March Networks reports fourth quarter and fiscal 2009 financial results



    
    Summary Operating Results:

    -------------------------------------------------------------------------
    $Cdn millions except                                  Fiscal      Fiscal
     EPS data                    Q4 2009     Q4 2008        2009        2008
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Revenue                   $     21.5  $     21.1  $    101.2  $     94.4
    -------------------------------------------------------------------------
    Non-GAAP operating
     loss(*)                        (1.4)       (4.1)       (1.0)       (7.4)
    -------------------------------------------------------------------------
    Net loss                  $     (1.9) $     (3.1) $     (6.6) $     (6.5)
    -------------------------------------------------------------------------
    Loss per share            $    (0.11) $    (0.18) $    (0.38) $    (0.38)
    -------------------------------------------------------------------------
    Cash and short-term
     investments              $     50.9  $     63.4  $     50.9  $     63.4
    -------------------------------------------------------------------------
    (*) Non-GAAP measure: earnings (loss) before stock based compensation,
        amortization of acquired intangibles, restructuring costs, interest
        and income taxes. This measure may not be comparable to similar
        measures used by other companies.
    

    OTTAWA, June 10 /CNW Telbec/ - March Networks(TM) (TSX:MN), a leading
provider of intelligent IP video and business analysis applications, today
announced financial results for the fourth quarter and fiscal year ended April
30, 2009. All figures in Canadian dollars and in accordance with Canadian GAAP
unless otherwise specified.
    The Company's fourth quarter fiscal 2009 revenue was $21.5 million
representing an increase of 2% as compared to revenue of $21.1 million in the
fourth quarter of fiscal 2008. Revenue for the fiscal year ended April 30,
2009 of $101.2 million increased by 7% as compared to the fiscal year ended
April 30, 2008.
    The Company recorded a non-GAAP operating loss of $1.4 million in the
fourth quarter of fiscal 2009 which represents an improvement of $2.7 million
relative to the non-GAAP operating loss of $4.1 million in the fourth quarter
of fiscal 2008. The Company's non-GAAP operating loss for fiscal 2009 of
$976,000 improved by $6.4 million as compared to the non-GAAP operating loss
of $7.4 million in fiscal 2008.
    The Company incurred a net loss in the fourth quarter of fiscal 2009 of
$1.9 million, or $0.11 per share, as compared to a net loss of $3.1 million or
$0.18 per share in fourth quarter of fiscal 2008.
    "Achieving $100M in revenue in this challenging economic environment
represents a considerable achievement and milestone for the company" said
Peter Strom, President and CEO. "We now embark on the next growth phase for
the company with a strong balance sheet, a diversified customer base, a
complete product line and an expanded global presence."

    
    Fourth Quarter 2009 Financial Highlights

    - Operating earnings up $2.7 million from fourth quarter of last fiscal
      year.
    - Generated $4.4 million in cash flow from operations in the fourth
      quarter
    - Fourth quarter net loss improved by $1.2 million or $0.07 per share
      from last year.
    

    "As set forth in the Company's press release on May 14, 2009, the Company
fell short of its fiscal 2009 operating earnings guidance as revenue growth
was lower than expected in a challenging economic environment", said Ken
Taylor, CFO of March Networks. "The Company anticipates growth in revenue,
profit and cash flow from operations in fiscal 2010 and expects operating
expenses to approximate the fiscal 2009 level. The Company will not provide
specific revenue and earnings guidance going forward."

    The Company will discuss the results on a conference call and webcast on
Thursday, June 11, 2009 at 8:30 a.m. EST (1:30 p.m. GMT). The conference call
may be accessed by dialing 1-800-594-3615 (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=2688400.
    A replay of the conference call will be available from June 11, 2009 at
10:00 a.m. EDT until June 18, 2009 at 11:59 p.m. EDT. The replay can be
accessed at 1-877-289-8525 or 416-640-1917. The passcode for the replay is
21306964#.

    About March Networks

    March Networks(TM) (TSX:MN) 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.

    
    ------------------------------------------------------------------------
    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:

    - Under stable economic conditions the market for the Company's products
      will grow by greater than 10% annually, however market growth will be
      impaired by depressed global economic conditions.
    - The Company will successfully reduce product costs to improve the
      Company's gross margin and/or avoid any margin erosion associated with
      competitive pricing pressure.
    - Annual operating expenses, excluding stock based compensation and
      amortization of acquired intangibles, will approximate fiscal 2009
      levels.
    - 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 investments in certain international markets will
      contribute to near term profitability.
    - The average fiscal 2010 exchange rates for US dollars and Euros to
      Canadian dollars will be US$1.00=CDN$1.20 and
      Euro 1=CDN$1.60.
    - The Company will have adequate component supply to meet customer
      demand.
    - 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 Company's ability to forecast revenue and profitability is impaired
      by the depressed global economic environment, which has introduced
      delays in the sales process; increased pricing pressure; and higher
      potential for cancellation or loss of opportunities in the sales
      pipeline.
    - Shifts in value of the Canadian dollar relative to billing currencies.
    - The impact of the depressed global economy and other factors may result
      in financial difficulty for key suppliers that would impact the
      Company's ability to meet demand and cost reduction targets.
    - Weaker than expected success versus competitors in new customer and
      vertical market opportunities and/or loss of existing customers to
      competitors.
    - Revenue shortfalls due to delays in securing new customer opportunities
      and the lack of long term purchase commitments from customers.
    - Higher than targeted product costs and/or higher than expected declines
      in market pricing for the Company's products.
    - Delays in product development programs for new products and new product
      features which lead to cost overruns and/or missed customer
      opportunities.
    - Product issues that result in increased costs to the Company and/or
      lost revenue opportunities.
    - Changes in the mix of revenues between fixed and mobile transportation
      solutions.

