OTTAWA , Nov. 28 /PRNewswire-FirstCall/ - March Networks(TM) (TSX:MN; AIM:MNW), a leading provider of innovative video and data applications used for security surveillance, monitoring, analysis and business optimization, today announced financial results for the second quarter and first six months of fiscal 2008 ended October 31, 2007 . All figures in Canadian dollars and in accordance with Canadian GAAP unless otherwise specified.
Record revenue of
The Company incurred a net loss from continuing operations before income
taxes in the second quarter of fiscal 2008 of
The Company incurred a loss from continuing operations in the second
quarter of fiscal 2008 of
"Our second quarter results represent another quarter of achievement for the Company as we recorded new revenue highs in several segments of our business. Our commitment to customer service continues to be a key differentiator for the Company as is demonstrated by proactively addressing design issues within the Company's installed base of transit products" said Peter Strom , President and CEO of March Networks.
Financial Highlights - Revenue excluding the Company's largest customer at record level and up 27% in the first six months of fiscal 2008 from the same period last year. - Second quarter 2008 revenue from the Company's largest customer increased by 27% from the first quarter of fiscal 2008. - Achieved record Transportation revenues of $5.6 million. - Generated $5.0 million and $10.9 million of cash flow from operating activities in the second quarter and first six months of fiscal 2008, respectively; cash resources at October 31, 2007 were $96.2 million."The Company has demonstrated its ability to maintain strong revenue levels with its largest customer and to generate strong revenue growth outside of this customer which are the key drivers to successfully achieving the Company's financial objectives for fiscal 2008." said Ken Taylor , CFO of March Networks.
Business Outlook
March Networks maintains its focus on long-term growth objectives and will
continue to provide only full year guidance. The Company is maintaining the
annual revenue and profitability guidance ranges that were last published in
the Company's first quarter results release on August 29, 2007 . The Company's
ability to achieve its revenue and profitability expectations is subject to a
significantly increased level of risk associated with the value of the US
dollar, which is currently trading at approximately $US1.00=$Cdn0.99 or 6%
below the Company's guidance rate of $US1.00=$CDN1.05. In addition, the
The Company's revenue expectations for the fiscal year ending April 30,
2008 are toward the top end of the range of
The Company's expectations of net earnings before income taxes for the
fiscal year ending April 30, 2008 are in the range of
The Company will discuss the results on a conference call and webcast on November 29, 2007 at 8:30 a.m. EST ( 1:30 p.m. GMT ). The conference call may be accessed by dialing 1-800-732-9303 ( North America ) or 00 800 2288 3501 ( Europe ).
The conference call webcast can be accessed at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2087580
A replay of the conference call will be available from November 29, 2007 at 10:30 a.m. EST until December 6, 2007 . The replay can be accessed at 1-877-289-8525. The passcode for the replay is 21252902#.
About March Networks
March Networks(TM) (TSX:MN; AIM:MNW) is a leading provider of intelligent IP video and business analysis applications that enable organizations to reduce losses, mitigate risks and improve security and operational efficiency. The Company's advanced software suite includes enterprise-class video management, powerful analytics and comprehensive managed and professional services. Our software and systems are used by leading financial institutions, retailers, transportation authorities and other organizations in more than 50 countries. For more information, please visit www.marchnetworks.com.
Forward-Looking Statements
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Certain statements included in this release constitute forward-looking statements, including those identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend" and similar expressions to the extent they relate to the Company or its management. The forward-looking statements are not historical facts but reflect the Company's current assumptions and expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current assumptions and expectations.
Assumptions made in preparing the forward-looking statements and financial guidance contained in this release include, but are not limited to, the following:
- The market for the Company's products will grow by greater than 10% annually. - The Company's revenue outside of its current largest customer will grow by at least 30% from the level generated in fiscal 2007. - The Company will develop and deliver new products on time in order to satisfy the demands of current and potential customers. - The Company will have adequate component supply to meet customer demand. - The Company's gross margin in fiscal 2008 will decline relative to fiscal 2007 as a result of competitive pricing strategies and sales mix. - The Company's increased investments in sales and marketing and in research and development will result in increased revenues and expanded addressable markets. - The prevailing exchange rate for US dollars to Canadian dollars will be US$1.00=CDN$1.05. - The Company will continue to demonstrate its potential to generate sufficient profits in future fiscal years to realize the value of its future tax assets.Factors that could cause actual results to differ materially from expected results include, but are not limited to, the following:
- The prevailing exchange rate for US dollars to Canadian dollars may remain significantly below the Company's expected level for fiscal 2007 (currently US$1.00=CDN$0.99). - Losses incurred by financial institutions in the sub-prime mortgage market that negatively impact their spending on video surveillance solutions. - Product issues in the Company's installed base that result in increased costs to the Company and/or lost revenue opportunities. - Delays in developing or delivering new products and new product features to meet customer demand. - Increasing competition from larger entities resulting from the consolidation of competitors and with larger entrants from other industries. - Shortages or long lead times in component supply that affect the Company's ability to meet customer demand. - Weaker than expected success versus competitors in new customer opportunities and/or loss of existing customers to competitors. - Inability to attract and retain key employees. - Higher than targeted product costs and/or higher than expected declines in market pricing for new products. - Revenue shortfalls due to delays in securing new customer opportunities and the lack of long term purchase commitments from customers.Additional risks are discussed herein and under "Risk Factors" in the Company's Annual Information Form available online at www.sedar.com.
