##### 





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C. 20549
      Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number 1-12367
      MIDWAY GAMES INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

22-2906244(State or other jurisdiction of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)2704 West Roscoe Street, Chicago, Illinois

60618(Address of principal executive offices)

(Zip Code)   Registrants telephone number, including area code:
    (773) 961-2222
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $.01 par value

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. Yes þ o
  Rule 12b-2
  Large accelerated
    filer o

Accelerated filer
    þ

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
    DOCUMENTS
    INCORPORATED BY REFERENCE:




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##### 





Midway®
    is our registered trademark. Our product names mentioned in this
    report are also our trademarks, except where we license them.
    Other product names mentioned in this report are the trademarks
    of their respective owners.
  This report contains forward-looking statements,
    within the meaning of the Private Securities Litigation Reform
    Act of 1995, which describe our plans, strategies and goals, our
    beliefs concerning future business conditions and our outlook
    based on currently available information. Where possible, we
    have identified these forward-looking statements by words such
    as may, will, should,
    could, expect, eventually,
    anticipate, plan, strategy,
    believe, estimate, seek,
    intend and similar expressions. Our actual results
    could differ materially from those described in the
    forward-looking statements due to a number of risks and
    uncertainties. These risks and uncertainties include, but are
    not limited to, 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, decisions
    by Sumner Redstone or his affiliates with respect to his
    ownership or trading of our common stock, and other risks more
    fully described under Item 1A. Risk Factors.
    Each forward-looking statement, including, without limitation,
    financial guidance, speaks only as of the date on which it is
    made, and we undertake 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.
 2




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##### 



MIDWAY
    GAMES, INC.
  2007
    FORM 10-K 
    TABLE OF CONTENTS
  PagePART IItem 1.


Business


4Item 1A.


Risk Factors


17Item 1B.


Unresolved Staff Comments


28Item 2.


Properties


29Item 3.


Legal Proceedings


29Item 4.


Submission of Matters to a Vote of Security Holders


30PART IIItem 5.


Market for Registrants Common Equity, Related Shareholder
    Matters and Issuer Purchases of Equity Securities


30Item 6.


Selected Financial Data


32Item 7.


Managements Discussion and Analysis of Financial Condition
    and Results of Operations


33Item 7A.


Quantitative and Qualitative Disclosures About Market Risk


53Item 8.


Financial Statements and Supplementary Data


54Item 9.


Changes in and Disagreements with Accountants on Accounting and
    Financial Disclosure


54Item 9A.


Controls and Procedures


54Item 9B.


Other Information


54PART IIIItem 10.


Directors, Executive Officers and Corporate Governance


55Item 11.


Executive Compensation


58Item 12.


Security Ownership of Certain Beneficial Owners and Management
    and Related Stockholder Matters


76Item 13.


Certain Relationships and Related Transactions and Director
    Independence


78Item 14.


Principal Accountant Fees and Services


80PART IVItem 15.


Exhibits and Financial Statement Schedule


81Signatures  3




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##### 



PART I  Item 1.
    Business.  Development
    of Our Business
  Xbox, GameCube Game Boy Advance Nintendo DS PlayStation 2 PlayStation Portable. Xbox 360 Wii PlayStation 3 Xbox 360 Wii PlayStation 3
  Mortal Kombat
  
    Unreal Tournament 3(2008);
    Stranglehold(2007);
    Rampage: Total Destruction(2007);
    Happy Feet(2006);
    Mortal Kombat: Armageddon(2006);
    Blitz: The League(2005);
    Mortal Kombat: Shaolin Monks(2005);
    Mortal Kombat: Deception(2004);
    NBA Ballers(2004);
    Midway Arcade Treasures(2003); and
    Mortal Kombat: Deadly Alliance(2002).    
    Fosters Home for Imaginary Friends: Imagination
    Invaders based upon the animated television
    series from Warner Bros. Interactive Entertainment/Cartoon
    Network; 4




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##### 




    Aqua Teen Hunger Force: Zombie Ninja
    Pro-Am based
    upon the animated television series from Warner Bros.
    Interactive Entertainment/Cartoon Network;
    Lord of the Rings Online: Shadows of
    Angmar based upon the literary works of
    J.R.R. Tolkien;
    Stranglehold based upon a character
    created by John Woo for his action film, Hard Boiledstarring Chow Yun-Fat;
    The Grim Adventures of Billy &
    Mandy based upon the animated television
    series from Warner Bros. Interactive Entertainment/Cartoon
    Network;
    The Ant Bully based upon the animated
    film from Warner Bros. Interactive Entertainment; and
    Happy Feet based upon the Oscar-winning
    animated film from Warner Bros. Interactive Entertainment.  Total NonStop Action Wrestling pay-per-view
         5




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##### 



Form 10-K, Form 10-Q, Form 8-K
    Industry
    Overview
    The Home Console and Handheld Platform
    Market.
  project-by-project
    Older-Generation Home
    Consoles

Previous-Generation Home
    Consoles

Next-Generation Home
    Consoles- Sonys PlayStation

- Sonys PlayStation 2

-Sonys PlayStation 3- Nintendo 64

- Nintendos GameCube

- Nintendos Wii- Microsofts Xbox

- Microsofts Xbox 360  6




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##### 



Xbox 360 Wii PlayStation 3
  Game Boy, Game Boy Advance, Game Boy
    Advance SP Nintendo DS, PlayStation Portable,
  The Personal Computer Game Market. Games for Windows
  The Online and Wireless Markets.
  Distribution.
  Our
    Business Strategy
    Leverage
    core competencies and established franchises
    
    Established franchises Many of the games we
    have released over the past 20 years have been best-sellers
    and have attracted loyal fan bases. The popularity of many of
    our games has enabled us to successfully market sequels,
    including sequels for Mortal Kombat, Spy Hunter, NBA Ballers,
    MLB SlugFest, Blitzand Area 51.A sequel in the
    Mortal Kombatseries that we released in 2006 for
    PlayStation 2and Xbox and in the second quarter
    of 2007 for Wii, Mortal Kombat: Armageddon, proved
    to be our second best selling game of 2006 and third best
    selling of 2007. We intend to leverage our franchises to create
    popular titles for play on traditional console platforms and new
    gaming mediums. We also control the intellectual property rights
    to hundreds of classic video game titles, including titles
    originally released under the Midway, Williams and 7




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##### 




    Over-the-top sports games We have enjoyed
    strong sales from our line of sports games, including NBA
    Ballers, the Blitzfranchise, NHL Hitz, MLB
    SlugFestand Ready 2 Rumble Boxing.Our titles in
    this popular category are characterized by extreme game play and
    the exaggerated abilities of the characters in these games,
    which we refer to as over-the-top sports
    entertainment. We believe our over-the-top style
    makes these games popular and differentiates them from the
    simulation style of most publishers sports
    video games. In future periods, we plan to release new versions
    of over-the-top sports games with novel and
    innovative features.
    Mature games The development of M
    rated games for consumers age 17 and older is one of our
    historic strengths. During the older-generation home
    console cycle, from 1995 to 1999, we were the industry leader in
    M rated dollar and unit sales. We also released the
    most M rated titles during that period. Our most
    successful and profitable video game franchise, Mortal
    Kombat, is marketed to mature audiences. We have sold over
    20 million copies of this franchise across eight major home
    console releases. The majority of video game players on current
    consoles are over 18 years of age and the average age of
    video game players is increasing. We expect mature games to
    continue to be a fast growing segment in the industry.  Continue
    to pursue the childrens, licensed and PC games
    markets
  Ed, Edd n Eddy The Ant Bully, The Grim Adventures of
    Billy & Mandy Happy Feet Aqua Teen
    Hunger Force: Zombie Ninja
    Pro-Am Fosters Home for Imaginary Friends: Imagination
    Invaders.
  The Lord of the Rings
    Online: Shadows of Angmar Unreal Tournament 3
  Develop
    ambitious, mass-market next-generation games
  Wheelman This is
    Vegas
   8




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##### 



Invest
    in internal product development to drive efficient production of
    next-generation games
      Expand
    international presence
    Products
  PlayStation 2 PS2 PlayStation 3 PS3 PlayStation Portable PSP Xbox Xbox GameCube NGC Wii Game Boy Advance GBA Nintendo DS
    (NDS) PS3 Xbox 360 Wii. Blitz: The League Xbox 360 Wii. PS3 Stranglehold Blacksite:
    Area 51 Unreal Tournament 3.
 9




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##### 



Xbox Live
    Mortal Kombat
  2007
    Video Game Releases
    Video Game Title

Platform

TerritoryAqua Teen Hunger Force: Zombie Ninja
    Pro-Am

PS2

North America, InternationalBig Buck Hunter

PC

North AmericaBlacksite: Area 51

Xbox 360; PC

North America, InternationalBlacksite: Area 51

PS3

North AmericaBlitz: The League

Xbox 360

InternationalCocoto Racers

NDS

InternationalCruisn

Wii

North AmericaFosters Home for Imaginary Friends: Imagination
    Invaders

NDS

North AmericaGame Party

Wii

North AmericaHot Brain

PSP

North America, InternationalHour of Victory

Xbox 360

North America, InternationalMortal Kombat: Armageddon

Wii

North America, InternationalMyst

NDS

InternationalStranglehold

Xbox 360; PC; PS3

North America, InternationalThe Ant Bully

Wii

InternationalThe Bee Game

NDS; GBA

North AmericaThe Grim Adventures of Billy & Mandy

Wii

InternationalThe Lord of the Rings Online: Shadows of Angmar

PC

North AmericaTouchmaster

NDS

North America, InternationalUltimate Mortal Kombat

NDS

North America, InternationalUnreal Tournament 3

PC

North America, InternationalUnreal Tournament 3

PS3

North America  10




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##### 



2006
    Video Game Releases
    Video Game Title

Platform

TerritoryBlitz: Overtime

PSP

North AmericaBlitz: The League

Xbox 360

North AmericaGauntlet: Seven Sorrows

PS2; Xbox

InternationalHappy Feet

PS2; Wii; PC; GBA; NDS

North America, InternationalHappy Feet

NGC

North AmericaL.A. RUSH

PC

North America, InternationalMaya the Bee 2

GBA; NDS

InternationalMidway Arcade Treasures: Deluxe Edition

PC

North AmericaMidway Arcade Treasures: Extended Play

PSP

InternationalMLB Slugfest 2006

PS2; Xbox

North AmericaMortal Kombat: Armageddon

PS2

North America, InternationalMortal Kombat: Armageddon

Xbox

North AmericaMortal Kombat: Unchained

PSP

North America, InternationalMyst

PSP

InternationalNBA Ballers: Phenom

PS2; Xbox

North AmericaNBA Ballers: Rebound

PSP

North AmericaRampage: Total Destruction

PS2; Wii

North America, InternationalRampage: Total Destruction

NGC

North AmericaRise & Fall: Civilizations At War

PC

North America, InternationalRUSH

PSP

North America, InternationalSpyHunter: Nowhere to Run

PS2

North America, InternationalSpyHunter: Nowhere to Run

Xbox

North AmericaThe Ant Bully

PS2; PC; GBA

North America, InternationalThe Ant Bully

NGC; Wii

North AmericaThe Grim Adventures of Billy & Mandy

PS2; NGC; Wii; GBA

North AmericaUnreal Tournament Anthology

PC

North America, International   2008
    Products
  NBA Ballers: Chosen
    One, NBA Ballers Xbox 360 PS3; The Wheelman, Xbox 360,
    PS3 TNA iMPACT!, Total Nonstop Action Wrestling, Xbox 360, PS3, PS2 Wii; This Is
    Vegas, Xbox
    360 PS3. Blitz: The League Mortal Kombat,
  Product
    Development
     11




---



##### 



12




---



##### 



Marketing
    and Distribution
    
    mass merchandisers;
    foreign, national and regional retailers;
    discount store chains; and
    video rental retailers.           13




---



##### 



Years Ended December 31,2007


2006


2005Net





Net





NetRevenues


%


Revenues


%


Revenues


%(Dollars in thousands)North America:United States

$
86,393



55.0
%

$
116,714



70.5
%

$
109,993



73.3
%Outside United States


10,307



6.5



7,398



4.5



8,292



5.5Total North America


96,700



61.5



124,112



75.0



118,285



78.8International


60,495



38.5



41,462



25.0



31,793



21.2Total Net Revenues

$
157,195



100.0
%

$
165,574



100.0
%

$
150,078



100.0
%     Competition
      
    the ability to select and develop popular titles;
    the ability to identify and obtain rights to commercially
    marketable intellectual properties; and
    the ability to adapt products for use with new technologies.        Mortal Kombat,
 14




---



##### 



Stranglehold Unreal
    Tournament 3,
    Manufacturing
    and Distribution
        Game Boy Advance Nintendo DS PlayStation Portable
  agreed-upon
 15




---



##### 



Licenses
    and Intellectual Property
  Platform Licenses.
    Intellectual Property Licenses.
  Patent, Trademark and Copyright
    Protection.
  
    trademarks associated with elements of the game, such as team
    logos;
    trademarks under which the game is marketed;
    the copyrights for the game software, including the games
    audiovisual elements; and
    the patents for inventions in the game software.     16




---



##### 



Seasonality
    Employees
    Item 1A.
    Risk
    Factors.  The occurrence of any of the following risks could
    significantly harm our business, results of operations or
    financial condition or have an adverse effect on the market
    value of our common stock or convertible senior notes. In that
    case, you may lose all or part of your investment.
  We have
    experienced operating and net losses in recent years, and we
    expect to incur future losses.
    
    $78.4 million for 2007;
    $72.0 million for 2006; and
    $108.5 million for 2005.    
    increasing costs of developing new games for previous and
    next-generation platforms;
    releasing titles that failed to gain popularity and generate
    expected sales;
    a tendency for retailers to stock only video games for which
    consumer demand is expected to be strongest; and
    weakness in the home video game industry during the home console
    transition periods.    If our
    new products fail to gain market acceptance, we may not have
    sufficient revenues to pay our expenses and to develop a
    continuous stream of new games.
   17




---



##### 



Product
    development schedules are long and frequently unpredictable, and
    we may experience delays in introducing new products, which may
    adversely affect our revenues.
    Our
    market is subject to rapid technological change, and if we do
    not adapt to, and appropriately allocate our new resources
    among, emerging technologies, our revenues would be negatively
    affected.
    If
    pricing of next-generation console software declines more
    rapidly than we expect, our revenues and margins would be
    adversely affected.
    Our
    operating results may fluctuate from quarter to quarter, making
    our results difficult to predict.
    
    peak demand during the year-end retail holiday selling season,
    which typically results in higher revenues in our fourth quarter;
    variations in the level and duration of market acceptance of our
    products; 18




---



##### 




    delays and timing of product development and introductions;
    fluctuations in our mix of products with varying profit margins;
    dependence on a relatively limited number of products in any
    quarter to produce revenues;
    introduction and market penetration of game platforms;
    the amount of royalties payable by us for the content contained
    in our video games;
    development and promotional expenses relating to the
    introduction of our products;
    changes in our pricing practices and those of our competitors;
    the accuracy of the forecasts of consumer demand made by
    retailers and by us; and
    the timing of orders from major customers, order cancellations
    and delays in shipment.    Restrictive
    debt covenants in our credit facility and the indenture for our
    7.125% convertible senior notes issued in May 2006 limit our
    operating flexibility, and all amounts outstanding under our
    credit facility, including our term loan, and our convertible
    senior notes may become immediately payable if we default under
    the facility or the indenture.
    
    make payments, including dividends or other distributions, on
    our capital stock, except in shares of common stock;
    incur additional indebtedness;
    sell, lease, license or dispose of any of our assets;
    make loans or investments;
    acquire companies or businesses;
    cause or permit a change of control;
    repurchase or redeem any shares of our capital stock;
    issue or sell securities of our subsidiaries; and
    make capital expenditures.     19




---



##### 



Increased
    leverage may harm our results of operations and financial
    condition.
      
    it could affect our ability to satisfy our debt and capital
    lease obligations;
    a substantial portion of our cash flows from operations will be
    dedicated to interest and principal payments on our debt,
    thereby reducing our ability to fund operations, working
    capital, capital expenditures, expansion, acquisitions, or
    general corporate or other purposes;
    it may impair our ability to obtain additional financing in the
    future;
    it may limit our flexibility in planning for, or reacting to,
    changes in our business and industry;
    it may place us at a competitive disadvantage compared to
    competitors that have less indebtedness; and
    it may make us more vulnerable to downturns in our business, our
    industry or the economy in general.    
    seek additional financing in the debt or equity markets;
    refinance or restructure all or a portion of our indebtedness,
    including the convertible senior notes;
    sell assets; and/or
    reduce or delay planned expenditures on research and development
    and/or
    commercialization activities.    If in the
    future we need to seek additional capital due to continuing
    operating losses or otherwise, we may incur additional expenses
    in the form of periodic interest or other debt service payments,
    or our stockholders may suffer dilution in their percentage
    ownership of common stock.
   20




