8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 2, 2006

MIDWAY GAMES INC.

(Exact Name of Registrant as Specified in Charter)

Delaware (State or Other Jurisdiction of Incorporation)	1-12367 (Commission File Number)	22-2906244 (I.R.S. Employer Identification Number)
2704 West Roscoe Street, Chicago, Illinois		60618
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (773) 961-2222

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

     On November 2, 2006, Midway Games Inc. issued a press release discussing financial results for the third quarter of 2006 and financial guidance. A copy of the press release is attached to this report as Exhibit 99.1. Exhibit 99.1 is incorporated herein by this reference.

     The information in this Current Report on Form 8-K, including the exhibit included herewith, is furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits

Exhibit No.	Description
99.1	Press Release of Midway Games Inc. dated November 2, 2006.

SIGNATURE

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

	MIDWAY GAMES INC.
November 2, 2006	By:	/s/ David F. Zucker
		David F. Zucker
		President and Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release of Midway Games Inc. dated November 2, 2006.

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACT:
Geoffrey Mogilner
Midway Games Inc.
(773) 961-2222
gmogilner@midway.com

MIDWAY REPORTS 2006 Q3 RESULTS

     Chicago, Illinois, November 2, 2006 — Midway Games Inc. (NYSE: MWY) today announced results of operations for the three month period ended September 30, 2006. The Company also confirmed its prior revenue guidance and updated its earnings guidance for the full year ending December 31, 2006, as well as provided revenue and earnings guidance for the fourth quarter ending December 31, 2006.

THIRD QUARTER RESULTS

Net revenues for the 2006 third quarter were $27.4 million, compared with 2005 third quarter net revenues of $29.5 million. The 2006 third quarter loss applicable to common stock was $22.2 million which includes $1.0 million of stock option expense, or a loss of $0.24 per share, compared with a 2005 third quarter loss applicable to common stock of $29.1 million, or $0.33 per share.

Other highlights during the third quarter of 2006 include:

• Midway launched The Ant Bully for PlayStation 2, Nintendo GameCube, Game Boy Advance, and PC; Spy Hunter: Nowhere to Run for PlayStation 2 and Xbox; and The Grim Adventures of Billy & Mandy for PlayStation 2 and GameCube.

• Midway’s real-time strategy PC title launched in June 2006, Rise & Fall: Civilizations at War, which topped the PC charts in the United Kingdom, recently won the prestigious “Best Strategy Game” award from the British Academy of Film and Television Arts, or BAFTA.

David F. Zucker, president and chief executive officer, commented, “We were pleased to exceed our financial expectations for the third quarter, and to continue our relationship with Warner Bros. with the third quarter release of The Ant Bully and The Grim Adventures of Billy & Mandy, and our scheduled release of the Happy Feet game in conjunction with the movie release mid-November.”

OUTLOOK

For the quarter ending December 31, 2006, Midway expects net revenues of approximately $86 million and net income of approximately $2 million. For the fourth quarter, Midway has already released Mortal Kombat: Armageddon for PlayStation 2 and Xbox, and Unreal Anthology for the PC. During the remainder of the quarter, the Company expects to release Happy Feet for multiple platforms; The Grim Adventures of Billy & Mandy, Rampage: Total Destruction, and The Ant Bully for the Nintendo Wii; Blitz: The League for the Xbox 360; and Blitz: The League Overtime, Mortal Kombat: Unchained, and Rush for the PlayStation Portable (PSP). For the year ending December 31, 2006, Midway continues to

expect net revenues of $155 million, and is revising full year earnings expectations to a net loss of approximately $73 million, compared to our prior guidance of a net loss of approximately $70 million. This is primarily due to decreasing margins on current generation titles. The full year guidance includes approximately $3.5 million of stock option expense.

Mr. Zucker commented, “Our fourth quarter line-up demonstrates both our genre and platform diversity. We expect that 2007 will show the fruits of our investment over the last several years in next generation technology and our sales and marketing infrastructure, and we continue to focus our efforts to position the company for revenue and market share growth in 2007 and beyond.”

CONFERENCE CALL

Midway Games Inc. is hosting a conference call and simultaneous webcast open to the general public at 4:30 P.M. EST today, Thursday, November 2, 2006. The conference call number is (866) 510-0704 or (617) 597-5362 (international callers). The passcode for the call is 82744623. Please call ten minutes in advance to ensure that you are connected prior to the presentation. Interested parties may also access the live call on the Internet at www.investor.midway.com or at www.earnings.com. Please log-on fifteen minutes in advance to ensure that you are connected prior to the call’s initiation. Following its completion, a replay of the call can be accessed until November 9^th by dialing (888) 286-8010 or (617) 801-6888 (international callers). The passcode for the replay is 79391706. Additionally, a replay of the call will be available for twelve months on the Internet via www.investor.midway.com.

ABOUT MIDWAY

Midway Games Inc. (NYSE:MWY), headquartered in Chicago, Illinois, with offices throughout the world, is a leading developer and publisher of interactive entertainment software for major videogame systems and personal computers. More information about Midway and its products can be found at www.midway.com.

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 concerning future business conditions and the outlook for Midway Games Inc. (the “Company”) based on currently available information. The Company’s actual results could differ materially from those described in the forward-looking statements as a result of a number of risks and uncertainties, including, without limitation, the performance of the interactive entertainment industry, dependence on new product introductions and the ability to maintain the scheduling of such introductions, the current console platform transition and other technological changes, dependence on major platform manufacturers and other risks more fully described under “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, and in other filings made by the Company with the Securities and Exchange Commission. Each forward-looking statement, including, without limitation, financial guidance, speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances, except as required by law.

