX THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM'S REMUNERATION AS STATED IN THIS CIRCULAR.
Each share of Common Stock is entitled to one vote on each matter
submitted to vote at the meeting. Under the Company's Bye-laws, action may be
taken by the shareholders at any duly convened Annual General Meeting of the
Company by a majority of the votes cast on each proposal (other than certain
proposals requiring a special resolution as defined in the Bye-laws). In the
case of elections of directors, the number of vacant positions (in the case of
this meeting, seven director positions) will be filled by the nominees who
receive the greatest number of votes at the meeting, with each shareholder being
entitled to vote for a number of directors equal to the number of vacancies, but
without cumulative voting. Although the Bye-laws permit voting by a show of
hands in certain circumstances, the Company follows the practice of voting by
poll or ballot (i.e. tabulating written votes submitted at the meeting in person
or by proxy).
The accompanying form of proxy confers discretionary authority upon the
persons named therein with respect to amendments or variations to matters
identified in the Notice and with respect to such other business or matters
which may properly come before the Meeting or any adjournments thereof.
RECORD DATE
The Board of Directors of the Company has fixed the close of business
on March 31, 2006, as the record date (the "Record Date") for the Meeting. Only
holders of record of the Common Stock as of the close of business on the Record
Date are entitled to receive notice of and to attend and vote at the Meeting.
- 2 -
VOTING SECURITIES AND THEIR PRINCIPAL HOLDERS
As of February 28, 2006 there were issued and outstanding 19,152,439
shares of the Common Stock of the Company.
The following table and the text that follows set forth information
with respect to shareholders which the Company believes own beneficially more
than 5% of the issued and outstanding shares of Common Stock of the Company, as
of February 28, 2006:
NAME AND ADDRESS OF NUMBER OF SHARES PERCENTAGE OF
BENEFICIAL OWNER COMMON STOCK
OUTSTANDING
------------------------------------- ---------------- -------------
Dito Devcar Corporation, et al. (1) 9,033,938 47.2%
c/o Richard H. Pickup
2321 Alcova Ridge Dr.
Las Vegas, Nevada 89134
Royce & Associates, LLC 1,216,150 6.4%
1414 Avenue of the Americas
New York, New York 10019
RAD Partners 1999 LLC, et al. (2) 1,111,813 5.8%
c/o The Busch Firm, 2532 Dupont Drive
Irvine, California 92612
-------------------------
(1) Includes shares of Common Stock owned by the following related persons:
Dito Devcar Corporation, DRP Charitable Unitrust, TMP Charitable Unitrust,
Dito Devcar, LP, Dito Caree, LP, Pickup Family Trust, Pickup Charitable
Unitrust II, TD Investments, LLC, Plus Four Equity Partners LP, Dito Devcar
Foundation and Richard H. Pickup.
(2) Includes shares of Common Stock owned by the following related persons: RAD
Partners 1999 LLC, Lenawee Trust, 92653 Trust, Busch Family Foundation and
Timothy R. Busch, who is a director of the Company.
The information in the above table is provided by individual
shareholders and therefore the Company cannot verify its accuracy.
- 3 -
ELECTION OF DIRECTORS
The following persons are nominees proposed by management for election
as directors of the Company to serve until the next annual meeting of the
shareholders of the Company or until their successors are duly elected or
appointed. A SHAREHOLDER MAY WITHHOLD HIS VOTE FROM ANY INDIVIDUAL NOMINEE BY
WRITING THE PARTICULAR NOMINEE'S NAME ON THE LINE PROVIDED IN THE FORM OF PROXY.
Management does not contemplate that any of the nominees will be unable to serve
as a director. If, as a result of circumstances not now contemplated any nominee
shall be unavailable to serve as a director, the proxy will be voted for the
election of such other person or persons as Management may select. The
management nominees for election as directors of the Company are Jon N.
Bengtson, Timothy R. Busch, John A.F.H. Coulter, Patrick S. Feely, Floyd W.
Glisson, Frank J. O'Connell and Richard E. Wenz. In April 2006, Mr. Albert J.
Crosson, one of the Company's directors, notified the Company that he was
resigning from the board and would not be standing for reelection at the May 22,
2006 annual meeting. The biographical information of all director nominees, and
of Mr. Crosson, follows the table below.