---



##### 



Our
    market is highly competitive. If we are unable to compete
    effectively, our business, results of operations and financial
    condition would be adversely affected.
      
    the ability to select and develop popular titles;
    the ability to identify and obtain rights to commercially
    marketable intellectual properties; and
    the ability to adapt products for use with new technologies.                If
    product returns and price adjustments exceed our allowances, we
    will incur additional charges, which would have an adverse
    effect on our results of operations.
   21




---



##### 



If game
    platform manufacturers refuse to license their platforms to us
    or do not manufacture our games on a timely basis or at all, our
    revenues would be adversely affected.
    
    we may only publish our games for play on their game platforms
    if we receive a platform license from them, which is renewable
    at their discretion;
    prices for platform licenses may be economically prohibitive;
    we must obtain their prior review and approval to publish games
    on their platforms;
    if the popularity of a game platform declines or if the
    manufacturer stops manufacturing a platform, does not meet the
    demand for a platform or delays the introduction of a platform
    in a region important to us, the games that we have published
    and that we are developing for that platform would likely
    produce lower sales than we anticipate;
    these manufacturers control the manufacture of, or approval to
    manufacture, and manufacturing costs of our game discs and
    cartridges; and
    these manufacturers have the exclusive right to (1) protect
    the intellectual property rights to their respective hardware
    platforms and technology and (2) discourage others from
    producing unauthorized software for their platforms that compete
    with our games.    Historically,
    approximately half of our total net revenues have been
    attributable to our five largest customers.
      A
    business failure by any of our major customers could have an
    adverse effect on our revenues and our ability to collect
    receivables.
   22




---



##### 



Rating
    systems for interactive entertainment software, potential
    legislation and vendor or consumer opposition could inhibit
    sales of our products.
      Lawsuits
    alleging damages as a result of our video games may require
    significant expenditures, divert the attention of management and
    generate negative publicity, and thereby have an adverse effect
    on our results of operations.
    We are
    dependent on third parties to manufacture our products, and any
    increase in the amounts we have to pay to have our products
    manufactured or any delay or interruption in production would
    negatively affect both our ability to make timely product
    introductions and our results of operations.
   23




---



##### 



We have
    limited control over the personnel, scheduling and use of
    resources by third parties that develop certain of our game
    titles, and our revenues may be adversely affected by delays
    caused by these developers.
    If we are
    not able to maintain or acquire licenses for intellectual
    property necessary to the success of some of our games, or if
    that intellectual property does not achieve market acceptance,
    our revenues would be adversely affected.
        We may
    experience increased costs to continue to attract and retain
    senior management and highly qualified software
    developers.
    If our
    products contain errors, our reputation, results of operations
    and financial condition may be adversely affected.
   24




---



##### 



If we are
    unsuccessful in protecting our intellectual property, our
    revenues may be adversely affected.
    If we
    infringe the intellectual property of others, our costs may rise
    and our results of operations may be adversely
    affected.
    We face
    risks associated with doing business in foreign countries,
    including our ability to generate international demand for our
    products.
    
    our ability to obtain or enforce our rights to the intellectual
    property developed by developers outside the United States;
    the time and costs associated with translating and localizing
    products for foreign markets;
    foreign currency fluctuations;
    unexpected changes in regulatory requirements, including import
    and export control regulations; and
    difficulties and costs of staffing and managing foreign
    operations, or licensing to foreign entities.    We may
    face limitations on our ability to find suitable acquisition
    opportunities or to integrate any additional acquired
    businesses.
   25




---



##### 



reductions-in-force,
  Through
    their control of over 85% of our outstanding common stock,
    Sumner M. Redstone and his related parties decide the outcome of
    votes of our stockholders and are able to control our business
    strategies and policies.
      Decisions
    by Mr. Redstone and his related parties with respect to
    their ownership or trading of our common stock could have an
    adverse effect on the market value of our common stock and our
    convertible senior notes.
     26




---



##### 



Effects
    of anti-takeover provisions could inhibit a change in control of
    Midway and could adversely affect the market price of our common
    stock.
    Blank
    check preferred stock
    Charter
    provisions
    
    directors may be removed only for cause by a majority of the
    votes cast at a meeting of the stockholders by holders of shares
    of our common stock entitled to vote;
    any vacancy on our board of directors may be filled only by a
    vote of a majority of the remaining directors then in office;
    stockholders may not act by written consent;
    only the Chair or our board of directors by a majority vote may
    call special meetings of stockholders, and the only business
    permitted to be conducted at such special meetings is business
    brought before the meeting by or at the direction of our board
    of directors;
    stockholders must follow an advance notice procedure for the
    submission of director nominations and other business to be
    considered at an annual meeting of stockholders;
    either a majority vote of our board of directors or an
    affirmative vote of holders of at least 80% of our outstanding
    common stock entitled to vote is needed in order to adopt, amend
    or repeal our bylaws; and
    either a majority vote of our board of directors or an
    affirmative vote of holders of at least 80% of our outstanding
    common stock entitled to vote is needed in order to amend or
    repeal the above provisions. 27




---



##### 



Section 203
    of the Delaware General Corporation Law
    The
    market price for our common stock may be highly
    volatile.
    Shares
    available for future issuance, conversion and exercise could
    have an adverse effect on the earnings per share and the market
    price of our common stock.
           Item 1B. Unresolved
    Staff Comments.   28




---



##### 



Item 2.
    Properties.      Item 3.
    Legal
    Proceedings.       29




---



##### 



Item 4.
    Submission
    of Matters to a Vote of Security Holders.   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.    Calendar Period

High


Low2006First Quarter

$
18.17


$
9.22Second Quarter

$
10.45


$
5.88Third Quarter

$
10.65


$
8.40Fourth Quarter

$
9.18


$
6.942007First Quarter

$
7.69


$
5.93Second Quarter

$
7.52


$
6.00Third Quarter

$
6.52


$
4.25Fourth Quarter

$
4.37


$
2.052008First Quarter (through February 29, 2008)

$
2.54


$
2.00     Dividends.
 30




---



##### 



Corporate Performance Graph.
  Comparison of
    Cumulative Five Year Total Return
  
  12/31/02


12/31/03


12/31/04


12/31/05


12/31/06


12/31/07(GRAPH) Midway

$
100


$
93.05


$
251.80


$
454.92


$
167.39


$
66.19(GRAPH) S&P 500

$
100


$
128.68


$
142.69


$
149.70


$
173.34


$
182.86(GRAPH) S&P Leisure

$
100


$
125.14


$
139.39


$
122.87


$
154.31


$
128.77   Recent Sales of Unregistered Securities.
  Issuer Repurchases.
  Purchases of Equity Securities by the Issuer and Affiliated
    Purchasers.
 31




---



##### 



Item 6.
    Selected
    Financial Data.  Form 10-K.
  Years Ended December 31,2007


2006


2005


2004


2003(In thousands, except per share amounts)SELECTED OPERATING DATANet revenuesTotal net revenues

$
157,195


$
165,574


$
150,078


$
161,595


$
92,524Gross profit (loss)


10,382



29,360



18,014



57,578



(20,781
)(5)Operating loss


(78,394
)


(71,979
)


(108,516
)(2)


(25,045
)


(115,975
)(6)Loss before income taxes


(100,344
)


(76,137
)


(111,226
)


(18,631
)(4)


(113,963
)Provision (benefit) for income taxes(1)


(752
)


1,646



1,261



1,314



1,264Net loss


(99,592
)


(77,783
)


(112,487
)


(19,945
)


(115,227
)Preferred stock dividends:Distributed










282



1,884



1,455Imputed










6



2,915
(7)


1,252Loss applicable to common stock

$
(99,592
)

$
(77,783
)

$
(112,775
)

$
(24,744
)

$
(117,934
)Basic and diluted loss per share of common stock

$
(1.09
)

$
(0.86
)

$
(1.30
)

$
(0.34
)

$
(2.43
)Average number of shares outstanding


91,167



90,708



86,937



72,421



48,486SELECTED BALANCE SHEET DATATotal assets

$
213,361


$
254,061


$
248,263


$
242,317


$
125,449Working capital


69,117



129,750



136,722



141,894



50,669Long-term obligations, excluding redeemable convertible
    preferred stock


112,960
(3)


155,420
(3)


90,814
(3)


17,391



19,081Redeemable convertible preferred stock














4,453



32,156Stockholders equity


29,081



52,707



115,445



187,017



47,893     (1)
    
    From January 1, 2001 through December 31, 2006, we did
    not provide for an income tax benefit due to the recording of a
    full valuation allowance on our deferred tax assets in the
    periods subsequent to December 31, 2000. We continue to
    maintain a full valuation allowance at December 31, 2007
    for our domestic deferred tax assets. However, we released the
    valuation allowance on all of our foreign operations except
    Australia as of December 31, 2007.(2)
    
    During 2005, we incurred restructuring and other charges
    totaling $10.8 million related to the closing of our
    Adelaide, Australia development studio. See Note 12 to the
    consolidated financial statements.(3)
    
    We completed two separate $75 million convertible senior
    note issuances in 2005 and 2006. During 2006 and 2007, we
    recorded conversion rate adjustments on these note issuances.
    See Note 8 to the consolidated financial statements.(4)
    
    Loss before income taxes for 2004 includes a $5.0 million
    gain from the settlement of liabilities with our former parent,
    WMS Industries Inc (WMS). Also during 2004, we
    recorded a $1.8 million reduction of expenses previously
    recorded in 2003 related to legal proceedings.(5)
    
    During 2003, $33.2 million of charges related to the
    writedown of capitalized product development costs are included
    in cost of sales.(6)
    
    During 2003, Neil D. Nicastro ceased to serve as our Chief
    Executive Officer, President and Chief Operating Officer. As a
    result, 2003 administrative expense includes $9.5 million
    of charges incurred under the terms of our employment agreement
    and severance agreement with Mr. Nicastro. In addition, we
    incurred $9.7 million 32




---



##### 



of restructuring and other charges relating to the consolidation
    of California product development and marketing operations, net
    of reductions recorded in prior year restructuring activities.  (7)
    
    During 2004, we accelerated recognition of imputed (non-cash)
    preferred stock dividends related to the conversion of
    redeemable convertible preferred stock into shares of common
    stock.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Overview
  PlayStation 2 PS2 PlayStation 3 PS3 PlayStation Portable PSP Xbox Xbox 360; GameCube NGC Wii Game Boy Advance GBA , Nintendo DS DS PS3 Xbox 360 Wii. Blitz: The
    League Xbox 360 Wii. PS3 Stranglehold Unreal
    Tournament 3.
  over-the-top Stranglehold, Xbox 360 PS3, Unreal Tournament 3, PS3 The Lord
    of the Rings Online: Shadows of Angmar
   33




---



##### 



New
    Platform Cycle, Recent Trends and Uncertainties
    New Platform Cycle PS2 GameCube Xbox, Xbox 360 Wii PS3
  Decreasing Revenues and Selling Prices per-unit
    Increasing Costs to Develop Video Games
  Handheld
    Market
  DS. PSP. PSP PSP DS
 34




---



##### 



PSP Hot Brain, The Bee Game Touchmaster Ultimate
    Mortal Kombat Fosters Home for Imaginary
    Friends: Imagination Invaders
  PC
    Market
  The Lord of the Rings Online:
    Shadows of Angmar Stranglehold Unreal
    Tournament 3 The Wheelman This Is Vegas
  Childrens
    Market
  Ed, Edd n Eddy The Ant Bully, The Grim Adventures of
    Billy & Mandy Happy Feet, Fosters Home for Imaginary
    Friends: Imagination Invaders.
  Strategic
    Alliances
  L.A. RUSH, PS2 Xbox, The Wheelman
    Total
    NonStop Action Wrestling pay-per-view TNA iMPACT!
    Issuance
    of Convertible Senior Notes
   35




---



##### 



Stock-based
    Compensation
  Share-Based Payment ,
  Accounting for Stock Issued to Employees
      Majority
    Stockholder
   36




---



##### 



Critical
    Accounting Policies and Estimates
    Revenue
    recognition
  97-2, Software Revenue Recognition.
  Price
    protection, returns and discounts
     37




---



##### 



Doubtful
    accounts
      Capitalized
    product development costs
  Accounting for the Costs of Computer
    Software to be Sold, Leased, or Otherwise Marketed. product-by-product
  product-by-product
    Goodwill
   38




---



##### 



Valuation
    of deferred tax assets
   39




---



##### 



Results
    of Operations
    Years Ended December 31,2007


2006


2005(Dollars in thousands)Net revenues

$
157,195



100.0
%

$
165,574



100.0
%

$
150,078



100.0
%Cost of sales:Product costs and distribution


56,413



35.9



67,331



40.7



56,212



37.5Royalties and product development


90,400



57.5



68,883



41.6



75,852



50.5Total cost of sales


146,813



93.4



136,214



82.3



132,064



88.0Gross profit


10,382



6.6



29,360



17.7



18,014



12.0Research and development expense


25,373



16.1



37,022



22.4



39,693



26.4Selling and marketing expense


42,960



27.3



43,150



26.1



57,189



38.1Administrative expense


21,226



13.5



21,297



12.8



18,864



12.6Restructuring and other charges


(783
)


(0.5
)


(130
)


(0.1
)


10,784



7.2Operating loss


(78,394
)


(49.8
)


(71,979
)


(43.5
)


(108,516
)


(72.3
)Interest income


2,313



1.5



4,384



2.7



2,449



1.6Interest expense


(27,165
)


(17.3
)


(11,241
)


(6.8
)


(3,119
)


(2.1
)Other income (expense), net


2,902



1.8



2,699



1.6



(2,040
)


(1.3
)Loss before income taxes


(100,344
)


(63.8
)


(76,137
)


(46.0
)


(111,226
)


(74.1
)Provision (benefit) for income taxes


(752
)


(0.5
)


1,646



1.0



1,261



0.8Net loss


(99,592
)


(63.3
)


(77,783
)


(47.0
)


(112,487
)


(74.9
)Preferred stock dividends:Distributed


















282



0.2Imputed


















6



Loss applicable to common stock

$
(99,592
)


(63.3
)%

$
(77,783
)


(47.0
)%

$
(112,775
)


(75.1
)%     Video Game Title

Year ReleasedUnreal Tournament 3


2007Stranglehold


2007Rampage: Total Destruction


2006Happy Feet


2006Mortal Kombat: Armageddon


2006Blitz: The League


2005Mortal Kombat: Shaolin Monks


2005Mortal Kombat: Deception


2004NBA Ballers


2004Midway Arcade Treasures


2003Mortal Kombat: Deadly Alliance


2002  40




---



##### 



2007
    Compared with 2006
  year-to-year
  Years Ended December 31,See





% of Net





% of Net


Increase/Explanation


2007


Revenues


2006


Revenues


(Decrease)


% ChangeConsolidated net revenues


A


$
157,195



100.0
%

$
165,574



100.0
%

$
(8,379
)


(5.1
)%North American net revenues


B



96,700



61.5
%


124,112



75.0
%


(27,412
)


(22.1
)%International net revenues


C



60,495



38.5
%


41,462



25.0
%


19,033



45.9
%Cost of sales:Product costs and distribution


D



56,413



35.9
%


67,331



40.7
%


(10,918
)


(16.2
)%Royalties and product development


E



90,400



57.5
%


68,883



41.6
%


21,517



31.2
%Research and development expense


F



25,373



16.1
%


37,022



22.4
%


(11,649
)


(31.5
)%Selling and marketing expense


G



42,960



27.3
%


43,150



26.1
%


(190
)


(0.4
)%Administrative expense


H



21,226



13.5
%


21,297



12.8
%


(71
)


(0.3
)%Restructuring and other charges (benefits)


I



(783
)


(0.5
)%


(130
)


(0.1
)%


653



502.3
%Interest income


J



2,313



1.5
%


4,384



2.7
%


(2,071
)


(47.2
)%Interest expense


K



(27,165
)


(17.3
)%


(11,241
)


(6.8
)%


15,924



141.7
%Other income, net


L



2,902



1.8
%


2,699



1.6
%


203



7.5
%Provision for income taxes


M



(752
)


(0.5
)%


1,646



1.0
%


(2,398
)


