March Networks Reports More than 200% Growth in Fourth Quarter and
Year End Results to April 30, 2005 - Q4 Revenue: CDN $13.5 million
(219% increase year over year; 10% increase quarter over quarter) -
Q4 Net Earnings: CDN $2.5 million - Q4 Diluted Earnings Per Share:
CDN $0.20 OTTAWA, June 10 /PRNewswire-FirstCall/ -- March Networks
Corporation (TSX: MN, AIM: MNW), a leading provider of IP-based
digital video surveillance solutions, today reported its fourth
quarter results for the period ended April 30, 2005. The first
public filing of quarterly results by the Company following its
April 27, 2005 initial public offering of shares in Toronto and
London, is highlighted by annual revenue growth of 262 percent.
Revenue for the fourth quarter of fiscal 2005 was $13.5 million,
compared with $4.2 million for the fourth quarter of fiscal 2004,
an increase of 219 percent and, compared with $12.3 million for the
third quarter of fiscal 2005, a quarter over quarter increase of 10
percent. Net earnings for the fourth quarter of fiscal 2005 were
$2.5 million or $0.20 per share on a diluted basis, compared with a
net loss of $256,000 or $0.02 from continuing operations for the
fourth quarter of fiscal 2004, and compared with $2.3 million or
$0.22 per share for the third quarter of fiscal 2005. Earnings per
share from the third quarter to the fourth quarter were affected by
the initial public offering of 5,000,000 of the Company's common
shares for $60 million in cash in April 2005. Revenue for fiscal
2005 was $42.7 million, compared with $11.8 million for fiscal
2004, an increase of 262 percent. The strong annual revenue growth
resulted from the Company securing multiple new enterprise accounts
with leading banks, retailers and transportation authorities.
During fiscal 2005, the Company announced retail sector and banking
sector account wins in excess of U.S. $5 million each. The Company
also secured major U.S. and international transit authority wins
with San Francisco MUNI and Singapore's SMRT. Net earnings for
fiscal 2005 were $6.0 million or $0.52 per share on a diluted
basis, compared with a net loss from continuing operations of $5.7
million or $(0.56) per share for fiscal 2004. Peter Strom,
President and CEO of March Networks stated, "This has been an
excellent growth year for March Networks with significant
milestones met in revenue growth, new product acceptance and
continuing to successfully work with our customers in key vertical
markets. With the IPO now complete, we are ready to execute on the
next phase of our growth strategy." Q4 Financial Highlights -
Seventh consecutive quarter of double-digit sequential revenue
growth. - Completion of initial public offering and secondary
offering of 5,736,850 March Networks common shares at a price of
$12.00 CDN per share. The Company issued 5,000,000 common shares
from treasury in the offering generating proceeds, net of
underwriters' commissions, of $56.4 million. Subsequent to
quarter-end, the Company issued an additional 443,860 shares from
treasury at $12 CDN per share in May, in order to satisfy the
underwriters' over-allotment option, generating additional net
proceeds of $5.0 million. - Third consecutive quarter of net cash
generation from operations with net cash generated from operations
of $5.1 million for the fourth quarter of fiscal 2005, compared
with net cash consumed of $1.4 million in the fourth quarter of
fiscal 2004. - Cash, cash equivalents and short-term investments
were $63.8 million at the end of the fourth quarter of fiscal 2005,
compared with $2.4 million at the end of the fourth quarter of
fiscal 2004, and compared with $5.7 million at the end of the third
quarter of fiscal 2005. The significant increase in cash, cash
equivalents and short-term investments resulted largely from the
completion of the Company's IPO. - Days Sales Outstanding (DSO) in
accounts receivable at the end of the fourth quarter of fiscal 2005
were 59 days, compared with 94 days at the end of the fourth
quarter of fiscal 2004, and 39 days at the end of the third quarter
of fiscal 2005. - Inventory turns were 4.5 in the fourth quarter of
fiscal 2005, compared with 5.3 in the fourth quarter of fiscal
2004, and 4.7 in the third quarter of fiscal 2005. March Networks
CFO, Ken Taylor stated, "This fourth quarter caps off a successful
year from a revenue generation and profitability perspective. With
seven consecutive quarters of double-digit sequential revenue
growth and a balance sheet that has been fortified by the
floatation on AIM and the TSX, the Company has strong momentum
entering fiscal 2006. Guidance March Networks maintains its focus
on long-term growth objectives and will provide guidance on the
year only. - March Networks expects revenue for the year ending
April 30, 2006 to be in the range of $62 million to $68 million. -
Net earnings for the year ending April 30, 2006 are expected to be
in the range of $8.5 million to $10 million. Analyst Conference
Call and Webcast - The Q4 FY'05 analyst conference call and webcast
to discuss March Networks' results and its guidance for Fiscal 2006
will be held at 8:30 a.m. EDT on Monday, June 13, 2005. The
conference call number is 1-800-814-4941(Canada); (0) 800-000-2288,
or 416-640-4127 (UK and international). The webcast, with visuals
supporting the conference call information will be available at:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal
sign)1151700 . A replay of the conference call will be available
from 10:30 a.m. EDT until Monday, June 20, 2005 by phoning
1-877-289-8525, passcode 21126927(pound key) . Forward-Looking
Statements This release contains certain forward-looking
information, including expectations of future business, business
plans and capital expenditures. This information is based on the
Company's current expectations and assumptions. Actual results
could differ materially from those anticipated by the Company. The
material factors that could cause actual results to differ
materially from the forward-looking information include the general
risks of the high tech and security industries, the Company's
operational risks, including risks relating to intellectual
property infringement claims, the Company's assumptions relating to
revenue, pricing and expenses, the Company's ability to manage the
expansion of its channel partners and growth, increased competition
and the Company's assumptions relating to and risks inherent in the
Company's acquisition strategies. These and other risks are more
fully described in the Company's Supplemented PREP prospectus,
which is available on SEDAR, at http://www.sedar.ca/ . About March
Networks March Networks(TM) (TSX:MN, AIM:MNW) is a leading provider
of IP-based digital video surveillance solutions. The Company's
comprehensive suite of purpose-built digital video recorders (DVRs)
and network management and application software enables end-users
to capture and manage video and transaction data over both
conventional and wireless networks. March Networks' highly scalable
DVRs and software serve the needs of leading banks, retail
organizations, and transportation authorities. The Company is also
developing video analytics software to exploit the emerging market
for broadband-based video applications. CONSOLIDATED STATEMENTS OF
OPERATIONS (CDN $) (In thousands, except share and per-share
amounts) (Unaudited) Three Months Ended Fiscal Year Ended
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April 30, April 30, April 30, April 30, 2005 2004 2005 2004