The following table and the textual discussion which follows sets forth
information as of February 28, 2006 (except as otherwise noted) with respect to
each of the management nominees for director and each executive officer,
including their names, ages, the number of shares beneficially owned by each
such person individually and as a group, all positions and offices with the
Company held by each such person (in addition to their directorships) and their
term of office as a director:
PERCENTAGE OF
NUMBER OF COMMON
TERM AS SHARES STOCK
AGE AT DIRECTOR OTHER POSITIONS AND OFFICES BENEFICIALLY OUTSTANDING
NAME 1/1/06 EXPIRES PRESENTLY HELD WITH THE COMPANY OWNED (1)
----------------------------- --------- ----------- ----------------------------------- -------------- --------------
Directors:
---------
Jon N. Bengtson (2) 62 2006 Chairman of the Board 348,460 1.8%
Timothy R. Busch (3)(5) 51 2006 None 1,156,813 6.0%
John A.F.H. Coulter (4) 62 2006 None 6,200
Albert J. Crosson (4)(6)(7) 75 2006 None 66,800
Patrick S. Feely (2) 59 2006 Chief Executive Officer 300,000 1.6%
Floyd W. Glisson (3) 58 2006 None 6,200
Frank J. O'Connell (4) 62 2006 Deputy Chairman of the Board and 7,092
Lead Director
Richard E. Wenz (2)(3) 56 2006 None 6,200
Executive Officers:
------------------
David C.W. Howell 43 Executive Vice President and 189,050 1.0%
Chief Financial Officer
Jeanne M. Olson 57 President North American 105,000
Operations
Denis Horton 54 President International and 40,000
Managing Director, Radica UK
James M. Romaine 60 Senior Vice President Sales 60,000
Laurence M. Scott, Jr. 60 Senior Vice President of Asian 30,000
Operations
Craig D. Storey 37 Vice President and Chief 36,000
Accounting Officer
Larry C.N. Cheng 42 Vice President Engineering 11,000
Robert E. Esterbrook 60 Vice President UK Finance & 16,000
Operations
Paul Fogerty 44 Vice President UK Sales 10,000
Louis S.W. Kwok 44 General Manager, Factory 12,000
Eric K.W. Chan 49 Quality Director --
Rick C.K. Chu 52 Director of Customer Service 4,000
Martin Frain 37 UK Marketing Director 4,000
- 4 -
PERCENTAGE OF
NUMBER OF COMMON
TERM AS SHARES STOCK
AGE AT DIRECTOR OTHER POSITIONS AND OFFICES BENEFICIALLY OUTSTANDING
NAME 1/1/06 EXPIRES PRESENTLY HELD WITH THE COMPANY OWNED (1)
----------------------------- --------- ----------- ----------------------------------- -------------- --------------
Queenie S.F. Lau 39 Director of International Sales --
Sean C.W. Lee 39 Finance Director - Asia 8,000
Donny K.W. So 42 Director of Project Management 4,000
Benedict K.S. Tsang 39 Engineering Director 4,000
Hermen H.L. Yau 46 MIS Director 100
Kenneth K.C. Yu 43 Engineering Director 4,000
-------------------------
(1) Except as indicated, in each case these shares represent less than 1% of
the total stock outstanding.
(2) Member of the Executive Committee.
(3) Member of the Audit Committee.
(4) Member of the Corporate Governance, Nominations and Compensation Committee.
(5) Mr. Busch is one of the persons included in the RAD Partners 1999 LLC
Group. See "Voting Securities and Their Principal Owners" above for
additional information.
(6) In the Company's Proxy Circular for 2004, we reported that Albert J.
Crosson, one of our directors, had a 1% beneficial interest in Crossfire,
LLC, which in turn had a beneficial ownership of 450,000 shares of our
common stock and the right for Crossfire to acquire an additional 400,000
shares over time from a limited liability company (RAD Partners 2001, LLC)
which was controlled by RAD Partners 1999 LLC, one of our principal
stockholders. Mr. Crosson has reported to the Company that in 2004 the
additional 400,000 shares were acquired by Crossfire and RAD Partners 2001
was liquidated, but Mr. Crosson sold his interest in Crossfire to his four
adult children. As a result, Mr. Crosson has disclaimed any beneficial
ownership in common stock of the Company, other than through his ownership
of stock options and restricted stock acquired as a director of the
Company.
(7) Mr. Crosson is not standing for reelection.
Messrs. Peter L. Thigpen and James J. O'Toole did not stand for
reelection at the May 2005 shareholder meeting. Theodore J. Eischeid resigned as
a Director in December 2005 and previously had resigned as President and Chief
Operating Officer of Radica Games.
The directors and executive officers of the Company as shown in the
above table, as a group (27 persons), owned beneficially 2,434,915 shares of
Common Stock (not including option shares not yet vested held by such persons),
or approximately 12.7% of the Common Stock outstanding, as of February 28, 2006.
The executive officers of the Company do not have any fixed term of
office and serve at the pleasure of the Board of Directors.
Jon N. Bengtson, formerly the Executive Vice President and Chief
Operating Officer of the Company, became the Chairman of the Board of the
Company in January 1996, and has been a director of the Company since January
1994. He was Chief Financial Officer of the Company from January 1994 to
September 1995, and was appointed President and Chief Executive Officer of
Radica USA in December 1993. Mr. Bengtson joined The Sands Regent in 1984 and
served in various positions, including Vice President of Finance and
Administration, Chief Financial Officer, Treasurer and Director, Senior Vice
President and Director and Executive Vice President and Chief Operating Officer
and Director until December 1993. From 1980 to 1984, Mr. Bengtson was a director
and served in various positions with International Game Technology ("IGT"),
including Treasurer and Vice President of Finance and Administration and Vice
President of Marketing. Mr. Bengtson is currently the Chairman of The Sands
Regent, Chairman of Altair Nanotechnologies, and founder and director of Pinyon
Technologies, a startup company developing smart wireless antenna technology.
Timothy R. Busch was appointed a director of the Company in May 2003.