(145.7
)%   A.
    Consolidated
    Net Revenues    Years Ended December 31,2007


2006Sony PlayStation 3

$
26,811



17.1
%

$





%Microsoft Xbox 360


45,555



29.0



3,469



2.1Nintendo Wii


15,762



10.0



11,456



6.9Sony PlayStation 2


12,843



8.2



75,955



45.8Microsoft Xbox


834



0.5



14,602



8.8Nintendo GameCube


875



0.6



11,184



6.8Sony PlayStation Portable


3,769



2.4



13,845



8.4Nintendo DS


13,138



8.4



9,870



6.0Nintendo Game Boy Advance


1,680



1.1



9,417



5.7Personal Computer


30,961



19.7



9,307



5.6Royalties and other


4,967



3.0



6,469



3.9Total Consolidated Net Revenues

$
157,195



100.0
%

$
165,574



100.0
%   per-unit per-unit Stranglehold, Blacksite: Area 51,
 41




---



##### 



B.
    North
    American Net Revenues  Stranglehold, Unreal Tournament
    3 Blacksite: Area 51. Mortal Kombat: Armageddon Happy Feet, Rampage: Total Destruction
  C.
    International
    Net Revenues  Stranglehold, Unreal
    Tournament 3, Blacksite: Area 51 Happy Feet,
    Rise & Fall: Civilizations at War Mortal
    Kombat: Armageddon.
  D.
    and E.
    Cost of Sales  Product
    Costs and Distribution
  per-unit
  Royalties
    and Product Development
  Unreal Tournament 3 Stranglehold Lord of the Rings Online: Shadows of
    Angmar
    Years Ended December 31,Description

2007


2006Amortization of capitalized product development costs

$
55,092,000


$
53,628,000Writedowns related to future releases


8,732,000



Writedowns related to current releases


2,404,000



1,696,000Total

$
66,228,000


$
55,324,000  42




---



##### 



F.
    Research
    and Development Expense    Years Ended December 31,Description

2007


2006Gross research and development costs

$
104,187,000


$
106,364,000Research and development costs capitalized


(78,814,000
)


(69,342,000
)Research and development expense

$
25,373,000


$
37,022,000     G.
    Selling
    and Marketing Expense    H.
    Administrative
    Expense    I.
    Restructuring
    and Other Charges (Benefits)    Years Ended December 31,Description

2007


2006Reversals of previously accrued charges, net


(783,000
)


(130,000
)Total

$
(783,000
)

$
(130,000
)   J.
    Interest
    Income    K.
    Interest
    Expense   43




---



##### 



L.
    Other
    Income, net    M.
    Provision
    for Income Taxes   44




---



##### 



2006
    Compared with 2005
  year-to-year
  Years Ended December 31,See





% of Net





% of Net


Increase/Explanation


2006


Revenues


2005


Revenues


(Decrease)


% ChangeConsolidated net revenues


A


$
165,574



100.0
%

$
150,078



100.0
%

$
15,496



10.3
%North American net revenues


B



124,112



75.0
%


118,285



78.8
%


5,827



4.9
%International net revenues


C



41,462



25.0
%


31,793



21.2
%


9,669



30.4
%Cost of sales:Product costs and distribution


D



67,331



40.7
%


56,212



37.5
%


11,119



19.8
%Royalties and product development


E



68,883



41.6
%


75,852



50.5
%


(6,969
)


(9.2
)%Research and development expense


F



37,022



22.4
%


39,693



26.4
%


(2,671
)


(6.7
)%Selling and marketing expense


G



43,150



26.1
%


57,189



38.1
%


(14,039
)


(24.5
)%Administrative expense


H



21,297



12.8
%


18,864



12.6
%


2,433



12.9
%Restructuring and other charges (benefits)


I



(130
)


(0.1
)%


10,784



7.2
%


(10,914
)


(101.2
)%Interest income


J



4,384



2.7
%


2,449



1.6
%


1,935



79.0
%Interest expense


K



(11,241
)


(6.8
)%


(3,119
)


(2.1
)%


(8,122
)


260.4
%Other (expense) income, net


L



2,699



1.6
%


(2,040
)


(1.3
)%


4,739



(232.3
)%Provision for income taxes


M



1,646



1.0
%


1,261



0.8
%


385



30.5
%Preferred stock dividends


N







0.0
%


288



0.2
%


(288
)


(100.0
)%   A.
    Consolidated
    Net Revenues    Years Ended December 31,2006


2005Microsoft Xbox 360

$
3,469



2.1
%

$





%Nintendo Wii


11,456



6.9







Sony PlayStation 2


75,955



45.8



77,590



51.7Microsoft Xbox


14,602



8.8



51,570



34.4Nintendo GameCube


11,184



6.8



5,452



3.6Sony PlayStation Portable


13,845



8.4



1,729



1.2Nintendo DS


9,870



6.0







0.0Nintendo Game Boy Advance


9,417



5.7



2,333



1.6Personal Computer


9,307



5.6



4,016



2.7Licenses and Royalty


6,301



3.8



6,145



4.1Other


168



0.1



1,243



0.7Total Consolidated Net Revenues

$
165,574



100.0
%

$
150,078



100.0
%  45




---



##### 



B.
    North
    American Net Revenues  Mortal Kombat: Armageddon Happy Feet Rampage: Total Destruction Blitz: The League, Mortal
    Kombat: Shaolin Monks Area 51.
  C.
    International
    Net Revenues  Happy Feet, Rise & Fall: Civilizations at War Mortal Kombat: Armageddon. Area 51, Mortal
    Kombat: Shaolin Monks L.A. RUSH
  D.
    and E.
    Cost of Sales  Product
    Costs and Distribution
  per-unit per-unit
  Royalties
    and Product Development
  Happy Feet The Ant Bully NBA
    Ballers: Phenom SpyHunter: Nowhere to Run. Unreal Championship 2: The Liandri Conflict Earth 2160.
    Years Ended December 31,Description

2006


2005Amortization of capitalized product development costs

$
53,628,000


$
55,417,000Writedowns related to future releases






4,366,000Writedowns related to current releases


1,696,000



7,691,000Total

$
55,324,000


$
67,474,000    46




---



##### 



F.
    Research
    and Development Expense    Years Ended December 31,Description

2006


2005Gross research and development costs

$
106,364,000


$
108,735,000Research and development costs capitalized


(69,342,000
)


(69,042,000
)Research and development expense

$
37,022,000


$
39,693,000   L.A. RUSH
  G.
    Selling
    and Marketing Expense    Mortal Kombat:
    Deception, PS2 Xbox NGC
  H.
    Administrative
    Expense   47




---



##### 



I.
    Restructuring
    and Other Charges (Benefits)    Years Ended December 31,Description

2006


2005Impairment of fixed and intangible assets and goodwill

$



$
5,416,000Impairment of capitalized product development costs






2,632,000Lease and long-term commitments and other costs






1,410,000Severance and related costs






1,326,000Reversals of previously accrued charges, net


(130,000
)


Total

$
(130,000
)

$
10,784,000   J.
    Interest
    Income    K.
    Interest
    Expense        L.
    Other
    (Expense) Income, net    M.
    Provision
    for Income Taxes   48




---



##### 



N.
    Preferred
    Stock Dividends    Impact of
    Recently Issued Accounting Pronouncements
  Accounting for Uncertainty in Income Taxes An Interpretation of FASB Statement No. 109 Accounting for Income Taxes.
      Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities
 49




---



##### 



Liquidity
    and Capital Resources
             50




---



##### 



51




---



##### 



PlayStation 3 Xbox 360 Wii
    Off
    Balance Sheet Arrangements and Contractual Obligations
      Payments Due by PeriodLess Than


1-3


3-5


More ThanContractual Obligations

Total


1 Year


Years


Years


5 YearsLong-term debt obligations(1)

$
19,167


$



$



$
19,167


$
Interest on long-term debt obligations(2)


6,468



1,437



2,875



2,156



Convertible senior notes(3)


150,000







150,000







Interest on convertible senior notes(4)


18,914



9,844



9,070







Operating lease obligations(5)


13,473



3,372



4,359



4,204



1,538Purchase obligations(6)


35,722



18,503



16,160



1,047



12Other liabilities(7)


726



363



363







Total

$
244,470


$
33,519


$
182,827


$
26,574


$
1,550     (1)
    
    This obligation is reflected on our consolidated balance sheet
    at December 31, 2007 in long-term debt. Refer to the
    Liquidity and Capital Resources section for a
    discussion of our Secured Facility with NAI.(2)
    
    Assumes debt is carried to full term. Debt bears interest at
    variable rates. The amounts above assume future interest will be
    incurred at 7.50% (base rate plus 1.50%) from January 1,
    2008 through June 29, 2012, the maturity date of the
    long-term debt obligation. These obligations are not reflected
    on our consolidated balance sheet at December 31, 2007.(3)
    
    Assumes our two convertible senior note instruments are carried
    through the dates the holders may first require redemption of
    the notes, which are April 30, 2009 and May 31, 2010,
    respectively. These obligations are reflected on our
    consolidated balance sheet at December 31, 2007.(4)
    
    Assumes our two convertible senior note instruments are carried
    through the dates the holders may first redeem the notes, which
    are April 30, 2009 and May 31, 2010, respectively. The
    Notes bear interest at fixed rates of 6.00% and 7.125% per
    annum, respectively. These obligations are not reflected on our
    consolidated balance sheet at December 31, 2007.(5)
    
    These obligations are not reflected on our consolidated balance
    sheet at December 31, 2007.(6)
    
    Purchase obligations are agreements to purchase goods or
    services that are enforceable and legally binding on us and that
    specify all significant terms, including: fixed or minimum
    quantities to be purchased; fixed, minimum or variable price
    provisions; and the approximate timing of the transaction. The
    amounts in the table above include inventory items, marketing
    commitments, and minimum payments due under various licensing
    agreements and third party developer agreements. The amounts
    disclosed above assume all transactions are carried to
    contractual term and do not reflect cancellations within our
    control. Such cancellations could result in 52




---



##### 



amounts owed being less than those reflected above. These
    obligations are not reflected on our consolidated balance sheet
    at December 31, 2007.(7)
    
    This item represents the remaining obligations under software
    license financing arrangements which are reflected on our
    consolidated balance sheet at December 31, 2007 in other
    accrued liabilities (current) and other noncurrent liabilities.  Impact of
    Inflation
    Seasonality
    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.  Interest
    Rate Risk
        Foreign
    Currency Risk
  and/or
   53




---



##### 



Item 8.
    Financial
    Statements and Supplementary Data.    Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.  Disclosure
    Controls and Procedures.
  Rule 13a-15(b)
  Internal
    Control over Financial Reporting.
  Managements Annual Report on Internal Control over
    Financial Reporting. page F-2
  page F-4
  Changes in Internal Control over Financial
    Reporting. Rule 13a-15(d)
  Item 9B.
    Other
    Information.   54




---



##### 



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance.  Identification of Directors and Executive
    Officers. his/her
  Name and Age

Position(s) with Midway

Committee(s)David F. Zucker(45)

President and Chief Executive OfficerRyan G. ODesky(32)

Interim Chief Financial Officer, Treasurer and Principal
    Accounting Officer; Vice President  Finance,
    Controller, and Assistant TreasurerSteven M. Allison(40)

Senior Vice President  Marketingand Chief Marketing OfficerMatthew V. Booty(41)

Senior Vice President  WorldwideStudiosDeborah K. Fulton(44)

Senior Vice President, Secretary andGeneral CounselMiguel Iribarren(41)

Vice President  PublishingMartin Spiess(42)

Managing Director  Europe (Midway Games Limited)William C. Bartholomay(79)

Director

(2)*; (3), (4)Peter C. Brown(49)

Director

(1)Joseph A. Califano, Jr.(76)

Director

(1), (2); (3)*Shari E. Redstone(53)

Chair of the Board of DirectorsRobert J. Steele(54)

DirectorRobert N. Waxman(71)

Director

(1)*; (4)*     (1)
    
    Member of the Audit Committee(2)
    
    Member of the Compensation Committee(3)
    
    Member of the Nominating and Corporate Governance Committee(4)
    
    Member of the Special Committee of Independent Directors(*)
    
    Indicates chair of committee whose number precedes the asterisk
    (*).  Biographical
    Information
  David F. Zucker Travel Agent Magazine;
  Ryan G. ODesky
 55




---



##### 



Steven M. Allison
  Matthew V. Booty
  Deborah K. Fulton
  Miguel Iribarren
  Martin Spiess
  William C. Bartholomay
  Peter C. Brown
  Joseph A. Califano, Jr.
 56




---



##### 



Shari E. Redstone
  Robert J. Steele
  Robert N. Waxman, partner-in-charge
  Section 16(a) Beneficial Ownership Reporting
    Compliance.
  Audit Committee Membership.
  Audit Committee Financial Expert.
  Code of Business Conduct and Ethics.
  Nominating and Corporate Governance
    Committee.
 57




---



##### 



Item 11.
    Executive
    Compensation.  Compensation
    Discussion and Analysis
  Overview
    of the Objectives and Philosophy of the Compensation Program for
    our Named Executive Officers
          Elements
    of our Compensation Program
  Salary
   58




---



##### 



Cash
    Bonus
         59




---



##### 



Equity
    Awards
      Form 10-K
      Perquisites
    and Other Benefits
    out-of-pocket
   60




---



##### 



Change of
    Control Payments
    Termination
    Payments
    Compensation
    Consultant
    Tax
    Considerations
   61




---



##### 



Compensation
    Committee Report
  Regulation S-K Form 10-K
  Compensation
    Committee William
    C. Bartholomay, Chairman
    Joseph A. Califano, Jr.
  Summary
    Compensation Table
      2007
    SUMMARY COMPENSATION TABLE
  Change inPensionValue andNon-Equity


NonqualifiedName and










Stock


Option


Incentive Plan


Deferred


All OtherPrincipal Position

Year


Salary($)


Bonus($)


Awards($)(1)


Awards($)(1)


Compensation($)


Earnings($)


Compensation($)


Total($)David F. Zucker


2007



600,630











910,158











8,456
(2)


1,519,244President and Chief


2006



600,193







49,583



2,451,919











11,915
(2)


3,113,610Executive Officer (PEO)Thomas E. Powell


2007



329,258











24,549











11,723
(2)


365,530Former Executive Vice


2006



322,271











24,358











5,838
(2)


352,467President  Finance, Treasurer and Chief Financial
    Officer (PFO)Steven M. Allison


2007



290,672











56,501















347,173Senior Vice President 


2006



290,000











53,799















343,799Marketing and Chief Marketing OfficerMatthew V. Booty


2007



354,950











26,977











5,657
(2)


387,584Senior Vice President 


2006



342,121











84,281











7,043
(2)


433,445Worldwide StudiosMartin Spiess


2007



360,326
(3)


73,900
(4)(6)






60,558











62,050
(3)(5)


556,834Managing Director  Europe for Midway Games, Limited  62




---



##### 



(1)
    
    Represents fair value of awards recognized as compensation cost
    during the year over the respective vesting periods of the
    awards. See discussion of Midways valuation procedures and
    fair value assumptions for stock option awards at Note 11
    to the consolidated financial statements.(2)
    
    Represents payments made under our Exec-U-Care supplemental
    health insurance program.(3)
    
    GBP to USD exchange rate used was the 2007 annual average of
    2.00181.(4)
    
    GBP to USD exchange rate used was the spot rate of 1.9973 as of
    December 31, 2007.(5)
    
    Represents payments made for car allowance and commute
    reimbursement.(6)
    
    Bonus will be paid in April 2008.  Grants Of
    Plan-Based Awards
    Form 10-K
    2007
    GRANTS OF PLAN-BASED AWARDS
  Estimated FuturePayouts Under








Grant Date FairEquity Incentive


Option


Exercise Price of


Value of OptionPlan Awards


Award


Option Awards


AwardsName

Grant Date


(#)


(#)


($/Sh)


($)David F. Zucker


8/20/2007



80,000











Thomas E. Powell


8/20/2007



45,000



40,000



5.90


$
3.11Steven M. Allison


8/20/2007



30,000



15,000



5.90


$
3.11Matthew V. Booty


8/20/2007



50,000



50,000



5.90


$
3.11Martin Spiess


8/20/2007



35,000



25,000



5.90


$
3.11   Outstanding
    Equity Awards At Year-End
   63




---



##### 



64




---



##### 



2007
    OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
  Option Awards





Stock AwardsEquityIncentive


EquityEquity














Plan


Incentive PlanIncentive














Awards:


Awards:Plan














Number of


Market orAwards:








Number


Market


Unearned


Payout ValueNumber of


Number of


Number of








of Shares


Value of


Shares,


of UnearnedSecurities


Securities


Securities








or Units


Shares or


Units or


Shares, UnitsUnderlying


Underlying


Underlying








of Stock


Units of


Other


or OtherUnexercised


Unexercised


Unexercised


Option





That


Stock That


Rights That


Rights ThatOptions (#)


Options (#)


Unearned


Exercise


Option


Have Not


Have Not


Have Not


Have NotName

Exercisable


Unexercisable


Options


Price($)


