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 1, 2007

MIDWAY GAMES INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	1-12367	22-2906244
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(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))

TABLE OF CONTENTS

Item 2.02 Results of Operations and Financial Condition.

On November 1, 2007, Midway Games Inc. issued a press release discussing financial results for the third quarter of 2007 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.

(d) Exhibits

Exhibit No.	Description
99.1	Press Release of Midway Games Inc. dated November 1, 2007

2

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 1, 2007	By:	/s/ David F. Zucker
		David F. Zucker
		President and Chief Executive Officer

3

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release of Midway Games Inc. dated November 1, 2007

4

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

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

MIDWAY REPORTS 2007 Q3 RESULTS

Chicago, Illinois, November 1, 2007 — Midway Games Inc. (NYSE: MWY) today announced results of operations for the three month period ended September 30, 2007. The Company also updated its full year revenue and earnings guidance and provided revenue and earnings guidance for the fourth quarter ending December 31, 2007.

THIRD QUARTER RESULTS

Net revenues for the 2007 third quarter were $36.7 million, compared to the 2006 third quarter net revenues of $27.4 million. The 2007 third quarter net loss was $33.5 million, or a loss of $0.37 per basic and diluted share, compared with a 2006 third quarter net loss of $22.2 million, or a loss of $0.24 per basic and diluted share.

On a non-GAAP basis, excluding the impact of stock-option expenses and certain non-cash items, the 2007 third quarter loss was $28.0 million or a loss of $0.31 per basic and diluted share. For the 2006 third quarter, on a non-GAAP basis, the Company had a loss of $20.3 million, or a loss of $0.22 per basic and diluted share. A reconciliation of non-GAAP results to GAAP results is provided at the end of this press release.

Other recent operating highlights include:

• Midway released Stranglehold for Xbox 360 and PC worldwide, which was a top-10 selling Xbox 360 game in the UK for the five weeks following launch according to Chart Track, as well as a top-10 selling Xbox 360 title in North America for the month of September according to The NPD Group. With the shipment of Stranglehold for the PS3 in North America on October 29, 2007, Midway has now exceeded 1 million units shipped worldwide on all platforms. Midway expects to ship Stranglehold for the PS3 in Europe later this month.

• Midway, in conjunction with developer Epic Games, recently released a demo of Unreal Tournament 3 for the PC, which has remained one of the top 2 most downloaded games on FilePlanet.com since it was released on October 12^th.

David F. Zucker, president and chief executive officer, commented, “We are happy with the response to our first front-line next generation game, Stranglehold, and believe that it has provided a solid foundation to build our standardized toolset for all of our next generation titles. Additionally, our commitment to our expanded direct presence in Europe has been validated with strong results for Stranglehold throughout the territory.”

OUTLOOK

During the fourth quarter, the Company has released Stranglehold for the PS3 in North America, Cocoto Racing for the DS in Europe, and The Bee Game for the GBA and DS in North America. Later this quarter, Midway expects to release worldwide Unreal Tournament 3 for the PC, BlackSite: Area 51 for Xbox 360 and PC, Ultimate Mortal Kombat for the DS, and Aqua Teen Hunger Force: Zombie Ninja Pro-Am for the PS2; in North America BlackSite: Area 51 for the PS3, Foster’s Home for Imaginary Friends for the DS, and Game Party and Cruis’n’ for the Wii; and in Europe Stranglehold for the PS3 and Hour of Victory for the PC. For the fourth quarter ending December 31, 2007, Midway expects the following:

• Net revenues of approximately $80 million, with a net loss of approximately $0.21 per basic and diluted share.

• On a non-GAAP basis, Midway expects a fourth quarter loss of approximately $0.13 per basic and diluted share, which excludes approximately:

o $0.01 of stock option expense and deferred income tax expense related to goodwill, and

o $0.07 of non-cash convertible debt interest expense.

Midway is lowering its financial outlook for the full year 2007 primarily to reflect the movement of certain Nintendo Wii and DS titles out of this fiscal year, mainly in the European territories, as well as lower expectations for PS3 product sales due to delayed release dates resulting in shorter holiday selling periods. For the year ending December 31, 2007, Midway now expects the following:

• Net revenues of approximately $160 million with a net loss of approximately $0.95 per basic and diluted share.

• On a non-GAAP basis, Midway expects a loss of approximately $0.76 per basic and diluted share, which excludes approximately:

o $0.03 of stock option expense and deferred income tax expense related to goodwill, and

o $0.16 of non-cash convertible debt interest expense.

Mr. Zucker concluded, “We remain confident that our technology strategy and product plan position us to grow both revenue and market share as we move into the heart of this console cycle. In the coming months, as we reveal more details on our strong line-up of new IP and major franchises for 2008, we expect to show investors how we plan to realize significant growth in 2008.”

