Mad Catz Reports Fiscal 2008 Second Quarter Diluted Earnings Per Share of $0.02



    Announces Strategic Acquisition of Leading PC Games Peripherals Provider
Saitek

    SAN DIEGO, November 14 /CNW/ - Mad Catz Interactive, Inc. (AMEX/TSX:
MCZ):

    
    Conference Call:    Today, November 14th, 2007 at 8:30 a.m. ET
    Dial-in numbers:    800/205-6183 (U.S. & Canada), 415/908-6241
                         (International)
    Webcast:            www.madcatz.com (Select "Investors")
    Replay Information: See release text
    

    Mad Catz Interactive, Inc. ("Mad Catz" or "the Company") (AMEX/TSX: MCZ),
a leading third-party interactive entertainment accessory provider, today
announced financial results for the fiscal 2008 second quarter ended September
30, 2007. The Company also announced the signing of a definitive agreement to
acquire 100 percent of a leading PC games peripherals provider, Saitek, for
$30 million, subject to working capital adjustment. The acquisition is
expected to close within the next week and is expected to be accretive to the
Company's fiscal 2008 earnings and cash flows.

    Net sales for the fiscal 2008 second quarter ended September 30, 2007
were $16.9 million, a 34.6% decrease from $25.8 million in the fiscal 2007
second quarter. Gross profit for the quarter decreased 11.1% to $5.0 million
from $5.6 million in the fiscal 2007 second quarter. Gross profit margin for
second quarter of fiscal 2008 was 29.4% compared to 21.6% in fiscal 2007
second quarter. Net income for the quarter ended September 30, 2007 was $0.9
million, or $0.02 per basic and diluted share, compared to a net income of
$0.2 million, or break even on a basic and diluted per share basis, for the
quarter ended September 30, 2006. EBITDA, a non-GAAP measure (defined as
earnings before interest, taxes, depreciation and amortization), was $2.0
million in the fiscal 2008 second quarter, a 67.3% increase over EBITDA of
$1.2 million in the fiscal 2007 second quarter. A reconciliation of EBITDA to
the Company's net income (loss) is included in the financial tables
accompanying this release.

    Net sales for the six-month period ended September 30, 2007 were $31.4
million, a decrease of 28.5% from $43.9 million in the same six-month period
of the prior fiscal year. Gross profit for the first half of fiscal 2008
increased 5.6% to $9.6 million from $9.1 million in the prior year period.
Gross profit margin for the six-month period ended September 30, 2007 was
30.6% compared to 20.8% in the prior year period. Net income for the first
half of fiscal 2008 was $0.7 million or $0.01 per basic and diluted share,
compared to net loss of $0.7 million or $(0.01) per basic and diluted share
for the six months ended September 30, 2006. EBITDA for the six months ended
September 30, 2007 rose 208.1% to $2.4 million compared to EBITDA of $0.8
million in the same period of the prior fiscal year.

    Fiscal 2008 Second Quarter and Recent Highlights:

    
    -- Grew net income over 340% from fiscal 2007 second quarter levels to
     $0.9 million equal to $0.02 per basic and diluted share, both record
     levels for Mad Catz' fiscal second quarter;

    -- Achieved record second quarter gross margin of 29.4%;

    -- EBITDA rose 67% to $2.0 million compared to EBITDA in the fiscal
     2007 second quarter, bringing the Company's EBITDA for the last four
     reported fiscal quarters to a total of $10.6 million;

    -- Decreased total operating expenses by 24.5% from the second quarter
     of 2007 to $3.7 million representing the lowest levels in any of the
     trailing ten fiscal quarters;

    -- Net debt (bank borrowings less cash) at September 30, 2007 of $3.9
     million (inclusive of borrowings for the Joytech acquisition), down
     70.0% from $13.2 million at September 30, 2006;

    -- Made meaningful progress against the Company's strategic plan to
     diversify and expand product lines, acquire attractive brand licenses
     and complete accretive transactions:

       -- Acquired certain assets of third-party videogame accessory
        developer and distributor Joytech from Take-Two Interactive
        Software, Inc. for approximately $3.0 million, providing new
        product lines and enhancing our geographic reach to include
        additional quality retail relationships throughout Europe;

       -- Delivered Halo 3 branded faceplates to accompany the launch of
        the biggest entertainment title in history;

       -- Recently announced plans to release a next generation of
        AirDrives(TM) specifically created for use with Apple's iPhone in
        early 2008;

       -- Recently entered into a multi-year extension to our license
        agreement with the NBA to produce controllers and related
        accessories for all current consoles;

       -- Began shipping AirDrives(TM) and AirDrives for Kids interactive
        earphones, with sales on the Mad Catz website, presence on
        BestBuy.com expected shortly and, based on strong initial
        responses to the product, several additional high-profile,
        specialty retailer placements planned for early 2008;

       -- Today announced signing the stock purchase agreement to acquire
        100 percent of a leading PC games peripherals provider, Saitek,
        for $30 million, with the transaction expected to be completed
        within the next week.
    

