Mad Catz Reports Fourth Quarter and Fiscal 2007 Results



    Full Year Net Income of $3.7 Million or $0.07 Per Diluted Share

    SAN DIEGO, June 5 /CNW/ - Mad Catz Interactive, Inc. ("Mad Catz")
(AMEX/TSX: MCZ), a leading worldwide provider of third-party video game
peripherals, today announced financial results for the fourth quarter and
fiscal year ended March 31, 2007.

    Net sales for the fiscal year ended March 31, 2007 were $99.7 million, a
1.0% decrease from $100.8 million in fiscal 2006. Gross profit for the fiscal
year increased 98.2% to $25.0 million from $12.6 million in the prior fiscal
year. Gross profit margin for fiscal 2007 was 25.1% compared to 12.5% in
fiscal 2006. Net income for the year ended March 31, 2007 was $3.7 million, or
$0.07 per share, compared to a net loss of $6.7 million or $(0.12) per share
for the year ended March 31, 2006. EBITDA, a non-GAAP measure (defined as
earnings before interest, taxes, depreciation and amortization), was $9.0
million in fiscal 2007 compared to EBITDA of negative $7.5 million in fiscal
2006. A reconciliation of EBITDA to the Company's net income (loss) on a U.S.
GAAP basis is included in the financial tables accompanying this release.

    Net sales for the fourth quarter ended March 31, 2007 were $19.3 million,
an increase of 12.1% from $17.2 million in the fourth quarter of fiscal 2006.
Gross profit for the quarter increased to $5.6 million, compared to $0.2
million in the same quarter of the prior year. Gross profit margin for the
fiscal 2007 fourth quarter increased to 29.1% compared to 1.0% in the same
quarter of the prior year. Net income for the quarter ended March 31, 2007 was
$0.7 million, or $0.01 per share compared to a net loss of $3.3 million, or
$(0.06) per share, in the fourth quarter of the prior fiscal year. EBITDA for
the quarter ended March 31, 2007 was $1.9 million compared to EBITDA of
negative $4.5 million for the quarter ended March 31, 2006.

    Fiscal 2007 Fourth Quarter Highlights:

    --  Year-over-year net sales growth in the fiscal fourth quarter of 12.1%
driven by the introduction of accessories for Sony's PlayStation(R) 3 console
and Nintendo's Wii(TM) console;

    --  European sales rose for the eighth consecutive quarter by 31.0% to
$4.7 million from $3.6 million in the fourth quarter of 2006;

    --  US sales rose 21.6% to $13.8 million from $11.5 million in the fourth
quarter of 2006;

    --  Achieved record quarterly gross margin of 29.1%, while gross profit
improved to $5.6 million from $0.2 million in the prior year;

    --  Fiscal fourth quarter EBITDA rose to $1.9 million compared to
negative EBITDA in the prior year;

    --  Reduced total operating expenses to 21.5% of net sales in the fiscal
2007 fourth quarter from 30.2% in comparable prior year period;

    --  Entered into agreement to produce a new line of officially-licensed
accessories to support the launch of BioWare's highly-anticipated game, Mass
Effect(TM);

    --  Began shipping Mad Catz GamePad controllers for Playstation(R) 3 in
wired and wireless versions;

    --  Strengthened balance sheet as inventory was reduced by $5.6 million
(30.4%) and outstanding bank debt was reduced by $7.2 million (84.3%) from the
same period in fiscal 2006; and,

    --  Ended the fiscal year net cash positive for the first time in the
Company's history, with cash net of debt at approximately $1.0 million.

    Commenting on the results, Darren Richardson, Mad Catz' President and
CEO, stated, "Concluding what was already an impressive year, Mad Catz
generated solid increases in fourth quarter financial results as we benefited
from initiatives to selectively diversify and expand our product lines and
improve operating efficiencies. The fourth quarter was highlighted by
significant net income gains, strong revenue growth in Europe and the United
States, and record quarterly gross margins.