NON-GAAP FINANCIAL MEASURES

Midway has included non-GAAP financial measures in its quarterly results and 2007 outlook. Midway does not intend for the presentation of the non-GAAP financial measures to be isolated from, a substitute for, or superior to the information that has been presented in accordance with GAAP. In addition, information used in the non-GAAP financial measures may be presented differently from non-GAAP financial measures used by other companies. The non-GAAP financial measures used by Midway include non-GAAP basic and diluted loss per share.

Midway considers the non-GAAP financial measures used herein, when used together with the corresponding GAAP measures, to be helpful in providing meaningful additional information regarding its performance by excluding specific items that may not be indicative of Midway’s core business or projected operating results. These non-GAAP financial measures exclude the following items:

Stock Option Expense. Midway adopted SFAS No. 123R, “Share-Based Payment” beginning January 1, 2006, in which it began to recognize as an expense the fair value of its stock options. A non-GAAP measurement that excludes stock option expense identifies this component of compensation expense that does not require cash outlay.

Non-cash convertible debt interest expense. In accordance with GAAP, Midway is required to record discounts on its convertible senior notes as a result of decreases in the conversion prices of these notes. These amounts are amortized as interest expense through the first date on which the holders may redeem the notes. There is no cash outlay associated with this interest expense. A non-GAAP measurement that excludes the convertible debt non-cash interest expense allows for a more direct comparison to prior periods, and also distinguishes this interest expense from the remainder of the interest expense, which requires (or required) a cash outlay by Midway.

Deferred tax expense related to goodwill. Midway recognizes deferred tax expense related to increases in the difference between the book basis and tax basis of goodwill. Goodwill is not amortized for book purposes but is amortized for tax purposes.  This increase in the book to tax basis difference causes an increase in the related deferred tax liability balance that cannot be offset against deferred tax assets.  Given the nature of this deferred tax expense, a non-GAAP measurement that excludes this expense is deemed appropriate.

In the future, Midway may consider whether other significant items should be excluded when arriving at non-GAAP measures of financial performance.

CONFERENCE CALL

Midway Games Inc. is hosting a conference call and simultaneous webcast open to the general public at 4:15 P.M. EDT today, Thursday, November 1, 2007. The conference call number is (800) 573-4842 or (617) 224-4327 (international callers). The passcode for the call is 57174775. 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 8th by dialing (888) 286-8010 or (617) 801-6888 (international callers). The passcode for the replay is 50476783. 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 video game systems and personal computers. More information about Midway and its products can be found at www.midway.com.

FORWARD-LOOKING STATEMENTS

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 that involves risks and uncertainties. The Company’s actual results could differ materially from those anticipated in the forward-looking statements as a result of these risks and uncertainties, including, without limitation, the

financial strength 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 1. Business — Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, and in more recent 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 Midway 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 –

page 5

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
Net revenues	$	36,747		$	27,392		$	79,618		$	68,710
Cost of sales:
Product costs and distribution		13,472			12,541			31,141			30,400
Royalties and product development		24,196			14,774			36,643			38,898
Total cost of sales		37,668			27,315			67,784			69,298
Gross profit (loss)		(921	)		77			11,834			(588	)
Research and development expense		6,245			7,147			20,250			28,525
Selling and marketing expense		14,173			8,059			29,174			27,448
Administrative expense		5,000			5,142			15,936			15,934
Restructuring and other charges (benefits)		—			1			(783	)		(160	)
Operating loss		(26,339	)		(20,272	)		(52,743	)		(72,335	)
Interest income		498			1,360			2,075			3,497
Interest expense		(8,429	)		(3,678	)		(17,600	)		(7,561	)
Other income, net		1,160			781			2,003			1,757
Loss before income taxes		(33,110	)		(21,809	)		(66,265	)		(74,642	)
Provision for income taxes		417			342			1,381			1,116
Net loss	$	(33,527	)	$	(22,151	)	$	(67,646	)	$	(75,758	)
Loss per share of common stock:
Basic and diluted	$	(0.37	)	$	(0.24	)	$	(0.74	)	$	(0.84	)
Weighted average number of shares outstanding:
Basic and diluted		91,180			90,812			91,095			90,626

– balance sheet follows –

page 6

MIDWAY GAMES INC.
Consolidated Balance Sheets
(In thousands)