Mr. Busch is CEO and founder of The Busch Firm. Founded in 1979, The Busch Firm
specializes in estate planning, asset protection, tax, corporate law,
- 5 -
partnership and real estate matters. He is also founder of Pacific Hospitality
Group, an Irvine-based hotel firm that constructs and operates hotels; St. Anne
School of Laguna Niguel, California, a private Christian elementary school; and
the new private JSerra Catholic High School. Mr. Busch serves on a number of
private and public boards in various industries, including Advanced Materials,
Inc. of Rancho Dominguez, California. Mr. Busch received his Juris Doctor degree
from the Wayne State University of Law, and his B.B.A., summa cum laude, degree
from Western Michigan University. He is an attorney licensed in Michigan,
California, Texas, and Washington, D.C., and a CPA licensed in Michigan, and
California. He is a member of the Orange County and Palm Springs Chapters of
Legatus, an organization of Catholic CEOs.
John A.F.H. Coulter is CEO and founder of Exact Products Ltd., a
company which specializes in new product development. Prior to this Mr. Coulter
had over 20 years of experience in the toy industry. He was founder and CEO of
TCL Marketing between 1992 and 2001 acting as the UK distributor for Radica, KID
design and Team Concepts. Prior to this he was a Corporate Vice President and
President of Europe for Tonka between 1986 and 1990. Between 1982 and 1986 he
helped build Mattel in the UK, as Managing Director and Vice President. Prior to
entering the toy industry he worked in the food industry and held senior
marketing management positions at United Biscuits, Brooke Bond Oxo, Cadbury
Schweppes and J. Lyons Grocery Division. Mr. Coulter is an Alumnus of London
Business School, Fellow of The Marketing Society (Chairman 1975-76), Fellow of
the Chartered Institute of Marketing and Fellow of the British Institute of
Management.
Albert J. Crosson was a director of the Company from May 2001 until his
resignation in April 2006. He became a director of International Game Technology
("IGT") in 1988. He became Vice Chairman of the Board of IGT in July 1996 and an
employee of such company. He resigned as an employee in December 2000 and as
Vice Chairman of the Board of IGT in August 2001. Mr. Crosson was employed for
34 years by ConAgra, Inc. and its predecessor companies. He was President of
ConAgra Grocery Products Companies from 1993 until January 1996 when he retired.
From 1986 until January 1993, he was President of Hunt-Wesson Foods, Inc., a
ConAgra company.
Patrick S. Feely has been Chief Executive Officer since April 1999. He
was Chief Operating Officer and President of the Company from July 1997 to
January 2005 and has been a director of the Company since July 1996. Prior to
joining Radica, he was President and CEO of Spectrum HoloByte, Inc. from 1993 to
1995; President of Bandai America, Inc. from 1991 to 1992; and founder and
President of Toy Soldiers, Inc. (which merged with Bandai America) from 1988 to
1991. Mr. Feely was an executive at Tonka, Inc. from 1982 to 1988, where he
served as President of the Tonka Products Division and a Director of the parent
company. At Tonka, in addition to his other responsibilities, he managed the
launch of the Sega video game system into the U.S. market. Mr. Feely was an
executive at Mattel Toys from 1977 to 1982 and began his career at RCA
Corporation in 1970. Mr. Feely is also an Advisor to the Toy Industry
Association Board of Directors, where he was Chairman from 2000 to 2002. He is
also a director of the Board of Trustees of the Toy Industry Foundation. He has
a BA from Duke University and an MBA from the University of Michigan.
Floyd W. Glisson has been Managing Member of GCM Investors, LLC since
December 13, 2005. He was CEO of Avantair, a privately held fractional aircraft
operator, from July 25, 2005 through October 7, 2005, CEO of Acres Gaming
Incorporated from July 1998 through October 2004, and Chairman of the Board from
April 2000 until the company was acquired in October 2003. He has a BS degree in
Accounting from the University of Akron, an MBA from the University of
Pittsburgh, and was a CPA in Colorado. His previous experience included audit
and consulting engagements with Arthur Andersen & Co., and financial management
positions with the Dial Corporation and ConAgra Foods Inc.
Frank J. O'Connell was appointed Lead Director and Deputy Chairman of
the Board in September 2005, and has been a director of the Company since May
2005. He was appointed head of the West Coast office at the Parthenon Group in
March 2005 having joined the firm in June 2004 as full time Senior Partner to
lead the consumer and specialty retail consulting practice. He joined Indian
Motorcycle Corporation in November 2000 as President and CEO to lead the
revitalization of this 100-year old American-Icon Brand. He became Chairman in
June 2002, eventually overseeing the liquidation of the company under a
California procedure in January 2005. From 1996 to 2000, he was Chairman,
President and CEO of Gibson Greetings, Inc., a public company in the greeting
card and social expression business. He negotiated the sale of Gibson to
American Greetings Corporation in March 2000. From 1991-1995 he was President
and Chief Operating Officer of Skybox International, a sports and entertainment
trading card company, which he took public. Mr. O'Connell has led other branded
companies including President of Reebok Brands, North America, President of HBO
Video, Founder and President of Fox Video Games and Senior VP of the Electronics
Divisions at Mattel. He spent the first 14 years of his career in the food
business, in various marketing and operating roles. Mr. O'Connell is a
co-founder of Tuckerman Capital, a
- 6 -
private equity fund in Hanover, NH. He serves on the Advisory Boards of the
Johnson Graduate School of Management, the Personal Enterprise Program, and the
Undergraduate Business Program at Cornell University, where he earned his
undergraduate and MBA degrees.