Expiration Date


Vested (#)


Vested ($)


Vested (#)


Vested ($)(1)David F. Zucker


225,968











2.92



5/5/2013











80,000
(3)


220,8001,087,857











3.57



5/5/2013















2,692











6.27



5/5/2013















1,669











6.53



5/5/2013















109











6.59



5/5/2013















472











6.70



5/5/2013















685











7.25



5/5/2013















399











7.38



5/5/2013















173











7.75



5/5/2013















54











8.10



5/5/2013















92,661











8.12



5/5/2013















44,816











8.30



5/5/2013















594











8.30



5/5/2013















310











8.61



5/5/2013















645











8.90



5/5/2013















2,145











9.10



5/5/2013















78











9.11



5/5/2013















7,956











9.21



5/5/2013















395











9.29



5/5/2013















32











9.36



5/5/2013















330











9.38



5/5/2013















27











9.39



5/5/2013















1,067











9.42



5/5/2013















1,971











9.49



5/5/2013















55











9.57



5/5/2013















124











9.59



5/5/2013















21











9.90



5/5/2013















336











9.91



5/5/2013















11,312











10.00



5/5/2013















436











10.03



5/5/2013















11,903











10.06



5/5/2013















922











10.13



5/5/2013















688











10.14



5/5/2013















2,104











10.15



5/5/2013















370











10.19



5/5/2013















76











10.20



5/5/2013















10,451











10.21



5/5/2013















15,689











10.22



5/5/2013















6











10.26



5/5/2013















12,349











10.36



5/5/2013















 65




---



##### 



Option Awards





Stock AwardsEquityIncentive


EquityEquity














Plan


Incentive PlanIncentive














Awards:


Awards:Plan














Number of


Market orAwards:








Number


Market


Unearned


Payout ValueNumber of


Number of


Number of








of Shares


Value of


Shares,


of UnearnedSecurities


Securities


Securities








or Units


Shares or


Units or


Shares, UnitsUnderlying


Underlying


Underlying








of Stock


Units of


Other


or OtherUnexercised


Unexercised


Unexercised


Option





That


Stock That


Rights That


Rights ThatOptions (#)


Options (#)


Unearned


Exercise


Option


Have Not


Have Not


Have Not


Have NotName

Exercisable


Unexercisable


Options


Price($)


Expiration Date


Vested (#)


Vested ($)


Vested (#)


Vested ($)(1)David F. Zucker


33











10.38



5/5/2013















69











10.39



5/5/2013















61











10.40



5/5/2013















285











10.42



5/5/2013















19











10.45



5/5/2013















69











10.46



5/5/2013















227











10.50



5/5/2013















688











10.52



5/5/2013















1,330











10.54



5/5/2013















119











10.55



5/5/2013















2,455











10.61



5/5/2013















190











10.63



5/5/2013















83











10.64



5/5/2013















60











10.72



5/5/2013















11,818











10.74



5/5/2013















48











10.78



5/5/2013















50











10.82



5/5/2013















2,433











10.84



5/5/2013















2,770











10.85



5/5/2013















16,403











10.90



5/5/2013















21











10.91



5/5/2013















688











10.96



5/5/2013















3,153











11.16



5/5/2013















55











11.28



5/5/2013















39











11.29



5/5/2013















4,483











11.32



5/5/2013















35,426











11.43



5/5/2013















10,966











11.46



5/5/2013















26











11.49



5/5/2013















1,345











11.52



5/5/2013















138











11.54



5/5/2013















62,021











11.55



5/5/2013















598











11.60



5/5/2013















19,456











11.61



5/5/2013















165











11.63



5/5/2013















761











11.66



5/5/2013















511











11.75



5/5/2013















255











11.79



5/5/2013















316











11.80



5/5/2013















103











11.83



5/5/2013















87











11.86



5/5/2013















 66




---



##### 



Option Awards





Stock AwardsEquityIncentive


EquityEquity














Plan


Incentive PlanIncentive














Awards:


Awards:Plan














Number of


Market orAwards:








Number


Market


Unearned


Payout ValueNumber of


Number of


Number of








of Shares


Value of


Shares,


of UnearnedSecurities


Securities


Securities








or Units


Shares or


Units or


Shares, UnitsUnderlying


Underlying


Underlying








of Stock


Units of


Other


or OtherUnexercised


Unexercised


Unexercised


Option





That


Stock That


Rights That


Rights ThatOptions (#)


Options (#)


Unearned


Exercise


Option


Have Not


Have Not


Have Not


Have NotName

Exercisable


Unexercisable


Options


Price($)


Expiration Date


Vested (#)


Vested ($)


Vested (#)


Vested ($)(1)David F. Zucker


14











11.87



5/5/2013















1,428











11.89



5/5/2013















11,676











11.90



5/5/2013















212











11.98



5/5/2013















34











11.99



5/5/2013















111











12.03



5/5/2013















910











12.06



5/5/2013















3,128











12.20



5/5/2013















110











12.25



5/5/2013















552











12.33



5/5/2013















948











12.40



5/5/2013















446











12.41



5/5/2013















374











12.45



5/5/2013















103











12.53



5/5/2013















1,263











12.55



5/5/2013















2,541











12.58



5/5/2013















663











12.59



5/5/2013















5,934











12.61



5/5/2013















5,678











12.63



5/5/2013















11,695











12.65



5/5/2013















5,948











12.70



5/5/2013















1,133











12.85



5/5/2013















Thomas E. Powell


25,000











2.35



8/12/2013











45,000
(3)


124,20010,000











13.70



1/14/2012



















40,000
(2)






5.90



8/19/2017















Steven M. Allison


31,875











3.72



12/21/2013











30,000
(3)


82,800



15,000
(2)






5.90



8/19/2017















Matthew V. Booty


50,000











9.89



6/4/2012











50,000
(3)


138,00050,000











2.35



8/12/2013















1,125











6.50



10/31/2010



















50,000
(2)






5.90



8/19/2017















Martin Spiess


20,000



20,000
(4)






9.25



6/2/2015











35,000
(3)


96,600



25,000
(2)






5.90



8/19/2017















     (1)
    
    Based on the closing price of our common stock on the NYSE on
    December 31, 2007, which was $2.76 per share.(2)
    
    During August 2007, the Company granted 130,000 shares of
    incentive stock options under the 2005 plan to our Named
    Executive Officers. Up to 25% of the grant is exercisable on
    August 20, 2008, up to 50% of the grant is exercisable on
    August 20, 2009, up to 75% of the grant is exercisable on
    August 20, 2010 and up to 100% of the grant is exercisable
    on August 20, 2011. 67




---



##### 



(3)
    
    During August 2007, the Company granted 240,000 restricted
    shares under the 2005 plan to our Named Executive Officers. The
    restricted stock is restricted as to transfer until the date we
    file our Annual Report on
    Form 10-K
    for the year ending December 31, 2008 with the Securities
    and Exchange Commission (the Release Date). A
    precondition to the lapse of restrictions on this
    performance-based restricted stock is that the Company achieve
    profitability (i.e., having net income greater than zero) for
    the fiscal year ending December 31, 2008. If the Company
    does not achieve profitability in the fiscal year ending
    December 31, 2008, the restricted stock is forfeited.
    Furthermore, in order for the restrictions to lapse the Company
    must not just achieve profitability but must meet a
    pre-determined level of profitability. If the pre-determined
    level of profitability is reached the restrictions will lapse
    over a period of three years, such that the restrictions will
    have lapsed as to 100% of the shares on the third anniversary of
    the Release Date. Since the grant is based on the achievement of
    certain financial performance targets for the year ending
    December 31, 2008, the restricted stock also will be
    forfeited if we cease to be subject to the reporting obligations
    under the Securities Exchange Act of 1934, upon certain changes
    in control or upon termination of employment of the person
    holding such restricted stock.(4)
    
    Up to 50% of the grant is currently exercisable; up to 75% of
    the grant is exercisable on June 3, 2008 and up to 100% of
    the grant is exercisable on June 3, 2009.  Option
    Exercises and Stock Vested
    2007
    OPTION EXERCISES and STOCK VESTED
  Option Awards


Stock AwardsNumber ofNumber of





Shares


ValueShares Acquired


Value Realized


Acquired on


Realized onName

on Exercise (#)


on Exercise ($)


Vesting (#)


Vesting ($)David F. Zucker














Thomas E. Powell














Steven M. Allison


10,625



38,072







Matthew V. Booty














Martin Spiess














   Potential
    Payments Upon Termination or
    Change-In-Control
  Post-Employment
    Compensation
  employee-at-will
 68




---



##### 



Termination
    and Change of Control Arrangements
  Mr. Zucker
    
    The Company shall pay Mr. Zucker, within 30 days after
    the date of termination, his base salary in effect at the date
    of termination through the date of termination, to the extent it
    was not already paid to Mr. Zucker; and
    Within 30 days after the Company publicly announces its
    audited results for the year in which the date of termination
    occurs, the product of:  °
    The annual bonus, if any, earned by Mr. Zucker under his
    employment agreement as if Mr. Zucker had remained employed
    for the entire year; and°
    A fraction, the numerator of which is the number of days in the
    applicable year, through the date of termination, and the
    denominator of which is 365, less any payments previously made
    to Mr. Zucker in respect of the annual bonus; and  
    Whether or not Mr. Zucker seeks or accepts other
    employment, the Company shall pay to Mr. Zucker an amount
    equal to two times his base salary in effect on the date of
    termination, which shall be payable 25% on the date of
    termination, and an additional 25% on each of 121 days,
    242 days and 365 after the date of termination.    
    conviction of a felony, or any other crime involving fraud,
    dishonesty or breach of trust relating to the Company or
    Mr. Zuckers employment;
    failure and refusal to follow a reasonable direction of the
    board of directors of the Company after notice in writing of
    such failure or refusal and a cure period of ten days after the
    notice in writing;
    commission of any dishonest or grossly negligent act which has
    or is reasonably likely to have a material adverse effect on the
    Company or its customer or trade relationships provided that
    such act was not taken with the approval of the board of
    directors of the Company; or
    a breach by Mr. Zucker of any material provision of his
    employment agreement, after the Company has provided him with
    notice in writing and a cure period of ten days.    
    individuals who constitute the board of directors at May 6,
    2003 or who have been recommended for election to the board by
    two-thirds of the board consisting of individuals who are
    members of the board at May 6, 2003 or such recommended
    successors cease for any reason to constitute at least a
    majority of such board; and
    Mr. Zucker is not offered the opportunity to continue as
    Chief Executive Officer after such a board change on the terms
    of this employment agreement.   69




---



##### 




    the sum of:  °
    one years base annual salary currently in effect; and°
    the bonus payable to Mr. Zucker, if any, for the year
    immediately prior to the change of control,  
    multiplied by 2.99.        
    a breach by the Company of any material provision of
    Mr. Zuckers employment agreement, after
    Mr. Zucker has provided the Company with notice in writing
    thereof and a cure period of ten days;
    there has occurred any material diminution or reduction in
    Mr. Zuckers duties, whether in scope or nature, or
    Mr. Zucker is required to report to anyone other than the
    board of directors of the Company or any committee thereof;
    the board of directors elects an executive officer senior in
    rank to Mr. Zucker;
    the Companys principal place of business is moved more
    than 50 miles from 2704 West Roscoe Street, Chicago,
    Illinois and as a result of such move, Mr. Zuckers
    commute to work is increased by more than 50 miles each
    way; or
    a change of control occurs and within 60 days after the
    change of control Mr. Zucker notifies the Company of his
    election to terminate his employment.  12-month
   70




---



##### 



Mr. Powell
      
    within five years of February 10, 2003; and
    within two years after the change of control a terminating
    condition occurs,        
    the employment of Mr. Powell is terminated by the Company
    without cause;
    Mr. Powell gives Midway a written resignation from his
    employment after, without his consent, the business facility at
    which he is required to perform his duties to the Company is
    relocated more than 50 miles from the business location at
    which he is performing his duties to Midway; or
    Mr. Powell gives the Company a written resignation from his
    employment after, without his consent, either he is placed in a
    position with the Company of lesser stature than his present
    position with the Company or he is assigned duties with the
    Company inconsistent with such position or duties which, if
    performed, would result in a significant change in the nature or
    scope of powers, authority, functions or duties inherent in such
    position on February 10, 2003 or Mr. Powell is
    assigned by the Company performance requirements and working
    conditions which are a variance with the performance
    requirements and working conditions in effect on
    February 10, 2003, provided that such assigned duties,
    performance requirements
    and/or
    working conditions are not associated with his achieving a
    position of greater stature, authority
    and/or
    responsibility than his position with his present position with
    the Company.    Mr. Spiess
    Potential
    Payments to Officers under Existing Employment or Retention
    Agreements
   71




---



##### 



Mr. Zucker
    Involuntary Not for Causeor Voluntary For Good


Termination Following aType of Payment

Reason Termination


Change of ControlSalary

$
1,200,000


$
1,797,000Bonus(1)






Restricted Shares(2)






220,800Total

$
1,200,000


$
2,017,800           Mr. Powell
    Termination Following aType of Payment

Change of ControlSalary(1)

$
658,516Other


Total

$
658,516      72




---



##### 



Mr. Spiess
    Termination WithoutType of Payment

CauseSalary(1)

$
179,757Other


Total

$
179,757       Non-Employee
    Director Compensation Table
    DIRECTOR
    COMPENSATION
  Change inPension ValueandNonqualifiedStock





Non-Equity


DeferredFees Earned or


Awards





Incentive Plan


Compensation


All OtherName

Paid in Cash ($)


($)


Option Awards ($)(1)


Compensation ($)


Earnings


Compensation ($)(2)


Total ($)William C. Bartholomay


86,371







21,118















107,489Peter C. Brown


75,000







21,118















96,118Joseph A. Califano, Jr.


66,750







21,118















87,868Kenneth D. Cron(3)


665,500







21,119











10,250



696,869Shari E. Redstone


318,500







21,118















339,618Ira S. Sheinfeld(4)


50,625







10,462















61,087Robert J. Steele


225,000







21,118















246,118Robert N. Waxman


81,000







21,118











14,990



117,108       (2)
    
    Represents payments made under our Exec-U-Care supplemental
    health insurance program.(3)
    
    Mr. Cron resigned as a director of the Company effective
    December 17, 2007.(4)
    
    Mr. Sheinfeld resigned as a director of the Company
    effective August 30, 2007.   73




---



##### 



Options Awarded


Grant Date


Fair Value Per Option10,000



5/18/1998


$
7.9710,000



1/31/2000



9.1615,000



1/15/2002



10.3521,676



9/3/2002



4.0025,000



9/19/2003



2.3281,676        74




---



##### 



Compensation
    Committee Interlocks and Insider Participation
   75




---



##### 



Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.  Principal
    Stockholders
    Number of Shares ofCommon Stock


Percentage ofBeneficially


OutstandingName and Address of Beneficial Owner

Owned(1)


Common Stock(1)Sumner M. Redstone


80,339,266
(2)


87.3
%200 Elm Street
    Dedham, MA 02026National Amusements, Inc.


22,687,479
(2)


24.6
%200 Elm Street 
    Dedham, MA 02026Sumco, Inc.


45,218,230
(2)


49.1
%200 Elm Street
    Dedham, MA 02026     (1)
    
    Under
    Rule 13d-3(d)(1)
    of the Securities Exchange Act of 1934, shares underlying
    options are deemed to be beneficially owned if the holder of the
    option has the right to acquire beneficial ownership, of the
    underlying shares within 60 days. Percentage calculations
    are based on 92,053,269 shares outstanding on
    February 29, 2008, excluding treasury shares.(2)
    
    Based upon a Form 4 filed with the SEC by Sumner M.
    Redstone on February 8, 2007, Mr. Redstone reported
    direct ownership of 12,433,557 and indirect ownership through
    NAI (shared voting power) of 22,687,479 and Sumco (shared voting
    power) of 45,218,230 shares of our common stock.
    Mr. Redstones shares do not include
    17,500 shares held by his wife, Paula Redstone, with
    respect to which shares Mr. Redstone disclaims beneficial
    ownership. As a result of his stock ownership in NAI and Sumco,
    Mr. Redstone is deemed the beneficial owner of the shares
    of common stock owned by both NAI and Sumco.  Security
    Ownership of Management
    Number of Shares of


Percentage ofCommon Stock


OutstandingName of Beneficial Owner

Beneficially Owned(1)


Common Stock(1)Steven M. Allison


61,875
(2)


*William C. Bartholomay


124,983
(3)


*Matthew V. Booty


151,125
(4)


*Peter C. Brown


8,000
(5)


*Joseph A. Califano, Jr.