    Commenting on the results, Darren Richardson, Mad Catz' President and
CEO, stated, "During the second quarter, our bottom line and balance sheet
continued to benefit from enhanced operating efficiencies and our focus on
higher-margin product lines. The net sales comparisons reflect a combination
of the Company's culling process to reduce low-margin product placements, the
continuing impact of the console transition and strong software sales in the
year-ago quarter attributable to Real World Golf 2. Our announcement today of
an agreement to purchase Saitek, one of the world's leading PC games
peripherals makers is a benchmark in our history, enabling us to immediately
add world-class people and products to our organization and to become a leader
in the highly-attractive, adjacent PC games category which leverages our core
competencies. With this exciting opportunity close on the heels of
consummating the Joytech acquisition in September, and, more recently,
shipping our AirDrives and AirDrives for Kids products moving us into the
high-growth portable audio category, we have made unprecedented progress on
our plan to accretively grow Mad Catz. Our net debt is down 70% from the prior
year period to $3.9 million at September 30. This strengthened balance sheet
leaves us well-positioned to continue to execute on our growth strategy for
increasing shareholder value, consisting of three initiatives: continue to
pursue growth and efficiencies in our core business; diversify our product
offerings through adjacent product categories; and publish new
hardware/software bundles."

    Mr. Richardson concluded, "Together with our impressive portfolio of
brand licenses aligning many of our accessory offerings with some of the most
highly-anticipated software products for the year, and with recent console
price reductions which we expect to drive growth in the installed base of
current-generation hardware, we are very much looking forward to the upcoming
holiday shopping season. More broadly, we believe that we are still in the
relatively early days of this hardware cycle for our products and, especially
with the addition of Saitek to the Mad Catz family, we are as excited as we've
ever been about the prospects for the Company."

    The Company will host a conference call and simultaneous webcast today
November 14, 2007, at 8:30 a.m. ET. Following its completion, a replay of the
call can be accessed for 30 days at the Company's Web site (www.madcatz.com,
select "Investors") or for 7 days via telephone at 800/633-8284 (reservation #
21354223) or, for International callers, at 402/977-9140.

    About Mad Catz

    Mad Catz is a leading provider of innovative peripherals for the
worldwide interactive entertainment industry. Mad Catz designs and markets
accessories under its Mad Catz, GameShark and Joytech brands for video game
systems, and publishes video game software, including the industry leading
GameShark video game enhancements. Mad Catz has distribution through most
leading retailers offering interactive entertainment products. Mad Catz has
its operating headquarters in San Diego, California and offices in Canada,
Europe and Asia. For additional information go to www.madcatz.com.

    Safe Harbor for Forward Looking Statements:

    This press release contains forward-looking statements about the
Company's business prospects that involve substantial risks and uncertainties.
The Company assumes no obligation to update the forward-looking statements
contained in this press release as a result of new information or future
events or developments except as may be required by law. You can identify
these statements by the fact that they use words such as "anticipate,"
"estimate," "expect," "project," "intend," "should," "plan," "goal,"
"believe," the negative of such expressions, and other words and terms of
similar meaning in connection with any discussion of future operating or
financial performance. Among the factors that could cause actual results to
differ materially are the following: the ability to maintain or renew the
Company's licenses; competitive developments affecting the Company's current
products; first party price reductions; the ability to successfully market
both new and existing products domestically and internationally; difficulties
or delays in manufacturing; or a downturn in the market or industry. A further
list and description of these risks, uncertainties and other matters can be
found in the Company's reports filed with the Securities and Exchange
Commission and the Canadian Securities Administrators.

    
                          MAD CATZ INTERACTIVE, INC.
                    Consolidated Statements Of Operations
      (unaudited, in thousands of US$, except share and per share data)

                          Three Months Ended         Six Months Ended
                             September 30,             September 30,
                       ------------------------- -------------------------
                           2007         2006         2007         2006
                       ------------ ------------ ------------ ------------
    Net sales          $    16,853  $    25,788  $    31,431  $    43,929
    Cost of sales           11,900       20,218       21,799       34,812
                       ------------ ------------ ------------ ------------

    Gross profit             4,953        5,570        9,632        9,117
    Operating
     expenses:
      Sales and
       marketing             1,946        2,049        3,679        4,593
      General and
       administrative        1,477        2,397        4,277        4,337
      Research and
       development             299          485          613          704

                       ------------ ------------ ------------ ------------

        Total
         operating
         expenses            3,722        4,931        8,569        9,634
                       ------------ ------------ ------------ ------------

    Operating income
     (loss)                  1,231          639        1,063         (517)
      Interest
       expense, net           (110)        (291)        (209)        (564)
      Foreign exchange
       gain, net               307            1          336          163
      Other income              60           72          151          129
                       ------------ ------------ ------------ ------------

    Income (loss)
     before income
     taxes                  1, 488          421        1,341         (789)
    Income tax expense
     (benefit)                 616          225          651         (109)
                       ------------ ------------ ------------ ------------

    Net income (loss)  $       872  $       196  $       690  $      (680)
                       ------------ ------------ ------------ ------------