Richard E. Wenz is a consultant and private investor and currently
serves on the Board of Directors of Hunter Fan Company and Inplex Corporation.
From 2000 to 2002 Mr. Wenz was an operating partner/affiliate of DB Capital
Partners, the private equity arm of Deutsche Bank A.G. and served on the board
of directors of a number of portfolio companies including NewRoads, Inc. and
Jenny Craig International. Mr. Wenz also served as Chief Executive Officer of
Jenny Craig International during 2002. From 1997 to 2000 Mr. Wenz was President
and Chief Operating Officer of Safety 1st, Inc., a publicly traded juvenile
products company. During 1995 and 1996 Mr. Wenz was the Partner in charge of the
Chicago office with The Lucas Group, a business strategy consulting firm.
Previous to 1995 Mr. Wenz held senior executive positions with Wilson Sporting
Goods Co., Electrolux Corporation, The Regina Company and Professional Golf
Corporation. Mr. Wenz began his career in 1971 with Arthur Young & Company
(predecessor of Ernst & Young) and left the firm as a Partner in 1983. Mr. Wenz
is a certified public accountant.
David C.W. Howell has been Executive Vice President and Chief Financial
Officer of the Company since September 1995. He was President Asian Operations
from December 1998 to October 2005. He was Vice President and Chief Accounting
Officer from January 1994 to September 1995 and a director of the Company from
January 1994 until May 2005 when he did not stand for re-election to the Board.
From 1992 to 1994, Mr. Howell was the Finance Director and Company Secretary of
Radica HK. From 1984 to 1991, Mr. Howell was employed by Ernst & Young in
London, Hong Kong and Vietnam. He has a B.Sc. from Nottingham University, is a
Fellow of the Institute of Chartered Accountants in England and Wales, and is a
Fellow of the Hong Kong Society of Accountants.
Jeanne M. Olson was promoted to President North American Operations in
January 2004. She previously held the positions of Executive Vice President and
General Manager from 2002 to 2003, and Senior Vice President, Marketing from
2000 to 2002. Prior to joining the Company in 2000, she was Senior Vice
President of Sales & Marketing at Lyrick Studios, a privately-held children's
entertainment company. Ms. Olson has over 15 years of experience in the toy
industry, having held executive marketing and management positions at Mattel
Toys, Hasbro Inc., and Tonka Toys. She started her career in marketing research
with The Pillsbury Company and with Custom Research Inc.
Denis Horton has been Managing Director of Radica U.K. Ltd. since April
2003 and President Radica Europe since January 2005. He has over 18 years of
experience in the toy industry, previously having held Managing Director
positions at Mattel U.K., Fisher Price and Tonka Europe. Prior to entering the
toy industry, Mr. Horton worked in the food industry and held management
positions at United Biscuits and H J Heinz Co., Ltd. Mr. Horton was promoted to
President, International effective December 2005. He received his BA (Honors)
degree in Business Studies from Nottingham Trent University, and is a Fellow of
the Chartered Institute of Marketing in the U.K.
James M. Romaine joined Radica USA in September 1999 as Senior Vice
President of Sales for Radica USA. He has been an executive in the Toy Industry
for over 33 years. He spent the 1980's and into the early 90's at Parker
Brothers where he was Senior Vice President of Sales. Mr. Romaine was the
President of Play Tech Inc., a VTech company, for seven years before joining
Radica USA. His most recent educational credentials include the completion of
the Executive Program for General Managers at the University of Michigan's
School of Business.
Laurence M. Scott, Jr. was appointed Senior Vice President Asian
Operations in April 2002. Previously he was Managing Director - Asian Operations
for iLogistix Singapore Supply Chain Management Pte. Limited. Prior to that he
was Managing Director for MGA Entertainment (Hong Kong) Limited (1998 - 2000);
Vice President - Operations for Atari Corporation (1992 - 1996) and then Vice
President - Worldwide Materials for JTS Corporation (1996 - 1997) after Atari
merged with JTS; and President and Managing Director for Radofin Electronics
(Far East) Limited. (1975 - 1991). Mr. Scott has over 25 years experience with
Asian Manufacturing Operations. He has a BSc. and MBA from the University of
Southern California.
Craig D. Storey has been Vice President and Chief Accounting Officer of
the Company since July of 1999. Prior to that, he was the Financial Controller
of Radica USA from 1995 to 1999. From 1993 to 1995, Mr. Storey was employed by
Kafoury, Armstrong and Company in Reno, Nevada. He has a BS from Arizona State
University and is a member of the American Institute of Certified Public
Accountants and the Nevada Society of CPA's.
- 7 -
Larry C.N. Cheng has been Vice President Engineering of the Company
since April 2003. Prior to that, he was an Engineering Director from April 1999
to March 2003. Mr. Cheng joined the Company in 1991 and was an Engineering
Manager from April 1993 to March 1999. Mr. Cheng has more than 15 years
experience in ODM and the toy industry. He has a Higher Diploma in Marine
Electronics from the Hong Kong Polytechnic University.