18,000
(6)


*Ryan G. ODesky


15,000



*Shari E. Redstone


67,923,290
(7)


73.8
%Martin Spiess


55,000
(8)


*Robert J. Steele


8,000
(9)


*Robert N. Waxman


33,000
(10)


*David F. Zucker


1,927,589
(11)


2.1
%Directors and Executive Officers as a Group (13 persons)


70,469,532
(12)


76.6
%  76




---



##### 



*
    
    Less than 1%(1)
    
    Under
    Rule 13d-3(d)(1)
    of the Securities Exchange Act of 1934, shares underlying
    options are deemed to be beneficially owned if the holder of the
    option has the right to acquire beneficial ownership of the
    underlying shares within 60 days. Percentage calculations
    are based on 92,053,269 shares outstanding on
    February 29, 2008, excluding treasury shares. No shares
    have been pledged as security by our directors or executive
    officers.(2)
    
    Includes 31,875 shares of common stock underlying stock
    options.(3)
    
    Includes 79,613 shares of common stock underlying stock
    options.(4)
    
    Includes 101,125 shares of common stock underlying stock
    options.(5)
    
    Includes 8,000 shares of common stock underlying stock
    options.(6)
    
    Includes 8,000 shares of common stock underlying stock
    options.(7)
    
    Includes 67,905,709 shares (73.8%) owned by NAI and Sumco
    as of February 29, 2008. As a director, President and
    shareholder of NAI, Ms. Redstone may be deemed a beneficial
    owner of NAIs shares of our common stock. Also, as
    President of Sumco, Ms. Redstone has voting and investment
    power with respect to shares of our common stock held by Sumco.
    Also includes 8,000 shares of common stock underlying stock
    options.(8)
    
    Includes 20,000 shares of common stock underlying stock
    options.(9)
    
    Includes 8,000 shares of common stock underlying stock
    options.(10)
    
    Includes 25,000 shares of common stock underlying stock
    options.(11)
    
    Includes 1,774,671 shares of common stock underlying stock
    options.(12)
    
    Includes an aggregate of 2,146,784 shares of common stock
    underlying stock options.  Securities
    Authorized for Issuance Under Equity Compensation
    Plans
       77




---



##### 



EQUITY
    COMPENSATION PLAN INFORMATION
  (c)Number of Securities(a)


(b)


Remaining Available forNumber of Securities to


Weighted-Average Exercise


Future Issuance Under Equitybe Issued upon Exercise


Price of Outstanding


Compensation Plansof Outstanding Options,


Options, Warrants and


(Excluding SecuritiesPlan Category

Warrants and Rights


Rights


Reflected in Column (a))Equity compensation plans approved by Stockholders


4,575,369
(1)

$
7.17



1,856,853     (1)
    
    Total excludes the 595,000 performance-based restricted shares
    granted to management that are outstanding at December 31,
    2007. See Note 11 to our consolidated financial statements
    for details.    Item 13.
    Certain
    Relationships and Related Transactions and Director
    Independence.    Other
    Transactions
   78




---



##### 



agreed-upon L.A. RUSH, L.A. RUSH
      Corporate
    Governance
  www.investor.midway.com.
 79




---



##### 



Controlled Company Exemptions.
  
    A majority of the members of the board of directors must qualify
    as independent directors who have no material
    relationship with the issuer other than serving as a director
    and who meet the other requirements of independence set forth in
    Section 303A.02 of the listing standards of the New York
    Stock Exchange;
    Issuers have a nominating and corporate governance committee (or
    committees that are responsible for each of these functions)
    composed entirely of independent directors; and
    Issuers have a compensation committee composed entirely of
    independent directors.    Item 14.
    Principal
    Accountant Fees and Services.    Years EndedDecember 31,2007


2006Audit Fees(1)

$
887,000


$
925,000Audit-Related Fees(2)


22,000



22,000Tax Fees






All Other Fees






Total

$
909,000


$
947,000     (1)
    
    Comprised of the audit of our annual consolidated financial
    statements, internal control attestation services required to
    comply with the requirements of the Sarbanes-Oxley Act, review
    of financial statements included in our
    Form 10-Qs
    and other services provided by the accountant in connection with
    statutory and regulatory filings.(2)
    
    Comprised of 401(k) audit procedures and various other services.  Pre-approval
    Policies and Procedures
    Percentage
    of Services Approved Under S-X
    Rule 2-01(c)(7)(i)(C)
   80




---



##### 



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedule.  Financial Statements. page F-1.
  Financial Statement Schedule. page F-1.
  Exhibits.
  ExhibitNo.

Description3
.1

Amended and Restated Certificate of Incorporation of the
    Registrant dated October 25, 1996, incorporated herein by
    reference to the Registrants Registration Statement on
    Form S-1/A,
    as amended, File
    No. 333-11919,
    filed on October 18, 1996 and effective October 29,
    1996 (the
    S-1
    Registration Statement).3
.2

Certificate of Amendment to the Amended and Restated Certificate
    of Incorporation of the Registrant dated February 25, 1998,
    incorporated herein by reference to the Registrants
    Registration Statement on
    Form 8-A/A,
    Amendment No. 1, filed on April 20, 1998.3
.3

Certificate of Amendment to the Amended and Restated Certificate
    of Incorporation of the Registrant dated August 5, 2003,
    incorporated herein by reference to the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2003.3
.4

Certificate of Amendment of the Amended and Restated Certificate
    of Incorporation of the Registrant dated February 17, 2004,
    incorporated herein by reference to the Registrants
    Registration Statement on
    Form S-3,
    File
    No. 333-113077,
    initially filed on February 25, 2004.3
.5

Amended and Restated By-laws of the Registrant, incorporated
    herein by reference to the Registrants Registration
    Statement on
    Form S-3,
    File
    No. 333-116334,
    initially filed on June 10, 2004 (the 6/10/04
    S-3).3
.6

Composite Amended and Restated By-laws of the Registrant dated
    June 13, 2007, incorporated herein by reference to the
    Registrants Current Report on
    Form 8-K
    filed on May 3, 2007.4
.1

Indenture, dated as of September 19,2005, between the
    Registrant and Wells Fargo Bank, National Association,
    incorporated herein by reference to the Registrants
    current report on
    Form 8-K
    filed on September 19, 2005 (the 9/19/2005
    8-K).4
.2

Registration Rights Agreement, dated as of September 19,
    2005 between the Registrant and Banc of America Securities, LLC,
    as representative of the Initial Purchasers, incorporated herein
    by reference to the 9/19/2005
    8-K.4
.3

Indenture, dated as of May 30, 2006, between the Registrant
    and Wells Fargo Bank, National Association, incorporated herein
    by reference to the Registrants Current Report on
    Form 8-K
    filed on May 30, 2006 (the 5/30/06
    8-K).4
.4

Registration Rights Agreement, dated as of May 30, 2006,
    between the Registrant and Banc of America Securities, LLC,
    incorporated herein by reference to the 5/30/06
    8-K.4
.5

Notice of Adjustment, dated July 13, 2006, incorporated
    herein by reference to the Registrants Current Report on
    Form 8-K
    filed on July 14, 2006.4
.6

Notice of Adjustment, dated April 30, 2007, incorporated
    herein by reference to the Registrants Current Report on
    Form 8-K
    filed on April 30, 2007.4
.7

Notice of Adjustment, dated August 22, 2007, incorporated
    herein by reference to the Registrants Current Report on
    Form 8-K
    filed on August 27, 2007.10
.1*

1996 Stock Option Plan, incorporated herein by reference to the
    Registrants Registration statement on
    Form S-1/A,
    as amended, File
    No. 333-11919,
    filed on October 25, 1996 and effective October 29,
    1996.10
.2*

1998 Non-Qualified Stock Option Plan, incorporated herein by
    reference to the Registrants Registration Statement on
    Form S-8,
    filed on June 24, 1998 (File
    No. 333-57583).10
.3*

1998 Stock Incentive Plan, incorporated herein by reference to
    the Registrants Registration Statement on
    Form S-8,
    filed on December 4, 1998 (File
    No. 333-68373). 81




---



##### 



ExhibitNo.

Description10
.4*

1999 Stock Option Plan, incorporated herein by reference to the
    Registrants Registration Statement on
    Form S-8,
    filed on March 5, 1999 (File
    No. 333-73451).10
.5*

2000 Non-Qualified Stock Option Plan, incorporated herein by
    reference to the Registrants Annual Report on
    Form 10-K
    for the fiscal year ended June 30, 2000.10
.6*

Amendment to 1998 Stock Incentive Plan, incorporated herein by
    reference to the Registrants Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended September 30, 2001.10
.7*

2002 Stock Option Plan, incorporated herein by reference to the
    Registrants definitive proxy statement filed on
    December 5, 2001.10
.8*

Letter Agreement dated as of March 21, 2001, between the
    Registrant and Thomas E. Powell regarding Mr. Powells
    employment by the Registrant, incorporated herein by reference
    to the Registrants Transition Report on
    Form 10-KT-405
    for the six-month transition period ended December 31,
    2001, filed on March 28, 2002.10
.9*

2002 Non-Qualified Stock Option Plan, incorporated herein by
    reference to the Registrants Registration Statement on
    Form S-8,
    filed on August 26, 2002 (File
    No. 333-98745).10
.10*

Letter Agreement dated as of February 10, 2003 between the
    Registrant and Thomas E. Powell regarding Mr. Powells
    employment by the Registrant, incorporated herein by reference
    to the Registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2002 filed with the
    SEC on March 28, 2003.10
.11*

Executive Employment Agreement made as of May 6, 2003,
    between the Registrant and David Zucker, incorporated herein by
    reference to the Registrants Current Report on
    Form 8-K
    filed on May 7, 2003 (the 5/7/03
    8-K).10
.12*

Stock Option Agreement made as of the May 6, 2003, between
    the Registrant and David Zucker, incorporated herein by
    reference to the 5/7/03
    8-K.10
.13*

Stock Option Agreement under 2002 Stock Option Plan made as of
    the May 6, 2003, between the Registrant and David Zucker,
    incorporated herein by reference to the 5/7/03
    8-K.10
.14*

Restricted Stock Agreement entered into as of the May 6,
    2003, between the Registrant and David Zucker, incorporated
    herein by reference to the 5/7/03
    8-K.10
.15

PlayStation 2 CD-ROM/DVD-ROM Licensed Publisher Agreement dated
    April 1, 2000 between Sony Computer Entertainment America
    Inc. and Midway Home Entertainment Inc., incorporated herein by
    reference to the Registrants Registration Statement on
    Form S-3/A,
    filed on August 18, 2003 (the August 2003
    S-3/A).
    (Portions of this exhibit have been omitted pursuant to a
    request for confidential treatment in accordance with
    Rule 406 under the Securities Act of 1933, as amended.)10
.16

PlayStation 2 Licensed Publisher Agreement dated
    November 14, 2000 between Sony Computer Entertainment
    Europe Limited and Midway Games Limited., incorporated herein by
    reference to the August 2003
    S-3/A.
    (Portions of this exhibit have been omitted pursuant to a
    request for confidential treatment in accordance with
    Rule 406 under the Securities Act of 1933, as amended.)10
.17*

Waiver, dated as of April 5, 2004, by David F. Zucker,
    incorporated herein by reference to the Registrants
    Current Report on
    Form 8-K
    filed on April 13, 2004.10
.18*

Amendment to Stock Option Plans of the Registrant, incorporated
    herein by reference to the
    6/10/04 S-3.10
.19

Letter Agreement entered into as of September 20, 2004
    amending the
    PlayStation®2
    CD-ROM/DVD-ROM
    Licensed Publisher Agreement effective as of April 1, 2000
    between Sony Computer Entertainment America Inc. and Midway Home
    Entertainment Inc., incorporated herein by reference to the
    Registrants Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended on September 30, 2004 (the
    9/30/2004
    10-Q).
    (Portions of this exhibit have been omitted pursuant to a
    request for confidential treatment in accordance with
    Rule 24b-2
    under the Securities Exchange Act of 1934, as amended.) 82




---



##### 



ExhibitNo.

Description10
.20*

First Amendment made as of October 18, 2004, to Restricted
    Stock Agreement entered into as of May 6, 2003 between the
    Registrant and David F. Zucker, incorporated herein by reference
    to the 9/30/2004
    10-Q.10
.21*

2000 Stock Option/Stock Issuance Plan for Midway
    Studios  Austin Inc. and Form of Option Agreement,
    incorporated herein by reference to the Registrants
    Registration Statement on
    Form S-8,
    File
    No. 333-120347,
    filed on November 10, 2004.10
.22*

2004 Form of Indemnity Agreement authorized to be entered into
    between the Registrant and officers and directors of the
    Registrant, incorporated herein by reference to the
    Registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2004 (the 2004
    10-K).10
.23*

Form of Stock Option Agreement used currently by the Registrant
    for directors under its stock option plans, incorporated herein
    by reference to the 2004
    10-K.10
.24*

Form of Stock Option Agreement used currently by the Registrant
    for employees under its stock option plans, incorporated herein
    by reference to the 2004
    10-K.10
.25*

Amended and Restated Midway Incentive Plan, incorporated herein
    by reference to the 2004
    10-K.10
.26*

2005 Long-Term Incentive Plan, incorporated herein by reference
    to the Registrants definitive proxy statement filed on
    April 29, 2005 (File
    No. 001-12367).10
.27*

Form of Stock Option Agreement used currently by the Registrant
    for employees under its 2005 Long-Term Incentive Plan,
    incorporated herein by reference to the 6/30/2005
    10-Q.10
.28*

Form of Restricted Stock Agreement used currently by the
    Registrant for management under its 2005 Long-Term Incentive
    Plan, incorporated herein by reference to the Registrants
    Current Report on
    Form 8-K
    filed on October 7, 2005.10
.29

Confidential License Agreement for Game Boy Advance (Western
    Hemisphere) dated August 6, 2001 between Midway Home
    Entertainment Inc. and Nintendo of America Inc. incorporated
    herein by reference to the Registrants Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended on March 31, 2006 (the
    3/31/06
    10-Q).
    Portions of this exhibit have been omitted pursuant to a request
    for confidential treatment in accordance with Rule 406
    under the Securities Act of 1933, as amended.10
.30

First Amendment to Confidential License Agreement for Game Boy
    Advance dated September 17, 2004 between Midway Home
    Entertainment Inc. and Nintendo of America Inc. incorporated
    herein by reference to the 3/31/06
    10-Q.10
.31

PlayStation Portable (PSP) Licensed PSP Publisher
    Agreement dated March 26, 2005 between Midway Home
    Entertainment Inc. and Sony Computer Entertainment America Inc.
    incorporated herein by reference to the 3/31/06
    10-Q.
    Portions of this exhibit have been omitted pursuant to a request
    for confidential treatment in accordance with Rule 406
    under the Securities Act of 1933, as amended.10
.32*

Form of Non-Employee Director Stock Option Agreement under the
    2005 Long-Term Incentive Plan incorporated herein by reference
    to the Registrants Current Report on
    Form 8-K
    filed on September 12, 2006.10
.33

Xbox 360 Publisher License Agreement entered into as of
    October 25, 2006 by and between Microsoft Licensing, GP and
    Midway Home Entertainment Inc., incorporated herein by reference
    to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2006, filed on
    March 12, 2007. (Portions of this exhibit have been omitted
    pursuant to a request for confidential treatment in accordance
    with
    Rule 24b-2
    under the Securities Exchange Act of 1934, as amended).10
.34

Amended and Restated Loan and Security Agreement by and among
    the Registrant, specified subsidiaries of the Registrant, the
    lenders thereto, and Wells Fargo Foothill, Inc., dated as of
    June 29, 2007, incorporated herein by reference to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2007, filed on
    August 2, 2007. 83




---



##### 



ExhibitNo.