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REVENUE $ 13,509 $ 4,230 $ 42,662 $ 11,788
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COST OF REVENUE 6,210 1,402 20,430 5,247
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GROSS MARGIN 7,299 2,828 22,232 6,541
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EXPENSES:
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Selling, marketing and support 2,491 1,594 7,633 5,277
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Research and development 1,238 804 4,380 3,420
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General and administrative 899 694 3,970 3,645
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Stock based compensation 164 - 270 -
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Total expenses 4,792 3,092 16,253 12,342
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EARNINGS (LOSS) BEFORE UNDERNOTED ITEMS 2,507 (264) 5,979 (5,801)
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Interest and other income, net 42 8 44 55
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EARNINGS (LOSS) BEFORE DISCONTINUED OPERATIONS 2,549 (256) 6,023
(5,746)
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Discontinued operations - 347 - 1,628
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NET EARNINGS (LOSS) 2,549 91 $ 6,023 $ (4,118)
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Basic net earnings (loss) per share:
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From continuing operations $ 0.20 $ (0.02) $ 0.53 $ (0.56)
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From discontinued operations 0.03 0.16
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$ 0.20 $ 0.01 $ 0.53 $ (0.40)
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Diluted net earnings (loss) per share:
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From continuing operations $ 0.20 $ (0.02) $ 0.52 $ (0.56)
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From discontinued operations 0.03 0.16
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$ 0.20 $ 0.01 $ 0.52 $ (0.40)
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Shares used in per-share calculation:
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Basic 12,828,443 10,316,212 11,318,552 10,318,876
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Diluted 13,027,796 10,361,540 11,638,245 10,371,502
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March Networks Corporation CONSOLIDATED BALANCE SHEETS (CDN $) (In
thousands) (Unaudited)
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April 30, April 30, 2005 2004
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ASSETS
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Current assets:
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Cash and cash equivalents $ 7,435 $ 2,432
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Short-term investments 56,400 -
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Accounts receivable 6,865 3,041
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Inventories 4,497 997
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Prepaid expenses and other current assets 166 488
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Total current assets 75,363 6,958
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Capital assets 294 69
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Other assets 147 783
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TOTAL ASSETS $ 75,804 $ 7,810
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
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Accounts payable $ 5,901 $ 2,887
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Accrued liabilities 3,983 1,077
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Deferred revenue 2,403 107
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Total liabilities 12,287 4,071
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Shareholders' equity 63,517 3,739
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 75,804 $ 7,810
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CONSOLIDATED STATEMENTS OF CASH FLOWS (CDN $) (In thousands)
(Unaudited)
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Fiscal Year Ended
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April 30, April 30, 2005 2004
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Cash flows from operating activities:
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Net earnings (loss) $ 6,023 $ (4,118)
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Items not affecting cash:
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Amortization of capital assets 79 717
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Writedown of other assets 101 -
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Stock based compensation 270 -
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Non-cash items relating to discontinued operations - (1,934)
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Change in non-cash operating working capital items:
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Accounts receivable (3,824) (359)
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Inventories (3,500) (966)
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Prepaid expenses and other current assets 322 216
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Accounts payable 2,339 442
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Accrued liabilities 337 (2,204)
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Deferred revenue 2,296 42
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Discontinued operations - 1,224
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Net cash generated (consumed) by operating activities 4,443 (6,940)
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Cash flows from investing activities:
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Purchases of short-term investments (56,400) -
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Purchase of capital assets (304) (65)
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Long-term receivable 535 -
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Proceeds from sale of division - 1,286
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Net cash (consumed) generated by investing activities (56,169)
1,221
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Cash flows from financing activities:
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Issuance of common shares 56,237 (208)
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Issuance of warrants 492 777
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Repayment of long-term debt - (332)
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Net cash generated by financing activities 56,729 237
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Net increase (decrease) in cash and cash equivalents 5,003 (5,482)
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Cash and cash equivalents, beginning of period 2,432 7,914
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Cash and cash equivalents, end of period 7,435 $ 2,432
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DATASOURCE: MARCH NETWORKS CORPORATION CONTACT: Ken Taylor, Chief
Financial Officer, March Networks Corporation, (613) 591-8181, ;
Sarah Dehler, Media Relations, March Networks Corporation, (613)
591-8181, ; Bobby Morse, Jeremy Garcia, James Strong, Buchanan
Communications, +44 (0) 20 7466 5000,
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