Robert E. Esterbrook joined Radica U.K. as Finance Director and Company
Secretary during July 2001, becoming Vice President U.K. Finance and Operations
in 2004. He has held executive positions in the U.K. toy industry for over 25
years. He has previously worked at Tonka Toys, Playmates Toys and Ideal Toys as
Finance Director and was involved with the establishment of Mattel Toys in the
U.K. in 1980. He re-joined Invicta Plastics, Ltd, originators of the board game
Mastermind, as Managing Director from 1989 to 1991. He is a fellow member of the
Chartered Institute of Management Accountants and completed a program in legal
studies at Demontfort University.
Paul Fogarty commenced working as Sales Director for Radica U.K. in
January 2004 and was promoted to Vice President of U.K. Sales in January 2005.
He has over 10 years experience in the toy industry previously having held
senior management positions for Mattel U.K., Tyco Toys U.K. and JAKKS Pacific.
Prior to this Mr. Fogarty worked in the paper industry for Scott Paper Ltd. Mr.
Fogarty, who is originally from New Zealand, moved to England in 1989. He
received his Bachelor of Commerce degree in Marketing from the University of
Auckland.
Louis S.W. Kwok has been the General Manager, Factory from April 2004.
Prior to that, he was the Materials and Logistics Director of the Company from
March 2002 to March 2003 and the Plant Administration Director from January 2001
to February 2002. He has over 16 years experience in manufacturing plant
operations. Major companies he has worked with are Fymetics (Hong Kong) Limited,
Management, Investment and Technology Company Limited, and Sunciti Manufacturers
Limited. He has a Higher Diploma in Mechanical Engineering, Diploma in
Mechanical Engineering (Manufacturing Technology), and National Diploma in
Mechanical Engineering.
Eric K.W. Chan has been the Quality Director of the Company since July
2, 2001. Prior to that, he was Senior QA Manager/Quality Director in various
major toy companies such as Tonka Kenner Parker, Hasbro and Galoob. Mr. Chan has
over 20 years of solid experience in QA/QC operations in the toy industry. He
has a Diploma in Production and Industrial Engineering, Diploma in Management
Study and Diploma in Industrial Management (U.K.).
Rick C.K. Chu has been the Director of Customer Service of the Company
since January 2004. Prior to that, he was the International Sales Director of
the Company from April 1996 to December 2003 and the International Sales
Administration Manager of the Company from April 1994 to April 1996. He has more
than 17 years experience in international trade and business management. From
1988 to 1994, he was the Senior Manager managing the sales administration
function and marketing of industrial materials for a leading trading company in
Hong Kong.
Martin Frain joined Radica U.K. as Marketing Director in May 2004.
Prior to that he was marketing manager at Hasbro U.K., where he worked from
1999. He entered the toy industry in 1993 when he started a games and toys
distribution business in Southern Africa. Before entering the industry he was a
publishing director at licensing agency Americom, and a journalist on a daily
newspaper. He received his MBA from the University of Bath.
Queenie S.F. Lau joined the Company as Sales Manager in January 2004
and was promoted to Director of International Sales in January 2006. She has
over 10 years experience in the toy industry. She received her Bachelor of
Business degree in Administrative Management from University of South Australia,
Graduate Diploma in Marketing from The Chinese University of Hong Kong and is a
member of the Chartered Institute of Marketing (U.K.).
Sean C.W. Lee has been Finance Director - Asia of the Company since
September 2002. Prior to that, he was the Financial Controller of Dongguan
factory. He has more than 10 years experience in electronic manufacturing field.
He has a Professional Diploma in Accountancy from City University of Hong Kong.
He is also a member of HKICPA and ACCA.
Donny K.W. So joined the Company as Director of Project Management in
September 2002. Before joining the Company, he held management positions in
product development at VTech HK for 4 years. Mr. So has 17 years experience in
project management and product development in major appliances, electronics and
toys industries. He obtained his Six Sigma experience while working for General
Electric Company, and led the development of Total Cycle Time management skill
at VTech. He has a Postgraduate Certificate in Business Administration from the
Open University of Hong Kong, a BA
- 8 -
in Industrial Design from the Hong Kong Polytechnic University and a Diploma in
Product Design from LWL Technical Institute.
Benedict K.S. Tsang has been Engineering Director since April 2005.
Prior to that, he was a Mechanical Engineering Manager from May 1999 to March
2005. He has 16 years working experience in product design, manufacturing of
household, networking products and toys industry. He received his BEng degree in
Mechanical Engineering from University of Newcastle upon Tyne and Master degree
in Polymer Engineering from University of Manchester Institute of Science
&Technology.
Hermen H.L. Yau has been the MIS Director of the Company since March 1,
1994. From 1982 to 1994, he worked in Outboard Marine Corporation Asia Ltd in
various positions in the Systems & Data Processing Department. He has more than
18 years experience in Information Technology and particular experience in IBM
mid-range computer systems and solutions. He has a Higher Diploma in Computer
Studies from the National Computing Center U.K. and a Diploma in Management
Studies from the Hong Kong Polytechnic and Hong Kong Management Association.
Kenneth K.C. Yu has been as Engineering Director - Asia of the Company
since June 2004. Prior to that, he was the engineering manager of a Dongguan
factory. He has seventeen years working experience in product engineering,
production and industrial engineering, product design, project management and
manufacturing of toys and computer accessories. His academic background is
engineering and he received a Master in Engineering Business Management in 2003.