    "Gross margins in fiscal 2007 rose almost 100% from fiscal 2006 levels.
Contributors to this improvement included: the elimination of select low
margin product placements; contributions from new higher-margin products;
reductions in inventory write-downs and price protections; and fiscal 2006
non-recurring payment for the early termination of a long-term purchase
commitment. In addition, despite the seasonality historically experienced in
the fourth quarter and a decrease in prior generation console sales, Mad Catz
recorded fiscal fourth quarter net income of $0.7 million reflecting the
initial introduction of new product lines for the Playstation3 and the Wii, as
well as further penetration of Xbox 360 products and accessories.

    "Importantly, over the last four quarters we met our goals of driving
operating efficiencies to position Mad Catz to take advantage of the growing
momentum of the console transition. In addition to continuing to provide
quality accessories for existing consoles, Mad Catz is focused on a
three-pronged approach to growth. First, we will continue to seek to align our
products with sports leagues, entertainment brands and high-profile software
franchises to generate heightened demand for our controllers and accessories.
We have made meaningful progress on this initiative over the last several
months having secured licenses to produce products to accompany the launches
of Mass Effect(TM) and the highly anticipated Halo 3(TM). We have also renewed
or expanded agreements with the NFL, NBA and MLB to produce branded
controllers and accessories. Second, we plan to develop further
hardware/software bundles such as Real World Golf and the Xbox 360 Arcade
Stick. These higher-margin products allow us to leverage our distribution
channels and proven ability to create quality hardware and accessories that
incorporate complementary software applications to provide gamers with a
quality, integrated product. Finally, we continue to pursue opportunities in
adjacent categories, such as personal audio devices. For example, last
November we acquired the InAir Technology and we plan to bring several
products to market this fall which incorporate this innovation in headphone
listening."

    Mr. Richardson concluded, "In fiscal 2007 Mad Catz made significant
progress in strengthening its balance sheet and improving operational and
working capital efficiency. Mad Catz is now shipping accessories for the Xbox
360, Sony PlayStation3 and Nintendo Wii consoles but we expect sales from
products for these new consoles to be more meaningful once the installed base
has been further established, which is typically in the first full year
following launch. With our improved balance sheet we are actively pursuing
growth initiatives in existing and new areas and have entered fiscal 2008
well-positioned for the future. Although the console transition is still
ongoing, we are optimistic about the future, and are focused on pursuing
opportunities for growth that will build long-term shareholder value."

    The Company will host a conference call and simultaneous webcast today
June 5, 2007, at 5:00 p.m. EDT. Following its completion, a replay of the call
can be accessed for 30 days on the Internet from the Company's Web site
(www.madcatz.com, select "Investors") or for 7 days via telephone at
800/633-8284 (reservation # 21339970) or, for International callers, at
402/977-9140.

    About Mad Catz

    Mad Catz is a worldwide leader of innovative peripherals in the
interactive entertainment industry. Mad Catz designs and markets a full range
of accessories for video game systems and publishes video game software,
including the industry leading GameShark brand of video game enhancements. Mad
Catz sells its products to 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.

    
                              - tables follow -


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

                          Three Months Ended            Year Ended
                               March 31,                 March 31,
                       ------------------------- -------------------------
                          2007         2006         2007         2006
                       ------------ ------------ ------------ ------------

    Net sales          $    19,334  $    17,243  $    99,721  $   100,768

    Cost of sales           13,710       17,062       74,703       88,148
                       ------------ ------------ ------------ ------------

    Gross profit             5,624          181       25,018       12,620

    Operating expenses:
      Sales and
       marketing             1,926        2,547        8,923       12,252
      General and
       administrative        1,904        2,240        8,244        7,914
      Research and
       development             327          417        1,406        1,605
                       ------------ ------------ ------------ ------------
        Total operating
         expenses            4,157        5,204       18,573       21,771
    Operating income
     (loss)                  1,467       (5,023)       6,445       (9,151)
      Interest expense,
       net                    (203)        (339)      (1,109)      (1,395)
      Foreign exchange
       gain (loss), net        (47)         (58)         256         (765)
      Other income              91           58          338          484
                       ------------ ------------ ------------ ------------
    Income (loss)
     before income
     taxes                   1,308       (5,362)       5,930      (10,827)
    Provision for
     income taxes             (612)       2,037       (2,225)       4,174
                       ------------ ------------ ------------ ------------
    Net income (loss)  $       696  $    (3,325) $     3,705  $    (6,653)
                       ------------ ------------ ------------ ------------