Description10
.35

First Amendment to Amended and Restated Loan and Security
    Agreement by and among the Registrant, specified subsidiaries of
    the Registrant, the lenders thereto and Wells Fargo Foothill,
    Inc., dated as of July 31, 2007, incorporated herein by
    reference to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2007, filed on
    August 2, 2007.10
.36

Unreal®
    Engine 3 License Agreement by and between Epic Games, Inc.
    (Epic) and Midway Home Entertainment Inc.
    (MHEI), dated as of January 14, 2005,
    incorporated herein by reference to the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2007, filed on
    August 2, 2007. (Portions of this exhibit have been omitted
    pursuant to a request for confidential treatment in accordance
    with
    Rule 24b-2
    under the Securities Exchange Act of 1934, as amended)10
.37

Amendment No. 1 to
    Unreal®
    Engine 3 License Agreement by and between Epic and MHEI, dated
    as of December 5, 2005 incorporated herein by reference to
    the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2007, filed on
    August 2, 2007. (Portions of this exhibit have been omitted
    pursuant to a request for confidential treatment in accordance
    with
    Rule 24b-2
    under the Securities Exchange Act of 1934, as amended).10
.38*

Second Form of Restricted Stock Agreement used by the Registrant
    for management under its 2005 Long-Term Incentive Plan,
    incorporated herein by reference to Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended September 30, 2007, filed on
    November 1, 2007.10
.39

Waiver and Second Amendment to Amended and Restated Loan and
    Security Agreement by and among the Registrant, specified
    subsidiaries of the Registrant, the lenders thereto and Wells
    Fargo Foothill, Inc., dated as of January 2, 2008.10
.40*

Confidential Settlement Agreement and General Release by and
    between the Registrant and Steven M. Allison dated
    January 24, 2008.10
.41

Amendment to the Xbox 360 Publisher License Agreement effective
    as of October 12, 2007 between Microsoft Licensing, GP and
    Midway Home Entertainment Inc. Portions of this exhibit have
    been omitted pursuant to a request for confidential treatment in
    accordance with
    Rule 24b-2
    under the Securities Exchange Act of 1934, as amended.10
.42

Confidential License Agreement for the Wii Console between
    Nintendo of America Inc. and Midway Home Entertainment Inc.
    effective November 19, 2006. Portions of this exhibit have
    been omitted pursuant to a request for confidential treatment in
    accordance with
    Rule 24b-2
    under the Securities Exchange Act of 1934, as amended.10
.43

License Agreement for the Nintendo DS System (EEA, Australia and
    New Zealand) dated June 18, 2006 between Nintendo Co., Ltd.
    and Midway Games Limited. Portions of this exhibit have been
    omitted pursuant to a request for confidential treatment in
    accordance with
    Rule 24b-2
    under the Securities Exchange Act of 1934, as amended.10
.44*

Sales Incentive Bonus Plan for Martin Spiess dated
    April 20, 2007. Portions of this exhibit have been omitted
    pursuant to a request for confidential treatment in accordance
    with
    Rule 24b-2
    under the Securities Exchange Act of 1934, as amended.10
.45

Loan and Security Agreement by and among the Registrant,
    specified subsidiaries of the Registrant, and National
    Amusements, Inc., dated as of February 29, 200810
.46

Continuing Guaranty dated as of February 29, 2008, between
    the Registrant and specified subsidiaries in favor of National
    Amusements, Inc.10
.47

Intercompany Subordination Agreement dated as of
    February 29, 2008 among the Registrant, specified
    subsidiaries of the Registrant and National Amusements, Inc.10
.48

Unsecured Loan Agreement dated as of February 29, 2008, by
    and between the Registrant and National Amusements Inc.10
.49

Unsecured Subordinated Loan Agreement dated as of February 29
    2008, by and the Registrant and National Amusements Inc.21


Subsidiaries of the Registrant23


Consent of Ernst & Young LLP. 84




---



##### 



ExhibitNo.

Description31


Certifications of Chief Executive Officer and Chief Financial
    Officer Pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as amended, as
    Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.32


Certifications of Chief Executive Officer and Chief Financial
    Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*


Indicates a management contract or compensatory plan or
    arrangement.  85




---



##### 



MIDWAY
    GAMES INC.
  INDEX TO
    FINANCIAL INFORMATION
  Page No.Financial Statements and Financial Statement ScheduleManagement Report on Internal Control over Financial Reporting


F-2Reports of Independent Registered Public Accounting Firm


F-3Consolidated Balance Sheets at December 31, 2007 and 2006


F-5Consolidated Statements of Operations for the years ended
    December 31, 2007, 2006 and 2005


F-6Consolidated Statements of Changes in Stockholders Equity
    for the years ended December 31, 2007, 2006 and 2005


F-7Consolidated Statements of Cash Flows for the years ended
    December 31, 2007, 2006 and 2005


F-8Notes to Consolidated Financial Statements


F-9Financial Statement Schedule II  Valuation and
    Qualifying Accounts for the years ended December 31, 2007,
    2006 and 2005


F-37    F-1




---



##### 



MANAGEMENT
    REPORT ON INTERNAL CONTROL
    OVER FINANCIAL REPORTING  Rule 13a-15(f) 15d-15(f)
  Internal Control 
    Integrated Framework.
    page F-4.
 F-2




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM             Internal Control  Integrated
    Framework
      F-3




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    ON INTERNAL CONTROL OVER FINANCIAL REPORTING
     Internal Control 
    Integrated Framework
                F-4




---



##### 



MIDWAY
    GAMES INC.



CONSOLIDATED
    BALANCE SHEETS  December 31,2007


2006(In thousands, except share and per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
27,524


$
73,422Receivables, less allowances of $32,510 and $19,408 at 2007 and
    2006, respectively


44,527



51,366Inventories


3,772



2,891Capitalized product development costs


51,252



35,213Prepaid expenses and other current assets


13,362



12,792Total current assets


140,437



175,684Capitalized product development costs


2,947



6,400Property and equipment, net


19,298



20,407Goodwill


41,307



41,273Other assets


9,372



10,297Total assets

$
213,361


$
254,061LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
29,642


$
7,864Accrued compensation and related benefits


6,134



4,541Accrued royalties


12,769



8,097Accrued selling and marketing


5,645



4,935Deferred revenue


2,940



2,000Current portion of long-term debt






3,333Other accrued liabilities


14,190



15,164Total current liabilities


71,320



45,934Convertible senior notes, less unamortized discount of $67,802
    and $7,990 at 2007 and 2006, respectively


82,198



142,010Long-term debt


19,167



3,611Deferred income taxes


10,715



9,402Other noncurrent liabilities


880



397Commitments and contingencies (Note 13)Stockholders equity:Preferred stock, $0.01 par value, 5,000,000 shares
    authorized and undesignated






Common stock, $0.01 par value, 200,000,000 shares
    authorized; 93,268,699 and 92,487,105 shares issued at 2007
    and 2006, respectively


933



925Additional paid-in capital


521,031



444,115Accumulated deficit


(480,474
)


(380,882
)Accumulated translation adjustment


(2,629
)


(1,671
)Treasury stock, at cost, 1,165,430 and 1,115,430 shares at
    2007 and 2006, respectively


(9,780
)


(9,780
)Total stockholders equity


29,081



52,707Total liabilities and stockholders equity

$
213,361


$
254,061    F-5




---



##### 



MIDWAY
    GAMES INC.



CONSOLIDATED
    STATEMENTS OF OPERATIONS  Years Ended December 31,2007


2006


2005(In thousands, except per share amounts)Net revenues

$
157,195


$
165,574


$
150,078Cost of sales:Product costs and distribution


56,413



67,331



56,212Royalties and product development


90,400



68,883



75,852Total cost of sales


146,813



136,214



132,064Gross profit


10,382



29,360



18,014Research and development expense


25,373



37,022



39,693Selling and marketing expense


42,960



43,150



57,189Administrative expense


21,226



21,297



18,864Restructuring and other charges (benefits)


(783
)


(130
)


10,784Operating loss


(78,394
)


(71,979
)


(108,516
)Interest income


2,313



4,384



2,449Interest expense


(27,165
)


(11,241
)


(3,119
)Other income (expense), net


2,902



2,699



(2,040
)Loss before income taxes


(100,344
)


(76,137
)


(111,226
)Provision (benefit) for income taxes


(752
)


1,646



1,261Net loss


(99,592
)


(77,783
)


(112,487
)Preferred stock dividends:Distributed










282Imputed










6Loss applicable to common stock

$
(99,592
)

$
(77,783
)

$
(112,775
)Basic and diluted loss per share of common stock

$
(1.09
)

$
(0.86
)

$
(1.30
)Average number of shares outstanding


91,167



90,708



86,937    F-6




---



##### 



MIDWAY
    GAMES INC.



CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY  Common Stock


Additional





Accumulated





Treasury


TotalNumber


Par


Paid-In


Accumulated


Translation


Deferred


Stock At


Stockholdersof Shares


Value


Capital


Deficit


Adjustment


Compensation


Cost


Equity(In thousands)Balance at January 1, 2005


87,883


$
879


$
392,177


$
(190,612
)

$
(1,420
)

$
(4,379
)

$
(9,628
)

$
187,017Net loss














(112,487
)














(112,487
)Translation adjustment


















981











981Comprehensive loss






























(111,506
)Exercise of common stock options


2,465



25



24,401















92



24,518Exercise of common stock warrants


124



1



1,311



















1,312Issuance of stock for acquisitions


493



5



6,557



















6,562Conversion of Series D preferred stock


1,121



11



4,587



















4,598Issuance of restricted common stock


150



1



2,561











(2,562
)






Forfeiture of restricted common stock


(2
)






(33
)










99



(66
)


Restricted stock compensation cost






















3,232







3,232Dividend on Series D preferred stockDistributed










(282
)


















(282
)Imputed










(6
)


















(6
)Balance at December 31, 2005


92,234



922



431,273



(303,099
)


(439
)


(3,610
)


(9,602
)


115,445Net loss














(77,783
)














(77,783
)Translation adjustment


















(1,232
)










(1,232
)Comprehensive loss






























(79,015
)Exercise of common stock options


239



3



1,026















7



1,036Issuance of common stock rights


11



























Forfeiture of restricted common stock


3







185















(185
)


Elimination of deferred compensation upon adoption of
    SFAS No. 123R










(3,610
)










3,610







Restricted stock compensation cost










2,603



















2,603Stock option compensation cost










3,519



















3,519Discount on convertible senior notes










9,119



















9,119Balance at December 31, 2006


92,487



925



444,115



(380,882
)


(1,671
)






(9,780
)


52,707Net loss














(99,592
)














(99,592
)Translation adjustment


















(958
)










(958
)Comprehensive loss






























(100,550
)Long-term incentive plan restricted stock


645



6



(6
)


















Employee stock purchase plan shares issued


82



1



327



















328Employee stock purchase plan discount










73



















73Exercise of common stock options


42



1



137



















138Issuance of common stock rights


13



























Restricted stock compensation cost










613



















613Stock option compensation cost










1,682



















1,682Discount on convertible senior notes










74,090



















74,090Balance at December 31, 2007


93,269


$
933


$
521,031


$
(480,474
)

$
(2,629
)

$



$
(9,780
)

$
29,081    F-7




---



##### 



MIDWAY
    GAMES INC.



CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Years Ended December 31,2007


2006


2005(In thousands)OPERATING ACTIVITIESNet loss

$
(99,592
)

$
(77,783
)

$
(112,487
)Adjustments to reconcile net loss to net cash used in operating
    activities:Depreciation and amortization of long lived assets


7,645



7,739



7,200Receivables provision


45,645



34,141



27,342Amortization of capitalized product development costs, including
    writedowns


66,228



55,324



70,106Deferred income taxes


(1,446
)


1,316



1,313Stock-based compensation


1,631



6,122



3,232Amortization of debt issuance costs


1,385



1,236



444Accretion of convertible senior notes discount


14,277



1,129



Loss on disposal of property and equipment


56



30



69Loss on impairment of assets










5,416Changes in operating assets and liabilities:Receivables


(37,804
)


(53,587
)


(42,090
)Inventories


(817
)


3,013



957Capitalized product development costs


(78,076
)


(69,342
)


(69,042
)Prepaid expenses and other current assets


732



(1,535
)


(4,265
)Accounts payable, accrued liabilities and deferred revenue


29,185



3,122



6,623Other assets and liabilities


(952
)


(3,827
)


4,805Net cash used in operating activities


(51,903
)


(92,902
)


(100,377
)INVESTING ACTIVITIESPurchases of property and equipment


(5,696
)


(8,751
)


(6,430
)Direct costs of acquisitions, net of cash acquired










(919
)Proceeds from the sale of property and equipment






75



Net cash used in investing activities


(5,696
)


(8,676
)


(7,349
)FINANCING ACTIVITIESProceeds from issuance of convertible senior notes






75,000



75,000Proceeds from long-term debt


14,722







Payment of debt issuance costs






(2,269
)


(2,682
)Payment of long-term debt


(2,650
)


(3,333
)


(3,333
)Payment of software license financing arrangements


(1,156
)


(374
)


(800
)Cash received on exercise of common stock options


138



6,318



19,417Cash received on exercise of common stock warrants










1,312Cash dividend on Series D preferred stock










(210
)Net cash provided by financing activities


11,054



75,342



88,704Effect of exchange rate changes on cash


647



1,282



(915
)Decrease in cash and cash equivalents


(45,898
)


(24,954
)


(19,937
)Cash and cash equivalents at beginning of period


73,422



98,376



118,313Cash and cash equivalents at end of period

$
27,524


$
73,422


$
98,376Supplemental Disclosures of Cash Flow Information:Interest paid

$
10,855


$
8,519


$
1,257Income taxes paid

$
537


$
5


$
    F-8




---



##### 



MIDWAY
    GAMES INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS
 DECEMBER 31, 2007
  NOTE 1:
    BUSINESS
    AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Nature of
    Business
  PlayStation 2,
    PlayStation 3 PlayStation Portable, Xbox Xbox 360, GameCube Wii Game Boy
    Advance Nintendo DS.
  Consolidation
    Policy
    Segment
    Reporting
  Disclosures about Segments
    of an Enterprise and Related Information.
  Cash
    Equivalents
    Receivable
    Allowances
     F-9




---



##### 



Inventories
  first-in,
  Capitalized
    Product Development Costs
  Accounting for the Costs of Computer
    Software to be Sold, Leased, or Otherwise Marketed. product-by-product
  product-by-product
    Property
    and Equipment
   F-10




---



##### 



Long-Lived
    Assets
    Goodwill
  Goodwill and Other Intangible
    Assets
  Intangible
    Assets
    Debt
    Issuance Costs
    Stock-Based
    Compensation
  Accounting for Stock Issued to Employees Accounting for Stock-Based Compensation Accounting for Stock-Based
    Compensation  Transition and Disclosure 
    An Amendment of FASB No. 123
 F-11




---



##### 



No. 96-18, Accounting for Equity Instruments that are Issued to Other
    Than Employees for Acquiring, or in Conjunction with Selling,
    Goods or Services.
  Share-Based Payment
      Transition Election Related to Accounting
    for the Tax Effects of Share-Based Payment Awards paid-in-capital
  Revenue
    Recognition
  97-2, Software Revenue Recognition.
   F-12




---



##### 



Distribution
    Costs
    Advertising
    Expense
    Income
    Taxes
    Foreign
    Currencies
      Comprehensive
    Loss
  Reporting Comprehensive Income
 F-13




---



##### 



Loss per
    Common Share
    December 31,Type

2007


2006


2005Stock options


4,537



3,810



4,877Warrants










555Contingent shares


713



1,045



1,578Convertible senior notes


18,864



12,747



4,224Total


24,114



17,602



11,234     Vesting

NumberPeriod

of Shares2008


1032009


2032010


2032011


204Total


713     Registration
    Rights
      
    $75,000,000 of convertible senior notes that are convertible
    into common stock at a current conversion rate of
    100 shares per $1,000 principal amount of the
    notes; and
    $75,000,000 of convertible senior notes that are convertible
    into common stock at a current conversion rate of
    151.5152 shares per $1,000 principal amount of the notes. F-14




---



##### 



Concentration
    of Risk
      Years Ended December 31,2007


2006


2005Geographic areasNet revenues outside of the United States

$
70,802


$
48,860


$
40,085Major customersNet revenues from GameStop

$
23,348


$
24,175


$
20,716Net revenues from Wal-Mart

$
15,998


$
27,596


$
27,706       Mortal Kombat
    Warranties
    Fair
    Value of Financial Instruments
   F-15




---



##### 



Use of
    Estimates
    Recently
    Issued Accounting Pronouncements
  Accounting for Uncertainty in Income Taxes An Interpretation of FASB Statement No. 109 Accounting for Income
    Taxes.
      Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Financial Liabilities
 F-16




---



##### 



NOTE 2:
    CAPITALIZED
    PRODUCT DEVELOPMENT COSTS    Years Ended December 31,2007


2006


2005Beginning balance

$
41,613


$
27,595


$
28,659Additions


78,814



69,342



69,042Amortization, including writedowns


(66,228
)


(55,324
)


(67,474
)Restructuring charges










(2,632
)Ending balance

$
54,199


$
41,613


$
27,595     NOTE 3:
    PROPERTY
    AND EQUIPMENT    December 31,2007


2006Land, land improvements, buildings and building improvements

$
6,034


$
6,023Leasehold improvements


6,829



7,757Furniture, fixtures, equipment and software


46,789



51,159Construction-in-progress


714



1,14060,366



66,079Less accumulated depreciation and amortization


(41,068
)


