Cash and short-term investments $44.3 $43.9 $44.3 $43.9
March Networks(® )(TSX:MN), a global provider of intelligent IP video solutions, today
announced financial results for the fiscal quarter and six months ended
October 31, 2011. All figures are in US dollars and in accordance with
International Financial Reporting Standards ("IFRS") unless otherwise
specified.
The Company's second quarter fiscal 2012 revenue of $21.9 million
represented a 21% decline relative to revenue of $27.5 million in the
second quarter of fiscal 2011 and a 2% decline as compared to the first
quarter fiscal 2012. Revenue for the first six months of fiscal 2012 of
$44.3 million declined by 16% relative to the first six months of
fiscal 2011. Revenue declines in the second quarter and first six
months of fiscal 2012 were due to normal quarterly revenue volatility
and the negative impact of the ongoing global macro-economic situation,
particularly in the banking sector.
Net loss for the second quarter of fiscal 2012 was $2.3 million or $0.13
per common share as compared to net earnings of $1.2 million or $0.07
per share in the second quarter of fiscal 2011. Net loss for the
six-month period ended October 31, 2011 was $3.2 million or $0.18 per
common share as compared to net earnings of $1.3 million or $0.07 per
share in the six-month period ended October 31, 2010.
The Company's cash and short-term investment position of $44.3 million
at October 31, 2011 increased by $424,000 as compared to October 31,
2010 but declined by $1.5 million relative to $45.8 million at April
30, 2011.
"The Company believes that delays in order intake and revenue declines
in the first half of fiscal 2012 were attributable to normal quarterly
revenue volatility and the negative impact of the ongoing global
macro-economic situation, particularly in the banking sector," said
Peter Strom, President and CEO of March Networks. "We believe our
results will improve in the second half of fiscal 2012 based on
improved revenue visibility, including the impact of $16 million in
orders from a large retail customer that we announced on November 8,
2011".
Update on Strategic Alternative Review Process
As disclosed previously, the Board of Directors of the Company
established a Special Committee in June 2011 to review strategic
alternatives for the Company. Today, the Company announced that it has
entered into a definitive agreement with Shenzhen Infinova Ltd. and
Infinova (Canada) Ltd. ("Infinova"), pursuant to which Infinova will
acquire through a statutory plan of arrangement, all of the issued and
outstanding shares of the Company in a $5.00 per share all cash
transaction. More detail on the arrangement can be found in the
Company's news release of today's date.
The company will discuss the results and the agreement with Infinova on
a conference call and webcast on Friday, December 9, 2011 at 8:30 a.m.
EST (1:30 p.m. UTC). The conference call may be accessed by dialing
1-800-814-4859 (North America) or +1 416-644-3414.
A replay of the conference call will be available from December 9, 2011
at 10:30 a.m. EST until December 16, 2011 at 11:59 p.m. EST. The replay
can be accessed at 1-877-289-8525 or +1 416-640-1917. The replay
passcode is 4486391#.
About March Networks
March Networks(®) (TSX:MN) is a leading provider of intelligent IP video solutions. For
more than a decade, the company has helped some of the world's largest
commercial and government organizations transition from traditional
CCTV to advanced surveillance technologies used for security, loss
prevention, risk mitigation and operational efficiency. Its highly
scalable and easy to use Command((TM)) video management platform incorporates a web-based client interface to
enable rapid system deployment and complete system control. It is
complemented by the company's portfolio of high-definition IP cameras,
encoders, video analytics and hybrid recorders, as well as outstanding
professional and managed services. March Networks systems are delivered
through an extensive distribution and partner network in more than 50
countries. For more information, please visit http://www.marchnetworks.com.
*MARCH NETWORKS, March Networks Command and the MARCH NETWORKS logo are
trademarks of March Networks Corporation. All other trademarks are the
property of their respective owners.
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 contained
in this release include, but are not limited to, the following:
-- The Company's pipeline of sales opportunities will yield year
over year revenue growth in the second half of fiscal 2012 as
compared to the second half of fiscal 2011.