He is a member of IEE and also a Chartered Engineer.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During fiscal 2005, the Board of Directors of the Company met four
times. Each of the directors, during his tenure as a director, attended at least
75% of the meetings of the Board of Directors and of each committee of the board
on which he has served.
The responsibilities of the Executive Committee include exercising the
authority of the Board of Directors as to matters that may arise between
meetings of the Board of Directors. The Executive Committee is comprised of
three members of the Board, being Messrs. Bengtson, Feely, and Wenz. In fiscal
2005, it did not hold any meetings.
The responsibilities of the Audit Committee include recommending to the
Board of Directors the independent registered public accountants to be selected
to conduct the annual audit of the books and accounts of the Company, reviewing
the proposed scope of such audit and approving the audit fees to be paid, and
reviewing the adequacy and effectiveness of the internal auditing, accounting
and financial controls of the Company with the independent registered public
accountants and the Company's financial and accounting staff. The Audit
Committee consists entirely of independent directors. The Audit Committee is
comprised of three members of the Board, being Messrs. Wenz (Chairman), Busch
and Glisson. In fiscal 2005, it held ten meetings.
The responsibilities of the Corporate Governance, Nominations and
Compensation Committee include reviewing and approving the slate of director
nominees for election to the Company's board of directors, recommending
individuals to serve on the standing committees of the Board, and developing and
recommending to the board a set of corporate governance principles applicable to
the Company. The responsibilities of the Committee also include reviewing and
approving executive appointments and remuneration and supervising the
administration of the Company's employee benefit plans. The Corporate
Governance, Nominations and Compensation Committee consists entirely of
independent directors. The Committee is comprised of three members of the Board,
being Messrs. O'Connell (Chairman), Coulter and Crosson (until his resignation
from the Board). In fiscal 2005, it held three meetings.
COMMITTEE CHARTERS
Our Board of Directors has adopted charters applicable to our Audit
Committee and our Corporate Governance, Nominations and Compensation Committee.
Copies of these charters are available at our website. Go to the investor
relations link at www.radicagames.com to inspect copies of our committee
charters.
- 9 -
AUDIT COMMITTEE FINANCIAL EXPERT
During 2004, our board of directors determined that Theodore J.
Eischeid qualified as an audit committee financial expert and that Mr. Eischeid
was independent within the meaning of the listing standards applicable to Radica
as a Nasdaq National Market company. However, on January 31, 2005, Mr. Eischeid
was named President and Chief Operating Officer of Radica and resigned from the
Audit Committee. Timothy R. Busch was then named Chairman of the Audit Committee
in replacement of Mr. Eischeid. The board determined that Mr. Busch was an
independent director within the meaning of such listing standards but made no
determination that Mr. Busch would qualify as an audit committee financial
expert. However, the board did determine that Mr. Busch met the financial
sophistication requirement of such listing standards. On May 23, 2005, the board
of directors determined that Richard E. Wenz qualified as an audit committee
financial expert and that Mr. Wenz was independent within the meaning of the
applicable listing standards and appointed him as the audit committee financial
expert.
The charter of the Audit Committee requires that all members of such
committee be independent and the board expects that ordinarily at least one
member will qualify as an audit committee financial expert.
CODE OF ETHICS
The Company has adopted a Code of Ethics that is applicable to all
directors, senior management and employees. The Code of Ethics contains written
standards that are reasonably designed to deter wrongdoing and to promote honest
and ethical conduct and the other standards applicable to public companies. A
copy of the Code of Ethics is available at our website. Go to the investor
relations link at www.radicagames.com to inspect a copy of our Code of Ethics.
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
Information responsive to this item is contained in the Company's
Annual Report on Form 20-F for the year ended December 31, 2005 and is
incorporated herein by reference. See Item 7 in such Report on Form 20-F.
COMPENSATION OF OFFICERS AND DIRECTORS
COMPENSATION
In fiscal 2005, the aggregate amount of compensation paid to all
executive officers and directors and former officers and directors for services
in all capacities was approximately $4.3 million. In addition, bonus payments of
$2.4 million were accrued in 2005 for 2005 performance and are expected to be
paid in April 2006.
In fiscal 2005, each outside (i.e. non-employee and non-affiliated)
director of the Company received compensation according to the following
schedule:
o Board retainer $10,000 annually
o Quarterly board meeting fee $1,250 per meeting
o Committee retainer $4,000 annually (excluding
Executive Committee)
o Audit chair additional retainer $4,000 annually
o Other committee chairs additional
retainer $2,000 annually
Payments are made quarterly. Any director may elect to receive some or all of
the above fees payable in shares of the Company's Common Stock valued at the
then current market price. In addition to the above schedule for outside
director compensation, where appropriate in light of the time commitment
involved, the Company will compensate an outside director for accepting the
responsibility of chairing an ad hoc or other special committee. Any such
compensation will be included in the aggregate amount of compensation in the
year in which it is paid (see, e.g., first paragraph of this section above.)
- 10 -
Directors who are employees or affiliates of the Company are not paid
any fees or additional remuneration for service as members of the Board of
Directors or its Committees.