------------------------------------------------------------------------- (x)MARCH NETWORKS and the MARCH NETWORKS logo are trademarks of March Networks Corporation. All other trademarks are the property of their respective owners. March Networks Corporation ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF OPERATIONS (CDN $) ------------------------------------------------------------------------- (In thousands, except share and per-share amounts) (Unaudited) ------------------------------------------------------------------------- Fiscal Quarter Ended Six Months Ended ------------------------------------------------------------------------- October 31, October 31, October 31, October 31, 2007 2006 2007 2006 ------------------------------------------------------------------------- ------------------------------------------------------------------------- REVENUE $ 27,713 $ 26,320 $ 52,259 $ 49,127 ------------------------------------------------------------------------- COST OF REVENUE 16,966 11,942 30,283 21,659 ------------------------------------------------------------------------- GROSS MARGIN 10,747 14,378 21,976 27,468 ------------------------------------------------------------------------- EXPENSES: ------------------------------------------------------------------------- Selling, marketing and support 3,949 4,543 7,971 8,050 ------------------------------------------------------------------------- Research and development 3,705 2,388 6,669 4,636 ------------------------------------------------------------------------- General and administrative 4,096 3,051 7,394 5,734 ------------------------------------------------------------------------- Stock based compensation 805 451 1,610 783 ------------------------------------------------------------------------- Amortization of acquired intangibles 137 138 274 166 ------------------------------------------------------------------------- Lawsuit settlement - 2,263 - 2,263 ------------------------------------------------------------------------- Total expenses 12,692 12,834 23,918 21,632 ------------------------------------------------------------------------- EARNINGS (LOSS) BEFORE UNDERNOTED ITEMS (1,945) 1,544 (1,942) 5,836 ------------------------------------------------------------------------- Interest and other income, net 1,073 845 2,000 1,665 ------------------------------------------------------------------------- EARNINGS (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS (872) 2,389 58 7,501 ------------------------------------------------------------------------- Current income tax expense 22 100 22 200 ------------------------------------------------------------------------- Future income tax expense (228) 859 328 3,088 ------------------------------------------------------------------------- NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS (666) 1,430 (292) 4,213 ------------------------------------------------------------------------- Discontinued operations - (2) - 85 ------------------------------------------------------------------------- NET EARNINGS (LOSS) $ (666) $ 1,428 $ (292) $ 4,298 ------------------------------------------------------------------------- Net earnings (loss) per share: ------------------------------------------------------------------------- Basic - from continuing operations $ (0.04) $ 0.09 $ (0.02) $ 0.25 ------------------------------------------------------------------------- - from discontinued operations - - - 0.01 ------------------------------------------------------------------------- $ (0.04) $ 0.09 $ (0.02) $ 0.26 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Diluted - from continuing operations $ (0.04) $ 0.08 $ (0.02) $ 0.24 ------------------------------------------------------------------------- - from discontinued operations - - - - ------------------------------------------------------------------------- $ (0.04) $ 0.08 $ (0.02) $ 0.24 ------------------------------------------------------------------------- Shares used in per-share calculation: ------------------------------------------------------------------------- Basic 16,886,938 16,651,215 16,881,446 16,625,801 ------------------------------------------------------------------------- Diluted 18,004,947 17,941,436 17,993,784 17,947,439 ------------------------------------------------------------------------- March Networks Corporation ------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS (CDN $) ------------------------------------------------------------------------- (In thousands) (Unaudited) ------------------------------------------------------------------------- October 31, April 30, 2007 2007 ------------------------------------------------------------------------- ASSETS ------------------------------------------------------------------------- Current assets: ------------------------------------------------------------------------- Cash and cash equivalents $ 4,131 $ 3,526 ------------------------------------------------------------------------- Short-term investments 92,106 82,305 ------------------------------------------------------------------------- Restricted cash 3,070 2,775 ------------------------------------------------------------------------- Accounts receivable 14,326 19,396 ------------------------------------------------------------------------- Inventories 9,989 11,577 ------------------------------------------------------------------------- Prepaid expenses and other current assets 2,863 1,778 ------------------------------------------------------------------------- Future tax assets 3,864 2,198 ------------------------------------------------------------------------- Total current assets 130,349 123,555 ------------------------------------------------------------------------- Restricted cash - 833 ------------------------------------------------------------------------- Capital assets 