    Net income (loss)
     per share:
      Basic            $      0.01  $     (0.06) $      0.07  $     (0.12)
                       ------------ ------------ ------------ ------------
      Diluted          $      0.01  $     (0.06) $      0.07  $     (0.12)
                       ------------ ------------ ------------ ------------

    Weighted average
     number of common
     shares
     outstanding:
      Basic             54,244,383   54,244,383   54,244,383   54,244,383
                       ------------ ------------ ------------ ------------
      Diluted           55,834,689   54,244,383   55,036,591   54,244,383
                       ------------ ------------ ------------ ------------
    

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

                                                       March 31, March 31,
                                                         2007      2006
                                                       --------- ---------
    Assets

    Current assets:
      Cash                                             $  2,350  $  1,607
      Accounts receivable, net                           14,405    12,024
      Other receivables                                      74       429
      Inventories                                        12,804    18,390
      Income taxes receivable                                 -     1,275
      Deferred tax assets                                 2,009     2,586
      Other current assets                                  700     1,661
                                                       --------- ---------
                                                         32,342    37,972

    Deferred tax assets                                   1,801     3,339
    Deferred financing fees                                  86         -
    Property and equipment, net                           1,658     2,427
    Intangible assets, net                                1,848     2,634
    Goodwill                                             22,591    22,363
                                                       --------- ---------
    Total assets                                       $ 60,326  $ 68,735
                                                       --------- ---------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Bank loan                                        $  1,345  $  8,581
      Accounts payable and accrued liabilities           16,162    23,302
      Income taxes payable                                  484          -
                                                       --------- ---------
                                                         17,991    31,883

    Shareholders' equity:
      Common stock, no par value, unlimited shares
       authorized; 54,244,383 shares issued and
       outstanding at March 31, 2007 and 2006            47,105    46,746
      Other comprehensive income - cumulative
       translation adjustment                             7,723     7,116
      Accumulated deficit (1)                           (12,493)  (17,010)
                                                       --------- ---------
      Total shareholders' equity                         42,335    36,852
                                                       --------- ---------
    Total liabilities and shareholders' equity         $ 60,326  $ 68,735
                                                       --------- ---------

    (1) Accumulated deficit as of March 31, 2007 includes a decrease of
     $0.8 million reflecting a cumulative effect of adjustment from the
     adoption of SAB 108.
    

    
                          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           Year Ended
                                          March 31,         March 31,
                                      ----------------- ------------------
                                       2007     2006     2007      2006
                                      -------- -------- -------- ---------
    Net sales
       United States                  $13,838  $11,476  $71,092  $ 72,172
       Europe                           4,668    3,566   22,163    19,373
       Canada                             826    2,017    6,355     8,892
       Other countries                      2      184      111       331
                                      -------- -------- -------- ---------
                                      $19,334  $17,243  $99,721  $100,768
                                      -------- -------- -------- ---------

    EBITDA Reconciliation
    EBITDA represents net income plus interest, taxes, depreciation and
     amortization.

                                        Three Months
                                            Ended           Year Ended
                                          March 31,         March 31,
                                      ----------------- ------------------
                                       2007     2006     2007      2006
                                      -------- -------- -------- ---------


    Net income (loss)                 $   696  $(3,325) $ 3,705  $ (6,653)

    Adjustments:
    Interest expense                      203      339    1,109     1,395
    Income tax expense (benefit)          612   (2,037)   2,225    (4,174)
    Depreciation and amortization         430      494    1,938     1,904
                                      -------- -------- -------- ---------

    EBITDA                            $ 1,941  $(4,529)   8,977  $ (7,528)
                                      -------- -------- -------- ---------
    

    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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