Commencing in May 2005, upon each annual re-election to the Board of
Directors, each outside director and the Chairman of the Board is entitled to
receive 600 shares of restricted common stock per quarter commencing upon such
re-election date (i.e. 2,400 shares per annum) at the then current market price.
The weighted average price of the restricted common stock granted during 2005
was $8.75 per share. These shares become free of any restrictions, in equal
annual installments, over two years from the date of grant.
Upon the initial election or appointment of a new outside director to
the Board of Directors, such director is entitled to receive 5,000 shares of
restricted common stock at the then-current market price. These shares become
free of any restrictions, in equal annual installments, over two years from the
date of grant.
EMPLOYMENT AGREEMENTS
Messrs. Feely, Howell, Bengtson, Horton and Ms. Olson have each entered
into individual employment agreements with the Company. In addition, the Company
provides residences for Mr. Howell and Mr. Scott in Hong Kong. Additional
information regarding employment agreements is contained in the Company's Annual
Report on Form 20-F for the year ended December 31, 2005 and is incorporated
herein by reference. See Item 6 in such Report on Form 20-F.
OPTIONS TO PURCHASE SECURITIES FROM THE COMPANY
The Company's 1994 Stock Option Plan provided for the granting of stock
options to directors, officers and employees of the Company. The Stock Option
Plan is administered by the Corporate Governance, Nominations and Compensation
Committee (hereinafter, the "Committee") of the Board of Directors. The total
number of shares of the Company's Common Stock that may be purchased pursuant to
stock options under the Stock Option Plan shall not exceed in the aggregate 3.7
million shares. The Stock Option Plan terminated in October 2004 but continues
in effect for outstanding options under such plan.
At the Annual Shareholders Meeting in May 2004, the 2004 Omnibus Equity
Incentive Plan which replaced the 1994 Stock Option Plan was approved. The 2004
Omnibus Equity Incentive Plan includes an authorization for a total of 500,000
shares of the Company's common stock to be issued under the plan and the plan
will expire in 2014 unless earlier terminated.
The option price per share with respect to each option shall be
determined by the Committee but shall normally be not less than 100% of the fair
market value of the Company's Common Stock on the date such option is granted.
Ordinarily, either twenty percent or thirty-three and a third percent of the
stock options vest and become exercisable on each of the first five or three
anniversaries of the date of grant, and all of the options expire in ten years.
In fiscal year 2005, an aggregate of 82,500 options (exclusive of the
outside directors' options and net of stock options that were both issued and
forfeited in the year) were granted to directors, officers and other employees
under the Omnibus Equity Incentive Plan to purchase the Company's shares at
exercise prices ranging from $7.90 to $8.81 per share.
At the end of fiscal year 2005, after giving effect to all prior
exercises and forfeitures of options, an aggregate of 1,238,152 options
(exclusive of the outside directors' options) were outstanding at exercise
prices ranging from $1.09 to $19.63 per share, and of such amount a total of
812,250 options were held by directors and executive officers of the Company as
a group. Also, an aggregate of 115,000 outside director's options were
outstanding at exercise prices ranging from $2.90 to $9.55 per share. During
2005, a total of 305,800 shares were issued upon the exercise of options, at
exercise prices ranging from $2.00 to $8.35 per share. Prior to 2005, a total of
2,146,678 shares had been issued upon the exercise of options, at exercise
prices ranging from $0.57 to $11.00 per share.
Information respecting options granted and exercised in the fiscal
periods of the Company prior to and including 2005 is contained in the Company's
Annual Report on Form 20-F for the year ended December 31, 2005, and is
incorporated herein by reference. See Item 6 in such Report on Form 20-F and
Note 11 of the Notes to the Consolidated Financial Statements included therein.
- 11 -
APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Management is recommending, and the person named in the enclosed form
of proxy will, in the case of a ballot and in the absence of specifications or
instructions to vote against or not to vote (abstain) in the form of proxy, vote
for the re-appointment of KPMG as the Independent Registered Public Accounting
Firm of the Company, to hold office until the next annual meeting of
shareholders of the Company or until a successor is duly elected or appointed,
and the authorization of the directors to fix the Independent Registered Public
Accounting Firm's remuneration. KPMG has been the Independent Registered Public
Accounting Firm of the Company since 2001.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information responsive to this item is contained in the Company's
Annual Report on Form 20-F for the year ended December 31, 2005 and is
incorporated herein by reference. See Item 16C in such Report on Form 20-F.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2007 annual
meeting of shareholders must be received by the Company at the principal
executive offices of Radica USA in the United States (see address below) on or
before December 31, 2006 in order to be considered for inclusion in the
Company's 2007 management information circular/proxy statement.
In addition, under the Company's Bye-Laws, unless a person is a
continuing director or is recommended by the board of directors for election, no
person shall be eligible for election to the office of director at any meeting
of shareholders unless, not less than 60 days nor more than 90 days before the
day appointed for the meeting, there shall have been given to the Secretary of
the Company notice in writing by a shareholder who is qualified to be present
and vote at the meeting of his intention to propose such person for election and
also notice in writing, signed by the person to be proposed, of his willingness
to be elected.
OTHER MATTERS
Management is not aware of any amendments or variations to matters
identified in the Notice or of any other matters that are to be presented for
action to the Meeting other than those described in the Notice.