(45,672
)Property and equipment, net

$
19,298


$
20,407     NOTE 4:
    OTHER
    ACCRUED LIABILITIES    December 31,2007


2006Product development advance

$
5,351


$
5,351Current portion of financing arrangement






1,156Interest payable


1,598



1,598Accrued restructuring costs






911Other


7,241



6,148Total

$
14,190


$
15,164   NOTE 5:
    FINANCING
    ARRANGEMENT   F-17




---



##### 



NOTE 6:
    CREDIT
    FACILITY            NOTE 7:
    INCOME
    TAXES  Valuation
    Allowance
   F-18




---



##### 



Pretax
    Loss
    December 31,2007


2006


2005(In thousands)Domestic

$
(105,227
)

$
(78,687
)

$
(95,458
)Foreign


4,883



2,550



(15,768
)Total pretax book loss

$
(100,344
)

$
(76,137
)

$
(111,226
)   Income
    Tax Provision (Benefit)
    Years Ended December 31,2007


2006


2005(In thousands)Current:Federal

$



$



$
(52
)State


1







Foreign


776



330



Total current


777



330



(52
)Deferred:Federal


(36,191
)


(23,855
)


(39,821
)State


(2,285
)


(1,506
)


(2,519
)Foreign


1,299



564



(717
)Total deferred


(37,177
)


(24,797
)


(43,057
)Valuation allowance


35,648



26,113



44,370Total provision (benefit) for income taxes

$
(752
)

$
1,646


$
1,261     Years Ended December 31,2007


2006


2005(In thousands)Federal at statutory rate of 35%

$
(35,121
)

$
(26,648
)

$
(38,929
)State income taxes, net of federal benefit


(2,218
)


(1,683
)


(2,458
)Valuation allowance


35,648



26,113



44,370Other, net


939



3,864



(1,722
)Total provision (benefit) for income taxes

$
(752
)

$
1,646


$
1,261  F-19




---



##### 



Income
    Taxes Payable
    December 31,2007


2006(In thousands)Federal

$



$
State


1



Foreign


609



336Income taxes payable

$
610


$
336   Deferred
    Income Taxes
      December 31,2007


2006(In thousands)Deferred tax assets resulting from:Tax loss carryforward

$
221,127


$
192,238Accrued liabilities not currently deductible


9,232



4,854Receivable allowance


10,337



6,681Tax over book depreciation


827



189Foreign tax credit






122Other


69



57Gross deferred tax assets


241,592



204,141Deferred tax liabilities resulting from:Goodwill


10,715



9,402Capitalized product development costs


20,168



15,484Discount on convertible senior notes


25,229



2,973Other


33



138Gross deferred tax liabilities


56,145



27,997Valuation allowance


(193,329
)


(185,546
)Net deferred tax liabilities

$
(7,882
)

$
(9,402
)  F-20




---



##### 



Years Ended December 31,2007


2006(In thousands)Deferred tax assets  current

$
1,260


$
Deferred tax assets  non-current


1,573



Total deferred tax assets


2,833



Deferred tax liabilities  current






Deferred tax liabilities  non-current


(10,715
)


(9,402
)Total deferred tax liabilities


(10,715
)


(9,402
)Net deferred tax liabilities

$
(7,882
)

$
(9,402
)         NOTE 8:
    CONVERTIBLE
    SENIOR NOTES    September
    2005 Issuance
   F-21




---



##### 




    Our controlling stockholder and his affiliates become the
    beneficial owner, directly or indirectly, of 90% or more of the
    aggregate fair value of our outstanding capital stock. In this
    event, the conversion rate will increase by 4.4177 shares
    per $1,000 principal amount of the notes. This conversion rate
    increase is subject to future adjustment in accordance with the
    provisions of the indenture governing the 6.0% Notes.
    On April 30, 2007, or in some circumstances,
    September 30, 2007, if the daily volume weighted average
    price of our common stock for the period that is 20 consecutive
    trading days prior to April 30, 2007, or in some
    circumstances, September 30, 2007, is less than $16.14, as
    adjusted for capital changes ($10.00 Reset Feature).
    In this event, the conversion rate will increase at varying
    amounts. However, after adjustment, the conversion rate cannot
    exceed 100 shares per $1,000 principal amount of the
    6.0% Notes.
    We effect certain business combinations, asset sales or changes
    in ownership where the consideration paid to the common
    stockholders includes securities (or other property) that are
    neither traded on a U.S. national securities exchange nor
    quoted on the Nasdaq National Market nor scheduled to be so
    traded or quoted immediately after such transaction. In these
    events, the conversion rate will increase at varying amounts
    with a maximum increase of 5.63 shares per $1,000 principal
    amount of the 6.0% Notes.
    Issuance of additional rights to holders of our common stock,
    such as stock splits, declaration of dividends and certain other
    distributions and capital changes.          Earnings per Share
 F-22




---



##### 



May 2006
    Issuance
      
    Our controlling stockholder and his affiliates become the
    beneficial owner, directly or indirectly, of 90% or more of the
    aggregate fair market value, as defined, of our outstanding
    capital stock. In this event, the conversion rate will increase
    by 7.2495 shares per $1,000 principal amount of the notes.
    This conversion rate increase is subject to future adjustment in
    accordance with the provisions of the indenture governing the
    7.125% Notes.
    On any date prior to May 31, 2008, if (1) the
    arithmetic average of the daily volume-weighted average price of
    our common stock for any 20 trading days within a period of 30
    consecutive trading days ending on such date, is less than
    $8.00, as may be adjusted for capital changes, and (2) 110%
    of the closing sale price is less than or equal to $8.80, as may
    be adjusted, then the conversion rate will increase on that date
    such that the conversion price would be $8.80 per share of
    common stock ($8.80 Reset Feature).
    On any date prior to May 31, 2008, if (1) the
    arithmetic average of the daily volume-weighted average price of
    our common stock for any 20 trading days within a period of 30
    consecutive trading days ending on such date, is less than
    $6.00, as may be adjusted for capital changes, and (2) 110%
    of the closing sale price is less than or equal to $6.60, as may
    be adjusted, then the conversion rate will increase on that date
    such that the conversion price would be $6.60 per share of
    common stock ($6.60 Reset Feature).
    On May 31, 2008 or May 31, 2009, if 110% of the
    arithmetic average of the daily volume-weighted average price of
    our common stock for any 20 trading days within a period of 30
    consecutive trading days ending on such dates is less than the
    conversion price in effect at that time, then the conversion
    rate will be increased so that the conversion price would be
    110% of the daily volume-weighted average price calculated at
    these respective dates. The conversion rate will not be adjusted
    on these dates if 110% of the daily volume-weighted average
    price for such 20 trading days within such period of 30
    consecutive trading days ending on such dates is equal to or
    greater than the conversion price in effect at that time. In no
    event shall the conversion rate be adjusted such that the
    conversion price would be less than $6.60 per share, as may be
    adjusted for capital changes.
    We effect certain business combinations, asset sales or changes
    in ownership where the consideration paid to the common
    stockholders includes securities (or other property) that are
    neither traded on a U.S. national securities exchange nor
    quoted on the Nasdaq National Market nor scheduled to be so
    traded or quoted immediately after such transaction. In these
    events, the conversion rate will increase at varying amounts
    with a maximum increase of 9.23 shares per $1,000 principal
    amount of the notes.
    Issuance of additional shares of common stock, convertible
    securities, rights to holders of our common stock, such as stock
    splits, declaration of dividends and certain other distributions
    and capital changes. F-23




---



##### 



Form 10-K.
  Earnings per Shar
    NOTE 9:
    PREFERRED
    STOCK AND WARRANTS     F-24




---



##### 



NOTE 10:
    COMMON
    STOCK  Common
    Stock
    Number ofDescription

SharesCommon stock option and long-term incentive plans


7,004Employee stock purchase plan


2,918Convertible senior notes


20,854Total


30,776   Savings
    Plan
    Employee
    Stock Purchase Plan
    Rights
    Agreement
   F-25




---



##### 



Stock-Based
    Awards
      NOTE 11:
    STOCK-BASED
    COMPENSATION  Stock-Based
    Compensation Under SFAS No. 123R
     F-26




---



##### 



Year EndedDecember 31,2005Reported loss applicable to common stock

$
(112,775
)Deduct stock-based compensation expense(a)


3,232Add stock-based compensation expense determined under the fair
    value based method for all awards(a)


(7,097
)Pro forma net loss applicable to common stock

$
(116,640
)Basic and diluted loss per share:As reported

$
(1.30
)Pro forma

$
(1.34
)     (a)
    
    These amounts reflect no income tax effect.      Determining
    Fair Value of Stock Options Under
    SFAS No. 123R
  Valuation Method.
  Expected Term.
  Expected Volatility.
  Risk-Free Interest Rate.
  Expected Dividend Yield.
  Expected Forfeitures.
 F-27




---



##### 



Years Ended December 31,2007


2006


2005Dividend yield


0.0
%


0.0
%


0.0
%Expected stock price volatility


0.58



0.70



0.75Risk-free interest rate


4.06
%


4.54
%


3.73
%Expected lives


5 years



5 years



4 years   Stock
    Option Activity
    Weighted


Weighted


AggregateAverage


Average


IntrinsicOptions


Exercise


Remaining


Value(in thousands)


Price


Contractual Life


(in thousands)Outstanding at January 1, 2005


7,583


$
9.85Granted


99



10.11Exercised


(2,475
)


9.90






$
19,483Forfeited


(330
)


12.43Outstanding at December 31, 2005


4,877



9.65Granted


104



8.88Exercised


(240
)


4.31






$
2,826Expired


(913
)


19.84Forfeited


(18
)


3.52Outstanding at December 31, 2006


3,810



7.56



5.6 years


$
6,961Granted


968



5.85Exercised


(42
)


3.23






$
126Expired


(77
)


13.73Forfeited


(122
)


8.10Outstanding at December 31, 2007


4,537


$
7.12



5.5 years


$
138Exercisable at December 31, 2006


3,086


$
7.92



5.3 years


$
5,378Exercisable at December 31, 2007


3,541


$
7.41



4.4 years


$
133   Years Ended December 31,2007


2006


2005Weighted average grant date fair value of options granted

$
3.09


$
5.37


$
5.74    F-28




---



##### 



WeightedAverageRemainingWeighted Average


ContractualShares Covered by Options


Exercise Price


LifeExercise Prices

Outstanding


Exercisable


Outstanding


Exercisable


Outstanding$2.31  $3.45


616



601


$
2.62


$
2.63



5.53.57  5.35


1,277



1,269



3.75



3.74



5.35.90  8.77


1,241



304



6.51



7.99



8.58.90  13.04


843



807



11.29



11.35



3.813.50  16.83


560



560



14.87



14.87



2.14,537



3,541



7.12



7.41



5.5       Restricted
    Stock
  and/or
  Restricted
    stock  non-performance-based awards
   F-29




---



##### 



WeightedAverageGrantShares


PriceOutstanding at January 1, 2005


541


$
9.10Granted


188



13.60Vested


(289
)


10.85Forfeited


(10
)


9.64Outstanding at December 31, 2005


430



9.89Granted






Vested


(303
)


8.86Forfeited


(20
)


9.41Outstanding at December 31, 2006


107



11.47Granted






Vested


(73
)


10.31Forfeited






Outstanding at December 31, 2007


34


$
13.92     Restricted
    stock  performance-based awards
  Form 10-K
 F-30




---



##### 



Total
    restricted stock
    NumberVesting Period

of Shares2008


1032009


2032010


2032011


204Total


713   NOTE 12:
    RESTRUCTURING
    AND OTHER CHARGES (BENEFITS)      Impairment of





Lease and


ImpairmentCapitalized





Long-Term


of Fixed andProduct





Commitments


IntangibleDevelopment


Severance


and Other


Assets andCosts


Costs


Costs(a)


Goodwill(b)


TotalProvision

$
2,632


$
1,326


$
1,410


$
5,416


$
10,784     (a)
    
    Includes $98,000 write-off of accumulated translation adjustment.(b)
    
    Includes the impairment of $4,867,000 of goodwill initially
    recorded upon the acquisition of Ratbag.   F-31




---



##### 



Impairment of





Lease and


ImpairmentCapitalized





Long-Term


of Fixed andProduct





Commitments


IntangibleDevelopment


Severance


and Other


Assets andCosts


Costs


Costs


Goodwill


TotalBalances at January 1, 2005

$



$



$
560


$



$
560Provision (benefits)


2,632



1,326



1,410



5,416



10,784Usage/payouts


(2,632
)


(1,326
)


(684
)


(5,416
)


(10,058
)Balances at December 31, 2005










1,286







1,286Provision (benefits)(a)










(130
)






(130
)Usage/payouts










(245
)






(245
)Balances at December 31, 2006










911







911Provision (benefits)(b)










(783
)






(783
)Other










(128
)






(128
)Balances at December 31, 2007

$



$



$



$



$
     (a)
    
    During 2006, we recorded reversals of previously accrued charges
    totaling $251,000 related to changes in estimates of accrued
    facility lease expense and sublease income.(b)
    
    During 2007, the benefit recorded relates to a change in the
    estimated amount of previously awarded grants that may be
    required to be refunded by our subsidiary to the Commonwealth of
    Australia.    NOTE 13:
    COMMITMENTS    2008

$
3,3722009


2,2342010


2,1252011


2,1422012


2,062Thereafter


1,538$
13,473      F-32




---



##### 



2008

$
10,3512009


4,7052010


6,4552011


9552012


92Thereafter


12$
22,570   NOTE 14:
    LEGAL
    PROCEEDINGS       F-33




---



##### 



NOTE 15:
    RELATED
    PARTY TRANSACTIONS  Majority
    Shareholder and Directors
    agreed-upon L.A. RUSH, L.A. RUSH
          Consolidated
    German Subsidiary Management
   F-34




---



##### 



Australia
    Subsidiary Management
    NOTE 16:
    SUBSEQUENT
    EVENT     F-35




---



##### 



NOTE 17:
    SUMMARIZED
    QUARTERLY FINANCIAL INFORMATION (UNAUDITED)    Quarter Ended,March 31,


June 30,


September 30,


December 31,2007


2007


2007


2007Net revenues

$
11,070


$
31,801


$
36,747


$
77,577Gross profit (loss)(1)


1,778



10,978



(921
)


(1,453
)Research and development expense


7,606



6,399



6,245



5,123Restructuring and other charges


(783
)










Net loss


(19,814
)


(14,305
)


(33,527
)


(31,946
)Basic and diluted loss per share of common stock

$
(0.22
)

$
(0.16
)

$
(0.37
)

$
(0.35
)Basic and diluted average number of shares outstanding


90,999



91,103



91,180



91,383   (1)
    
    Gross profit includes $57,000, $92,000, $4,782,000 and
    $6,205,000 related to writedowns of capitalized product
    development costs reflected in cost of sales for the quarters
    ended March 31, June 30, September 30 and
    December 31, 2007, respectively.  Quarter Ended,March 31,


June 30,


September 30,


December 31,2006


2006


2006


2006Net revenues

$
15,396


$
25,922


$
27,392


$
96,864Gross profit (loss)(1)


712



(1,376
)


77



29,947Research and development expense


10,662



10,715



7,147



8,498Restructuring and other charges






(161
)


1



30Net loss


(22,599
)


(31,007
)


(22,151
)


(2,026
)Basic and diluted loss per share of common stock

$
(0.25
)

$
(0.34
)

$
(0.24
)

$
(0.02
)Basic and diluted average number of shares outstanding


90,410



90,651



90,812



90,952   (1)
    
    Gross profit includes $886,000, $810,000, $0 and $0 related to
    writedowns of capitalized product development costs reflected in
    cost of sales for the quarters ended March 31,
    June 30, September 30 and December 31, 2006,
    respectively. F-36




---



##### 



MIDWAY
    GAMES INC.
 SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS  Column CColumn A

Column B


Additions


Column D


Column EBalance at


Charged to


Charged to





Balance atBeginning of


Costs and


Other





End ofPeriod

Description

Period


Expenses


Accounts


Deductions


PeriodYears ended December 31, 2007, 2006 and 2005Year EndedDecember 31, 2007

Allowance for doubtful accounts

$
1,315,000


$
320,000


$



$
1,285,000


$
350,000Allowance for price protection, returns and discounts


18,093,000



45,989,000







31,922,000



32,160,000Deferred tax asset valuation allowance


185,546,000



35,648,000







27,865,000



193,329,000Year EndedDecember 31, 2006

Allowance for doubtful accounts

$
1,263,000


$
241,000


$



$
189,000


$
1,315,000Allowance for price protection, returns and discounts


14,867,000



33,900,000







30,674,000



18,093,000Deferred tax asset valuation allowance


160,622,000



26,113,000







1,189,000



185,546,000Year EndedDecember 31, 2005

Allowance for doubtful accounts

$
714,000


$
692,000


$



$
143,000


$
1,263,000Allowance for price protection, returns and discounts


8,122,000



26,650,000







19,905,000



14,867,000Deferred tax asset valuation allowance


107,766,000



44,370,000



8,486,000







160,622,000  F-37




---



##### 



SIGNATURES
      By:
    /s/  DAVID
    F. ZUCKER       Name

Title

Date/s/  DAVID
    F. ZUCKERDavid
    F. Zucker

President and Chief Executive Officer (Principal Executive
    Officer)

March 14, 2008/s/  RYAN
    G. ODESKYRyan
    G. ODesky

Interim Chief Financial Officer and Treasurer (Principal
    Financial Officer and Principal Accounting Officer); and Vice
    President  Finance, Controller, and Assistant
    Treasurer

March 14, 2008/s/  WILLIAM
    C. BARTHOLOMAYWilliam
    C. Bartholomay

Director

March 14, 2008/s/  PETER
    C. BROWNPeter
    C. Brown

Director

March 14, 2008/s/  JOSEPH
    A. CALIFANO, JR.Joseph
    A. Califano, Jr.