– tables follow –

Midway Games Inc., 11/2/06 page 3

MIDWAY GAMES INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2006			2005			2006			2005
Net revenues	$	27,392		$	29,527		$	68,710		$	80,268
Cost of sales:
Product costs and distribution		12,541			11,470			30,400			30,440
Royalties and product development		14,774			20,469			38,898			45,164
Total cost of sales		27,315			31,939			69,298			75,604
Gross profit (loss)		77			(2,412	)		(588	)		4,664
Research and development expense		7,147			8,756			28,525			28,166
Selling and marketing expense		8,059			12,538			27,448			35,597
Administrative expense		5,142			4,475			15,934			13,124
Restructuring and other charges		1			—			(160	)		—
Operating loss		(20,272	)		(28,181	)		(72,335	)		(72,223	)
Interest income		1,360			436			3,497			1,554
Interest expense		(3,678	)		(595	)		(7,561	)		(1,319	)
Other income and (expense), net		781			(292	)		1,757			(1,731	)
Loss before income taxes		(21,809	)		(28,632	)		(74,642	)		(73,719	)
Provision for income taxes		342			297			1,116			953
Net loss		(22,151	)		(28,929	)		(75,758	)		(74,672	)
Preferred stock dividends:
Distributed		—			151			—			277
Imputed		—			3			—			6
Loss applicable to common stock	$	(22,151	)	$	(29,083	)	$	(75,758	)	$	(74,955	)
Loss per share of common stock:
Basic and diluted	$	(0.24	)	$	(0.33	)	$	(0.84	)	$	(0.87	)
Weighted average number of shares outstanding:
Basic and diluted		90,812			87,068			90,626			86,221

– balance sheets follow –

Midway Games Inc., 11/2/06 page 4

MIDWAY GAMES INC.
Consolidated Balance Sheets
(In thousands)

	September 30,			December 31,
	2006			2005
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	91,494		$	98,376
Receivables, net		11,892			30,835
Inventories		2,452			5,811
Capitalized product development costs		39,607			27,570
Prepaid expenses and other current assets		21,007			16,134
Total current assets		166,452			178,726
Capitalized product development costs		9,206			25
Property and equipment, net		20,242			19,049
Goodwill		41,203			41,108
Other assets		11,587			9,355
Total assets	$	248,690		$	248,263
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	9,629		$	12,431
Accrued compensation and related benefits		2,453			4,060
Accrued royalties		3,124			3,938
Accrued selling and marketing		2,604			4,418
Deferred revenue		2,385			384
Current portion of long-term debt		3,333			3,333
Other accrued liabilities		16,083			13,440
Total current liabilities		39,611			42,004
Convertible senior notes, less unamortized discount		141,455			75,000
Long-term debt		4,445			6,944
Deferred income taxes		9,070			8,086
Other noncurrent liabilities		507			784
Stockholders’ equity:
Common stock		925			922
Additional paid-in capital		442,874			431,273
Accumulated deficit		(378,857	)		(303,099	)
Accumulated translation adjustment		(1,573	)		(439	)
Deferred compensation		—			(3,610	)
Treasury stock		(9,767	)		(9,602	)
Total stockholders’ equity		53,602			115,445
Total liabilities and stockholders’ equity	$	248,690		$	248,263

– supplemental data follows –

Midway Games Inc., 11/2/06 page 5

MIDWAY GAMES INC.
Net Revenues by Platform
(In thousands)
(unaudited)

	Three Months
	Ended September 30,
	2006					2005
Sony PlayStation 2	$	15,561		56.8	%	$	17,271	58.5	%
Microsoft Xbox		2,202		8.0	%		10,982	37.2	%
Nintendo GameCube		4,035		14.7	%		216	0.7	%
Nintendo Game Boy Advance		2,185		8.0	%		137	0.5	%
Sony PlayStation Portable		744		2.7	%		—	0.0	%
Personal Computer		1,666		6.1	%		109	0.4	%
Royalties		1,063		3.9	%		663	2.2	%
Other		(64	)	-0.2	%		149	0.5	%
Total	$	27,392		100.0	%	$	29,527	100.0	%

	Nine Months
	Ended September 30,
	2006				2005
Sony PlayStation 2	$	36,320	52.9	%	$	37,463	46.7	%
Microsoft Xbox		7,809	11.4	%		31,723	39.5	%
Nintendo GameCube		6,230	9.1	%		3,033	3.8	%
Nintendo Game Boy Advance		2,418	3.5	%		608	0.8	%
Sony PlayStation Portable		4,755	6.9	%		—	0.0	%
Personal Computer		7,118	10.4	%		2,262	2.8	%
Royalties		3,930	5.7	%		4,193	5.2	%
Other		130	0.1	%		986	1.2	%
Total	$	68,710	100.0	%	$	80,268	100.0	%

– supplemental data follows –

Midway Games Inc., 11/2/06 page 6

MIDWAY GAMES INC.
Net Revenues by Geography
(In thousands)
(unaudited)

	Three Months
	Ended September 30,
	2006				2005
North America	$	21,370	78.0	%	$	24,507	83.0	%
International		6,022	22.0	%		5,020	17.0	%
Total	$	27,392	100.0	%	$	29,527	100.0	%

	Nine Months
	Ended September 30,
	2006				2005
North America	$	52,673	76.7	%	$	60,028	74.8	%
International		16,037	23.3	%		20,240	25.2	%
Total	$	68,710	100.0	%	$	80,268	100.0	%

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