Information stated in this Circular is dated as of February 28, 2006
except where otherwise indicated. The contents and the mailing of this Circular
have been approved by the Board of Directors of the Company.
PATRICK S. FEELY JON N. BENGTSON DAVID C.W. HOWELL
Chief Executive Officer Chairman of the Board Executive Vice President
and Chief Financial Officer
THE COMPANY FILES AN ANNUAL REPORT ON FORM 20-F WITH THE SECURITIES AND
EXCHANGE COMMISSION. A COPY OF THIS CIRCULAR AND THE ANNUAL REPORT CONTAINING
THE FINANCIAL STATEMENTS OF THE COMPANY AND MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, WILL BE SENT TO ANY PERSON
UPON REQUEST IN WRITING ADDRESSED TO INVESTOR RELATIONS AT RADICA USA'S OFFICE
AT 13628-A BETA ROAD, DALLAS, TEXAS 75244. COPIES ARE WITHOUT CHARGE TO ANY
SHAREHOLDER.
- 12 -
FORM OF PROXY
RADICA GAMES LIMITED
ANNUAL MEETING
MAY 22, 2006
The undersigned shareholder of Radica Games Limited hereby appoints the
person selected below,
Patrick S. Feely, or failing him Jon N. Bengtson, or failing
him David C.W. Howell (strike out if another proxy is to be
appointed)
___________________________________________ (Other)
as such shareholder's proxy, with the power of substitution, and hereby
authorizes such person to represent and to vote as designated below all of the
Common Stock, $0.01 par value per share, of Radica Games Limited (the "Company")
that the undersigned is entitled to vote at the Company's Annual Meeting of
Shareholders to be held at The Westin Pasadena Hotel, 191 North Los Robles
Avenue, Pasadena, California 91101 on Monday, May 22, 2006, or any postponement
or adjournment thereof.
Every shareholder of the Company is entitled to appoint one proxy (or
representative in the case of a corporation) to attend the meeting and vote on
such shareholder's behalf. The proxy need not be another shareholder of the
Company. To be effective, this Proxy must be completed and deposited at the
principal office of Radica Enterprises, Ltd. ("Radica USA") located at 13628-A
Beta Road, Dallas, Texas 75244, not later than the last business day preceding
the day of the meeting, or any postponement or adjournment thereof.
Please insert the number of shares registered in your name in the space
provided on the reverse. If no number is inserted, this Proxy will be deemed to
relate to the total number of shares registered in your name.
PLEASE INDICATE WITH AN "X" IN THE APPROPRIATE BOX HOW YOU WISH YOUR
PROXY TO VOTE. IF THIS PROXY IS RETURNED WITHOUT AN INDICATION AS TO HOW THE
PROXY SHALL VOTE, THE PROXY WILL VOTE FOR, AGAINST OR ABSTAIN IN RESPECT OF
PROPOSALS 1 AND 2 AS SET FORTH IN THE ACCOMPANYING CIRCULAR.
The Board of Directors recommends a vote for all Nominees listed in
Proposal 1 and adoption of Proposal 2.
1. Election of Directors FOR ALL NOMINEES LISTED BELOW FOR THE TERMS WITHHOLD AUTHORITY TO VOTE
SET FORTH IN THE PROXY STATEMENT (EXCEPT AS FOR ALL NOMINEES LISTED BELOW. |_|
MARKED TO THE CONTRARY BELOW). |_|
Jon N. Bengtson Timothy R. Busch John A.F.H. Coulter Patrick S. Feely
Floyd W. Glisson Frank J. O'Connell Richard E. Wenz
(INSTRUCTION: To withhold authority to vote for any individual nominee
write that nominee's name on the line provided below.)
--------------------------------------------------------------------------------
2. To approve the appointment of KPMG as the Company's Independent Registered
Public Accounting Firm and to authorize the directors to fix the Independent
Registered Public Accounting Firm's remuneration.
|_| FOR |_| AGAINST |_| ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
This Proxy must be signed by the appointing shareholder, or such
shareholder's attorney duly authorized in writing, exactly as such shareholder's
name appears herein. In the case of joint shareholders, all joint shareholders
must sign. In the case of a corporation, the Proxy must be executed under its
Common Seal or the hand of its attorney duly authorized in writing. In the case
of partnerships, the Proxy must be signed in the partnership name by an
authorized person. Each power of attorney, or a duly certified copy thereof,
must be deposited at the principal office of Radica USA not later than the last
business day preceding the day of the meeting, or any postponement or
adjournment thereof.
This proxy, when properly executed, will be voted in the manner
directed by the undersigned stockholder. If no direction is given, this proxy
will be voted for Proposals 1 and 2. The undersigned hereby acknowledges receipt
of the accompanying Notice of Annual Meeting and Circular and hereby revokes any
proxy or proxies heretofore given.
Please mark, sign, date and return this Proxy in the accompanying
prepaid envelope.
Date: _____________________________, 2006
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(Printed Name of Shareholder)
-----------------------------------------
(Signature)
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(Printed Name of Shareholder)
-----------------------------------------
(Signature)
-----------------------------------------
(Number of Shares held)
(PLEASE SIGN EXACTLY AS YOUR NAME APPEARS
ON THIS PROXY. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
IF SHARES ARE HELD JOINTLY, BOTH OWNERS
SHOULD SIGN.)