Director

March 14, 2008/s/  SHARI
    E. REDSTONEShari
    E. Redstone

Director

March 14, 2008/s/  ROBERT
    J. STEELERobert
    J. Steele

Director

March 14, 2008/s/  ROBERT
    N. WAXMANRobert
    N. Waxman

Director

March 14, 2008




---



##### 



EXHIBIT INDEX
  ExhibitNo.

Description3
.1

Amended and Restated Certificate of Incorporation of the
    Registrant dated October 25, 1996, incorporated herein by
    reference to the Registrants Registration Statement on
    Form S-1/A,
    as amended, File
    No. 333-11919,
    filed on October 18, 1996 and effective October 29,
    1996 (the
    S-1
    Registration Statement).3
.2

Certificate of Amendment to the Amended and Restated Certificate
    of Incorporation of the Registrant dated February 25, 1998,
    incorporated herein by reference to the Registrants
    Registration Statement on
    Form 8-A/A,
    Amendment No. 1, filed on April 20, 1998.3
.3

Certificate of Amendment to the Amended and Restated Certificate
    of Incorporation of the Registrant dated August 5, 2003,
    incorporated herein by reference to the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2003.3
.4

Certificate of Amendment of the Amended and Restated Certificate
    of Incorporation of the Registrant dated February 17, 2004,
    incorporated herein by reference to the Registrants
    Registration Statement on
    Form S-3,
    File
    No. 333-113077,
    initially filed on February 25, 2004.3
.5

Amended and Restated By-laws of the Registrant, incorporated
    herein by reference to the Registrants Registration
    Statement on
    Form S-3,
    File
    No. 333-116334,
    initially filed on June 10, 2004 (the 6/10/04
    S-3).3
.6

Composite Amended and Restated By-laws of the Registrant dated
    June 13, 2007, incorporated herein by reference to the
    Registrants Current Report on
    Form 8-K
    filed on May 3, 2007.4
.1

Indenture, dated as of September 19,2005, between the
    Registrant and Wells Fargo Bank, National Association,
    incorporated herein by reference to the Registrants
    current report on
    Form 8-K
    filed on September 19, 2005 (the 9/19/2005
    8-K).4
.2

Registration Rights Agreement, dated as of September 19,
    2005 between the Registrant and Banc of America Securities, LLC,
    as representative of the Initial Purchasers, incorporated herein
    by reference to the 9/19/2005
    8-K.4
.3

Indenture, dated as of May 30, 2006, between the Registrant
    and Wells Fargo Bank, National Association, incorporated herein
    by reference to the Registrants Current Report on
    Form 8-K
    filed on May 30, 2006 (the 5/30/06
    8-K).4
.4

Registration Rights Agreement, dated as of May 30, 2006,
    between the Registrant and Banc of America Securities, LLC,
    incorporated herein by reference to the 5/30/06
    8-K.4
.5

Notice of Adjustment, dated July 13, 2006, incorporated
    herein by reference to the Registrants Current Report on
    Form 8-K
    filed on July 14, 2006.4
.6

Notice of Adjustment, dated April 30, 2007, incorporated
    herein by reference to the Registrants Current Report on
    Form 8-K
    filed on April 30, 2007.4
.7

Notice of Adjustment, dated August 22, 2007, incorporated
    herein by reference to the Registrants Current Report on
    Form 8-K
    filed on August 27, 2007.10
.1*

1996 Stock Option Plan, incorporated herein by reference to the
    Registrants Registration statement on
    Form S-1/A,
    as amended, File
    No. 333-11919,
    filed on October 25, 1996 and effective October 29,
    1996.10
.2*

1998 Non-Qualified Stock Option Plan, incorporated herein by
    reference to the Registrants Registration Statement on
    Form S-8,
    filed on June 24, 1998 (File
    No. 333-57583).10
.3*

1998 Stock Incentive Plan, incorporated herein by reference to
    the Registrants Registration Statement on
    Form S-8,
    filed on December 4, 1998 (File
    No. 333-68373).10
.4*

1999 Stock Option Plan, incorporated herein by reference to the
    Registrants Registration Statement on
    Form S-8,
    filed on March 5, 1999 (File
    No. 333-73451).10
.5*

2000 Non-Qualified Stock Option Plan, incorporated herein by
    reference to the Registrants Annual Report on
    Form 10-K
    for the fiscal year ended June 30, 2000.10
.6*

Amendment to 1998 Stock Incentive Plan, incorporated herein by
    reference to the Registrants Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended September 30, 2001.10
.7*

2002 Stock Option Plan, incorporated herein by reference to the
    Registrants definitive proxy statement filed on
    December 5, 2001.




---



##### 



ExhibitNo.

Description10
.8*

Letter Agreement dated as of March 21, 2001, between the
    Registrant and Thomas E. Powell regarding Mr. Powells
    employment by the Registrant, incorporated herein by reference
    to the Registrants Transition Report on
    Form 10-KT-405
    for the six-month transition period ended December 31,
    2001, filed on March 28, 2002.10
.9*

2002 Non-Qualified Stock Option Plan, incorporated herein by
    reference to the Registrants Registration Statement on
    Form S-8,
    filed on August 26, 2002 (File
    No. 333-98745).10
.10*

Letter Agreement dated as of February 10, 2003 between the
    Registrant and Thomas E. Powell regarding Mr. Powells
    employment by the Registrant, incorporated herein by reference
    to the Registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2002 filed with the
    SEC on March 28, 2003.10
.11*

Executive Employment Agreement made as of May 6, 2003,
    between the Registrant and David Zucker, incorporated herein by
    reference to the Registrants Current Report on
    Form 8-K
    filed on May 7, 2003 (the 5/7/03
    8-K).10
.12*

Stock Option Agreement made as of the May 6, 2003, between
    the Registrant and David Zucker, incorporated herein by
    reference to the 5/7/03
    8-K.10
.13*

Stock Option Agreement under 2002 Stock Option Plan made as of
    the May 6, 2003, between the Registrant and David Zucker,
    incorporated herein by reference to the 5/7/03
    8-K.10
.14*

Restricted Stock Agreement entered into as of the May 6,
    2003, between the Registrant and David Zucker, incorporated
    herein by reference to the 5/7/03
    8-K.10
.15

PlayStation 2 CD-ROM/DVD-ROM Licensed Publisher Agreement dated
    April 1, 2000 between Sony Computer Entertainment America
    Inc. and Midway Home Entertainment Inc., incorporated herein by
    reference to the Registrants Registration Statement on
    Form S-3/A,
    filed on August 18, 2003 (the August 2003
    S-3/A).
    (Portions of this exhibit have been omitted pursuant to a
    request for confidential treatment in accordance with
    Rule 406 under the Securities Act of 1933, as amended.)10
.16

PlayStation 2 Licensed Publisher Agreement dated
    November 14, 2000 between Sony Computer Entertainment
    Europe Limited and Midway Games Limited., incorporated herein by
    reference to the August 2003
    S-3/A.
    (Portions of this exhibit have been omitted pursuant to a
    request for confidential treatment in accordance with
    Rule 406 under the Securities Act of 1933, as amended.).10
.17*

Waiver, dated as of April 5, 2004, by David F. Zucker,
    incorporated herein by reference to the Registrants
    Current Report on
    Form 8-K
    filed on April 13, 2004.10
.18*

Amendment to Stock Option Plans of the Registrant, incorporated
    herein by reference to the 6/10/04
    S-3.10
.19

Letter Agreement entered into as of September 20, 2004
    amending the
    PlayStation®2
    CD-ROM/DVD-ROM Licensed Publisher Agreement effective as of
    April 1, 2000 between Sony Computer Entertainment America
    Inc. and Midway Home Entertainment Inc., incorporated herein by
    reference to the Registrants Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended on September 30, 2004 (the
    9/30/2004
    10-Q).
    (Portions of this exhibit have been omitted pursuant to a
    request for confidential treatment in accordance with
    Rule 24b-2
    under the Securities Exchange Act of 1934, as amended.)10
.20*

First Amendment made as of October 18, 2004, to Restricted
    Stock Agreement entered into as of May 6, 2003 between the
    Registrant and David F. Zucker, incorporated herein by reference
    to the 9/30/2004
    10-Q.10
.21*

2000 Stock Option/Stock Issuance Plan for Midway
    Studios  Austin Inc. and Form of Option Agreement,
    incorporated herein by reference to the Registrants
    Registration Statement on
    Form S-8,
    File
    No. 333-120347,
    filed on November 10, 2004.10
.22*

2004 Form of Indemnity Agreement authorized to be entered into
    between the Registrant and officers and directors of the
    Registrant, incorporated herein by reference to the
    Registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2004 (the 2004
    10-K).10
.23*

Form of Stock Option Agreement used currently by the Registrant
    for directors under its stock option plans, incorporated herein
    by reference to the 2004
    10-K.10
.24*

Form of Stock Option Agreement used currently by the Registrant
    for employees under its stock option plans, incorporated herein
    by reference to the 2004
    10-K.




---



##### 



ExhibitNo.

Description10
.25*

Amended and Restated Midway Incentive Plan, incorporated herein
    by reference to the 2004
    10-K.10
.26*

2005 Long-Term Incentive Plan, incorporated herein by reference
    to the Registrants definitive proxy statement filed on
    April 29, 2005 (File
    No. 001-12367).10
.27*

Form of Stock Option Agreement used currently by the Registrant
    for employees under its 2005 Long-Term Incentive Plan,
    incorporated herein by reference to the 6/30/2005
    10-Q.10
.28*

Form of Restricted Stock Agreement used currently by the
    Registrant for management under its 2005 Long-Term Incentive
    Plan, incorporated herein by reference to the Registrants
    Current Report on
    Form 8-K
    filed on October 7, 2005.10
.29

Confidential License Agreement for Game Boy Advance (Western
    Hemisphere) dated August 6, 2001 between Midway Home
    Entertainment Inc. and Nintendo of America Inc. incorporated
    herein by reference to the Registrants Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended on March 31, 2006 (the
    3/31/06
    10-Q).
    Portions of this exhibit have been omitted pursuant to a request
    for confidential treatment in accordance with Rule 406
    under the Securities Act of 1933, as amended.10
.30

First Amendment to Confidential License Agreement for Game Boy
    Advance dated September 17, 2004 between Midway Home
    Entertainment Inc. and Nintendo of America Inc. incorporated
    herein by reference to the 3/31/06
    10-Q.10
.31

PlayStation Portable (PSP) Licensed PSP Publisher
    Agreement dated March 26, 2005 between Midway Home
    Entertainment Inc. and Sony Computer Entertainment America Inc.
    incorporated herein by reference to the 3/31/06
    10-Q.
    Portions of this exhibit have been omitted pursuant to a request
    for confidential treatment in accordance with Rule 406
    under the Securities Act of 1933, as amended.10
.32*

Form of Non-Employee Director Stock Option Agreement under the
    2005 Long-Term Incentive Plan incorporated herein by reference
    to the Registrants Current Report on
    Form 8-K
    filed on September 12, 2006.10
.33

Xbox 360 Publisher License Agreement entered into as of
    October 25, 2006 by and between Microsoft Licensing, GP and
    Midway Home Entertainment Inc., incorporated herein by reference
    to the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2006, filed on
    March 12, 2007. (Portions of this exhibit have been omitted
    pursuant to a request for confidential treatment in accordance
    with
    Rule 24b-2
    under the Securities Exchange Act of 1934, as amended).10
.34

Amended and Restated Loan and Security Agreement by and among
    the Registrant, specified subsidiaries of the Registrant, the
    lenders thereto, and Wells Fargo Foothill, Inc., dated as of
    June 29, 2007, incorporated herein by reference to the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2007, filed on
    August 2, 2007.10
.35

First Amendment to Amended and Restated Loan and Security
    Agreement by and among the Registrant, specified subsidiaries of
    the Registrant, the lenders thereto and Wells Fargo Foothill,
    Inc., dated as of July 31, 2007, incorporated herein by
    reference to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2007, filed on
    August 2, 2007.10
.36

Unreal®
    Engine 3 License Agreement by and between Epic Games, Inc.
    (Epic) and Midway Home Entertainment Inc.
    (MHEI), dated as of January 14, 2005,
    incorporated herein by reference to the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2007, filed on
    August 2, 2007. (Portions of this exhibit have been omitted
    pursuant to a request for confidential treatment in accordance
    with
    Rule 24b-2
    under the Securities Exchange Act of 1934, as amended)10
.37

Amendment No. 1 to
    Unreal®
    Engine 3 License Agreement by and between Epic and MHEI, dated
    as of December 5, 2005 incorporated herein by reference to
    the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2007, filed on
    August 2, 2007. (Portions of this exhibit have been omitted
    pursuant to a request for confidential treatment in accordance
    with
    Rule 24b-2
    under the Securities Exchange Act of 1934, as amended).10
.38*

Second Form of Restricted Stock Agreement used by the Registrant
    for management under its 2005 Long-Term Incentive Plan,
    incorporated herein by reference to Registrants Quarterly
    Report on
    Form 10-Q
    for the quarter ended September 30, 2007, filed on
    November 1, 2007.




---



##### 



ExhibitNo.

Description10
.39

Waiver and Second Amendment to Amended and Restated Loan and
    Security Agreement by and among the Registrant, specified
    subsidiaries of the Registrant, the lenders thereto and Wells
    Fargo Foothill, Inc., dated as of January 2, 2008.10
.40*

Confidential Settlement Agreement and General Release by and
    between the Registrant and Steven M. Allison dated
    January 24, 2008.10
.41

Amendment to the Xbox 360 Publisher License Agreement effective
    as of October 12, 2007 between Microsoft Licensing, GP and
    Midway Home Entertainment Inc. Portions of this exhibit have
    been omitted pursuant to a request for confidential treatment in
    accordance with
    Rule 24b-2
    under the Securities Exchange Act of 1934, as amended.10
.42

Confidential License Agreement for the Wii Console between
    Nintendo of America Inc. and Midway Home Entertainment Inc.
    effective November 19, 2006. Portions of this exhibit have
    been omitted pursuant to a request for confidential treatment in
    accordance with
    Rule 24b-2
    under the Securities Exchange Act of 1934, as amended.10
.43

License Agreement for the Nintendo DS System (EEA, Australia and
    New Zealand) dated June 18, 2006 between Nintendo Co., Ltd.
    and Midway Games Limited. Portions of this exhibit have been
    omitted pursuant to a request for confidential treatment in
    accordance with
    Rule 24b-2
    under the Securities Exchange Act of 1934, as amended.10
.44*

Sales Incentive Bonus Plan for Martin Spiess dated
    April 20, 2007. Portions of this exhibit have been omitted
    pursuant to a request for confidential treatment in accordance
    with
    Rule 24b-2
    under the Securities Exchange Act of 1934, as amended.10
.45

Loan and Security Agreement by and among the Registrant,
    specified subsidiaries of the Registrant, and National
    Amusements, Inc., dated as of February 29, 2008.10
.46

Continuing Guaranty dated as of February 29, 2008, between
    the Registrant and specified subsidiaries in favor of National
    Amusements, Inc.10
.47

Intercompany Subordination Agreement dated as of
    February 29, 2008 among the Registrant, specified
    subsidiaries of the Registrant and National Amusements, Inc..10
.48

Unsecured Loan Agreement dated as of February 29, 2008, by
    and between the Registrant and National Amusements Inc.10
.49

Unsecured Subordinated Loan Agreement dated as of February 29
    2008, by and the Registrant and National Amusements Inc.21


Subsidiaries of the Registrant23


Consent of Ernst & Young LLP.31


Certifications of Chief Executive Officer and Chief Financial
    Officer Pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934, as amended, as
    Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.32


Certifications of Chief Executive Officer and Chief Financial
    Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*


Indicates a management contract or compensatory plan or
    arrangement.