    Basic net income
     (loss) per share  $      0.02  $      0.00  $      0.01  $     (0.01)
                       ------------ ------------ ------------ ------------

    Diluted net income
     (loss) per share  $      0.02  $      0.00  $      0.01  $     (0.01)
                       ------------ ------------ ------------ ------------

    Weighted average
     shares - basic     54,970,288   54,244,383   54,664,487   54,244,383
                       ------------ ------------ ------------ ------------

    Weighted average
     shares - diluted   55,877,078   54,244,383   55,531,186   54,244,383
                       ------------ ------------ ------------ ------------
    

    
                          MAD CATZ INTERACTIVE, INC.
                         Consolidated Balance Sheets
                            (in thousands of US$)

                                               September 30,   March 31,
                                                   2007          2007
                                               ------------- -------------
                                                (unaudited)
    Assets
    Current assets:
        Cash                                   $      3,022  $      2,350
        Accounts receivable, net of allowances
         of $3,216 and $3,583 at September 30,
         2007 and March 31, 2007, respectively       14,138        13,937
        Other receivables                               245           542
        Inventories                                  13,861        12,804
        Deferred tax assets                           2,009         2,009
        Other current assets                            556         1,385
                                               ------------- -------------

             Total current assets                    33,831        33,027
    Deferred tax assets                               1,390         1,801
    Deferred financing fees                              70            86
    Property and equipment, net                       1,989         1,658
    Intangible assets, net                            2,069         1,848
    Goodwill                                         17,483        17,483
                                               ------------- -------------

             Total assets                      $     56,832  $     55,903
                                               ------------- -------------

       Liabilities and Shareholders' Equity
    Current liabilities:
        Bank loan                              $      6,971  $      1,345
        Accounts payable                              7,596        13,509
        Accrued liabilities                           3,181         3,338
        Income taxes payable                            407           484
                                               ------------- -------------

             Total current liabilities               18,155        18,676
    Shareholders' equity:
        Common stock, no par value, unlimited
         shares authorized; 54,973,949 and
         54,299,383 shares issued and
         outstanding at September 30, 2007 and
         March 31, 2007, respectively                47,497        47,105
        Accumulated other comprehensive income        2,982         2,615
        Accumulated deficit                         (11,802)      (12,493)
                                               ------------- -------------

             Total shareholders' equity              38,677        37,227
                                               ------------- -------------

             Total liabilities and
              shareholders' equity             $     56,832  $     55,903
                                               ------------- -------------
    

    
                          MAD CATZ INTERACTIVE, INC.
                              Supplementary Data
                       (Unaudited, in thousands of US$)

    Geographical Sales Data

    The Company's net sales are attributable to the following geographic
     regions:

                                   Three months ended   Six months ended
                                      September 30,       September 30,
                                   ------------------- -------------------
                                     2007      2006      2007      2006
                                   --------- --------- --------- ---------
    Net sales:
        United States              $  11,103 $  17,432 $  20,818 $  31,121
        Europe                         5,062     6,840     9,232     9,302
        Canada                           663     1,516     1,349     3,397
        Other countries                   25         -        32       109
                                   --------- --------- --------- ---------

                                   $  16,853 $  25,788 $  31,431 $  43,929
                                   --------- --------- --------- ---------
    

    
    EBITDA Reconciliation

    EBITDA represents net income (loss) plus interest, taxes, depreciation
     and amortization.

                                      Three months ended  Six months ended
                                         September 30,     September 30,
    --------------------------------- ------------------- ----------------
             (in thousands)             2007      2006     2007     2006
    --------------------------------- --------- --------- ------- --------
    Net income (loss)                 $     872 $     196 $   690 $  (680)
        Adjustments:
        Interest expense                    110       291     209     564
        Income tax expense (benefit)        616       225     651    (109)
        Depreciation and amortization       436       504     884   1,015
                                      --------- --------- ------- --------

    EBITDA                            $   2,034 $   1,216 $ 2,434 $   790
                                      --------- --------- ------- --------
    

    EBITDA represents net income (loss) plus interest, taxes, depreciation
and amortization. EBITDA is not intended to represent cash flows for the
period, nor is it being presented as an alternative to operating income or net
income as an indicator of operating performance and should not be considered
in isolation or as a substitute for measures of performance prepared in
accordance with accounting principles generally accepted in the United States.
As defined, EBITDA is not necessarily comparable to other similarly titled
captions of other companies due to potential inconsistencies in the method of
calculation. We believe, however, that in addition to the performance measures
found in our financial statements, EBITDA is a useful financial performance
measurement for assessing our Company's operating performance. Our management
uses EBITDA as a measurement of operating performance in comparing our
performance on a consistent basis over prior periods, as it removes from
operating results the impact of our capital structure, including the interest
expense resulting from our outstanding debt, and our asset base, including
depreciation and amortization of some of our assets.




For further information:

For further information: Mad Catz Interactive, Inc. Stewart Halpern,
800-831-1442 or Jaffoni & Collins Incorporated Joseph Jaffoni or David Jacoby,
212-835-8500 mcz@jcir.com

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MAD CATZ INTERACTIVE, INC.

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