2,439 2,720 ------------------------------------------------------------------------- Intangible assets 2,814 3,088 ------------------------------------------------------------------------- Future income taxes 20,063 21,975 ------------------------------------------------------------------------- Goodwill 5,397 5,397 ------------------------------------------------------------------------- TOTAL ASSETS $ 161,062 $ 157,568 ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------------------------------------------- Current liabilities: ------------------------------------------------------------------------- Accounts payable $ 5,022 $ 5,790 ------------------------------------------------------------------------- Accrued liabilities 8,149 4,337 ------------------------------------------------------------------------- Refundable royalty advance 2,362 2,775 ------------------------------------------------------------------------- Acquisition escrow 708 - ------------------------------------------------------------------------- Deferred revenue 4,876 7,560 ------------------------------------------------------------------------- Income taxes payable 421 467 ------------------------------------------------------------------------- Total current liabilities 21,538 20,929 ------------------------------------------------------------------------- Acquisition escrow - 833 ------------------------------------------------------------------------- Deferred revenue 8,166 5,881 ------------------------------------------------------------------------- Long term compensation 178 - ------------------------------------------------------------------------- Total liabilities 29,882 27,643 ------------------------------------------------------------------------- Shareholders' equity 131,180 129,925 ------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 161,062 $ 157,568 ------------------------------------------------------------------------- March Networks Corporation ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS (CDN $) ------------------------------------------------------------------------- (In thousands) (Unaudited) ------------------------------------------------------------------------- Six Months Ended ------------------------------------------------------------------------- October 31, October 31, 2007 2006 ------------------------------------------------------------------------- Cash flows from operating activities: ------------------------------------------------------------------------- Net earnings - continuing operations $ (292) $ 4,213 ------------------------------------------------------------------------- Net earnings - discontinued operations - 85 ------------------------------------------------------------------------- Items not affecting cash: ------------------------------------------------------------------------- Amortization of capital assets 658 319 ------------------------------------------------------------------------- Amortization of acquired intangibles 274 166 ------------------------------------------------------------------------- Gain on sale of discontinued operations - (86) ------------------------------------------------------------------------- Stock based compensation 1,610 783 ------------------------------------------------------------------------- Foreign exchange loss on foreign cash and cash equivalents held (615) (38) ------------------------------------------------------------------------- Future income taxes and non-refundable investment tax credits (143) 2,873 ------------------------------------------------------------------------- Net change in non-cash items: ------------------------------------------------------------------------- Continuing operations 9,363 (479) ------------------------------------------------------------------------- Discontinued operations - (409) ------------------------------------------------------------------------- Net cash generated by operating activities 10,855 7,427 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash flows from investing activities: ------------------------------------------------------------------------- (Purchase) redemption of short-term investments (9,813) 1,010 ------------------------------------------------------------------------- Purchase of capital assets (377) (1,509) ------------------------------------------------------------------------- Acquisition of business - (8,316) ------------------------------------------------------------------------- Proceeds from sale of discontinued operations - 86 ------------------------------------------------------------------------- Net cash consumed by investing activities (10,190) (8,729) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash flows from financing activities: ------------------------------------------------------------------------- Issuance of share capital, net 127 1,269 ------------------------------------------------------------------------- Net cash generated by financing activities 127 1,269 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Increase in cash and cash equivalents - continuing operations 792 291 ------------------------------------------------------------------------- Decrease in cash and cash equivalents - discontinued operations - (324) ------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 792 (33) ------------------------------------------------------------------------- Foreign exchange loss on foreign cash and cash equivalents held (187) 5 ------------------------------------------------------------------------- Cash and cash equivalents, beginning of period 3,526 3,292 ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 4,131 $ 3,264 ------------------------------------------------------------------------- -------------------------------------------------------------------------SOURCE MARCH NETWORKS CORPORATION