-- The Company will have adequate component supply to meet
customer demand.
-- The Company will develop and deliver new products on time in
order to satisfy the demands of current and potential
customers.
-- The Company's new products will address the needs of new and
existing customers and contribute to near term profitability.
-- The Company will successfully reduce product costs to improve
the Company's gross margin and/or avoid margin erosion
associated with competitive pricing pressure.
-- The average exchange rates for Canadian dollars and Euros to US
dollars will be US$1.00=CDN$1.00 and Euro 1=US$1.40.
Factors that could cause actual results to differ materially from
expected results include, but are not limited to, the following:
-- The Company has announced that it has entered into a definitive
agreement to be acquired. The uncertainty during the period
until the transaction closes could lead to disruption in the
Company's business and affect the Company's financial
condition, operating results, and/ or ability to attract and
retain staff. If the transaction is not successfully completed,
a material decline in the Company's share price could occur.
-- The Company's quarterly revenue is generally dependent upon
conversion of opportunities in the sales pipeline during the
quarter and, as a result, revenue and operating results can be
difficult to predict and can fluctuate substantially. The
Company's success in realizing customer opportunities may be
negatively impacted by depressed economic conditions, changes
in sales cycles, and/or weaker than expected success versus
competitors.
-- Longer than expected lead times from component suppliers could
result in production delays resulting in delayed or lost
revenue and /or reduced profits. There is currently a global
shortage of hard drives as a result of recent flooding in
Thailand, which is the world's second largest exporter of hard
drives. Failure to secure adequate hard drive supply and/or
increased cost in securing adequate supply may have a material
negative effect on the Company's revenue and profitability.
-- The Company's gross margin and operating results may be
adversely affected by pricing models required to compete
successfully, lower than expected revenue mix of software and
high margin hardware products, and/or a failure by the Company
to achieve its product cost targets.
-- Product issues that result in increased costs to the Company
and/or lost revenue opportunities.
-- Delays in product development programs for new products and new
product features which lead to cost overruns and /or missed
customer opportunities.
-- Weaker than expected market acceptance of several new products
being introduced by the Company that are expected to contribute
significant revenue in the second half of fiscal 2012.
-- The Company plans to become increasingly dependent upon third
parties for product design and supply. Higher than expected
costs and delayed or lost revenue may result if these
activities are not transitioned and managed effectively.
-- Shifts in value of the US dollar relative to the Canadian
Dollar may cause the Company's operating costs to fluctuate
significantly.
Additional risks are discussed under "Risk Factors" in the Company's
Annual Information Form available online at http://www.sedar.com.
March Networks Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(US dollars, amounts in thousands, except share and per-share data)
(Unaudited)
Three Months Ended Six Months Ended
October 31, October 31, October 31, October 31,
2011 2010 2011 2010
REVENUE
$21,891 $27,536 $44,324 $52,796
Cost of
revenue 12,782 15,638 25,239 29,107
GROSS MARGIN
9,109 11,898 19,085 23,689
EXPENSES:
Selling,
marketing and 4,887 5,321 9,548 9,864
support
Research and
development 2,625 2,275 5,384 4,995
General and
administrative 2,856 2,232 5,528 5,012
Stock based
compensation 254 125 412 293
Restructuring
charges -- -- -- 884
Amortization
573 617 1,202 1,210
Total expenses
11,195 10,570 22,074 22,258
Earnings
(loss) before (2,086) 1,328 (2,989) 1,431
undernoted
items
Interest and
other income, 14 64 60 104
net
EARNINGS
(LOSS) BEFORE (2,072) 1,392 (2,929) 1,535
INCOME TAXES
Deferred 252
income taxes 162 318 275
NET EARNINGS $
(LOSS) ($2,324) $1,230 ($3,247) 1,260
Basic and $
diluted ($0.13) $0.07 ($0.18) 0.07
earnings
(loss) per
share