	September 30,			December 31,
	2007			2006
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	31,144		$	73,422
Receivables, net		28,577			51,366
Inventories		3,178			2,891
Capitalized product development costs		71,366			35,213
Prepaid expenses and other current assets		13,526			12,792
Total current assets		147,791			175,684
Capitalized product development costs		2,766			6,400
Property and equipment, net		20,326			20,407
Goodwill		41,353			41,273
Other assets		9,628			10,297
Total assets	$	221,864		$	254,061
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	18,774		$	7,864
Accrued compensation and related benefits		3,808			4,541
Accrued royalties		7,013			8,097
Accrued selling and marketing		4,551			4,935
Deferred revenue		3,395			2,000
Current portion of long-term debt		2,000			3,333
Other accrued liabilities		16,602			15,164
Total current liabilities		56,143			45,934
Convertible senior notes, less unamortized discount		75,924			142,010
Long-term debt		17,667			3,611
Deferred income taxes		10,387			9,402
Other noncurrent liabilities		846			397
Stockholders’ equity:
Common stock		933			925
Additional paid-in capital		520,684			444,115
Accumulated deficit		(448,528	)		(380,882	)
Accumulated translation adjustment		(2,412	)		(1,671	)
Treasury stock		(9,780	)		(9,780	)
Total stockholders’ equity		60,897			52,707
Total liabilities and stockholders’ equity	$	221,864		$	254,061

– supplemental data follows –

page 7

MIDWAY GAMES INC.
Consolidated Non-GAAP Operating Results
(In thousands, except per share amounts)
(unaudited)

The following table reconciles Midway’s net loss and basic and diluted loss per share as presented in its Consolidated Statements of Operations as prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) in the United States of America with its non-GAAP loss and non-GAAP basic and diluted loss per share. Midway’s non-GAAP loss and non-GAAP basic and diluted loss per share exclude stock option expense, convertible debt non-cash interest expense, and deferred tax expense related to goodwill.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
Net loss	$	(33,527	)	$	(22,151	)	$	(67,646	)	$	(75,758	)
Stock option expense (1)		175			954			1,343			2,541
Convertible debt non-cash interest expense		4,999			550			8,004			574
Deferred tax expense related to goodwill		329			329			985			985
Non-GAAP loss	$	(28,024	)	$	(20,318	)	$	(57,314	)	$	(71,658	)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
Basic and diluted loss per share of common stock	$	(0.37	)	$	(0.24	)	$	(0.74	)	$	(0.84	)
Stock option expense (1)		0.00			0.01			0.01			0.03
Convertible debt non-cash interest expense		0.06			0.01			0.09			0.01
Deferred tax expense related to goodwill		0.00			0.00			0.01			0.01
Non-GAAP basic and diluted loss per share of common stock	$	(0.31	)	$	(0.22	)	$	(0.63	)	$	(0.79	)

(1) Excludes stock option costs capitalized as product development costs.

page 8

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

	Three Months
	Ended September 30,
	2007					2006
Microsoft Xbox 360	$	25,655		69.8	%	$	—	0.0	%
Nintendo Wii		2,137		5.8	%		—	0.0	%
Sony PlayStation 2		1,946		5.3	%		15,561	56.8	%
Microsoft Xbox		(55	)	(0.1	%)		2,202	8.0	%
Nintendo GameCube		103		0.3	%		4,035	14.7	%
Sony PlayStation Portable		1,239		3.4	%		744	2.7	%
Nintendo DS		1,806		4.9	%		—	0.0	%
Nintendo Game Boy Advance		164		0.4	%		2,185	8.0	%
Personal Computer		3,729		10.1	%		1,666	6.1	%
Royalties and other		23		0.1	%		999	3.7	%
Total	$	36,747		100.0	%	$	27,392	100.0	%

	Nine Months
	Ended September 30,
	2007				2006
Microsoft Xbox 360	$	33,544	42.1	%	$	—	0.0	%
Nintendo Wii		10,128	12.7	%		—	0.0	%
Sony PlayStation 2		8,971	11.3	%		36,320	52.9	%
Microsoft Xbox		730	0.9	%		7,809	11.4	%
Nintendo GameCube		841	1.1	%		6,230	9.1	%
Sony PlayStation Portable		2,779	3.5	%		4,755	6.9	%
Nintendo DS		5,342	6.7	%		—	0.0	%
Nintendo Game Boy Advance		1,403	1.8	%		2,418	3.5	%
Personal Computer		13,865	17.4	%		7,118	10.4	%
Royalties and other		2,015	2.5	%		4,060	5.8	%
Total	$	79,618	100.0	%	$	68,710	100.0	%

page 9

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

	Three Months
	Ended September 30,
	2007				2006
North America	$	18,814	51.2	%	$	21,370	78.0	%
International		17,933	48.8	%		6,022	22.0	%
Total	$	36,747	100.0	%	$	27,392	100.0	%

	Nine Months
	Ended September 30,
	2007				2006
North America	$	48,792	61.3	%	$	52,673	76.7	%
International		30,826	38.7	%		16,037	23.3	%
Total	$	79,618	100.0	%	$	68,710	100.0	%

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