    Additional risks are discussed herein and under "Risk Factors" in the
    Company's Annual Information Form available online at www.sedar.com.
    -------------------------------------------------------------------------

    (*) 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
    -------------------------------------------------------------------------
    (Canadian dollars, amounts in thousands, except share and per-share data)
                                 (Unaudited)

    -------------------------------------------------------------------------
                                 Three Months Ended       Fiscal Year Ended
    -------------------------------------------------------------------------
                                April 30,   April 30,   April 30,   April 30,
                                    2009        2008        2009        2008
    -------------------------------------------------------------------------
    REVENUE                   $   21,530  $   21,052   $ 101,191  $   94,410
    -------------------------------------------------------------------------
    COST OF REVENUE               11,422      10,750      54,162      50,783
    -------------------------------------------------------------------------
    CONTRACT LOSSES AND
     RETROFIT                          -         750       1,187       3,189
    -------------------------------------------------------------------------
    GROSS MARGIN                  10,108       9,552      45,842      40,438
    -------------------------------------------------------------------------
    EXPENSES:
    -------------------------------------------------------------------------
    Selling, marketing and
     support                       4,724       5,479      19,846      17,402
    -------------------------------------------------------------------------
    Research and development       2,177       4,584      12,176      15,823
    -------------------------------------------------------------------------
    General and administrative     4,569       3,598      14,796      14,625
    -------------------------------------------------------------------------
    Stock based compensation         283         446       1,345       2,760
    -------------------------------------------------------------------------
    Amortization of acquired
     intangible assets               899         399       3,779         810
    -------------------------------------------------------------------------
    Restructuring costs                -           -       2,665           -
    -------------------------------------------------------------------------
    Total expenses                12,652      14,506      54,607      51,420
    -------------------------------------------------------------------------
    LOSS BEFORE UNDERNOTED
     ITEMS                        (2,544)     (4,954)     (8,765)    (10,982)
    -------------------------------------------------------------------------
    Interest and other income,
     net                             250         773       1,227       3,921
    -------------------------------------------------------------------------
    LOSS BEFORE INCOME TAXES      (2,294)     (4,181)     (7,538)     (7,061)
    -------------------------------------------------------------------------
    Current income tax
     expense                         134          68          78          93
    -------------------------------------------------------------------------
    Future income tax
     expense                        (568)     (1,125)     (1,026)       (639)
    -------------------------------------------------------------------------
    NET LOSS                  $   (1,860) $   (3,124) $   (6,590) $   (6,515)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Net loss per share:
    -------------------------------------------------------------------------
    Basic                     $    (0.11) $    (0.18) $    (0.38) $    (0.38)
    -------------------------------------------------------------------------
    Diluted                   $    (0.11) $    (0.18) $    (0.38) $    (0.38)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Shares used in per-share
     calculation:
    -------------------------------------------------------------------------
    Basic                     17,191,908  17,633,233  17,504,349  17,194,161
    -------------------------------------------------------------------------



                         March Networks Corporation
    -------------------------------------------------------------------------
                         CONSOLIDATED BALANCE SHEETS
    -------------------------------------------------------------------------
                   (Canadian dollars, amounts in thousands)
                                 (Unaudited)

    -------------------------------------------------------------------------
                                                        April 30,   April 30,
                                                            2009        2008
    -------------------------------------------------------------------------
    ASSETS
    -------------------------------------------------------------------------
    Current assets:
    -------------------------------------------------------------------------
    Cash                                              $   10,126  $    4,187
    -------------------------------------------------------------------------
    Short-term investments                                40,740      59,209
    -------------------------------------------------------------------------
    Restricted cash                                            -       2,410
    -------------------------------------------------------------------------
    Accounts receivable                                   14,892      15,432
    -------------------------------------------------------------------------
    Inventories                                           23,932      22,220
    -------------------------------------------------------------------------
    Prepaid expenses and other current assets              4,040       2,982
    -------------------------------------------------------------------------
    Future tax assets                                      5,128       4,556
    -------------------------------------------------------------------------
    Total current assets                                  98,858     110,996
    -------------------------------------------------------------------------
    Capital assets                                         6,273       2,492
    -------------------------------------------------------------------------
    Intangible assets                                     12,598      16,377
    -------------------------------------------------------------------------
    Future tax assets                                     22,151      21,081
    -------------------------------------------------------------------------
    Goodwill                                              22,429      22,048
    -------------------------------------------------------------------------
    TOTAL ASSETS                                      $  162,309  $  172,994
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    -------------------------------------------------------------------------
    Current liabilities:
    -------------------------------------------------------------------------
    Accounts payable                                  $   12,004  $   11,576
    -------------------------------------------------------------------------
    Accrued liabilities                                    7,328      10,236
    -------------------------------------------------------------------------
    Refundable royalty advance                                 -       2,410
    -------------------------------------------------------------------------
    Deferred revenue                                       7,851       3,329
    -------------------------------------------------------------------------
    Deferred leasehold inducement                            132           -
    -------------------------------------------------------------------------
    Income taxes payable                                     390         422
    -------------------------------------------------------------------------
    Total current liabilities                             27,705      27,973
    -------------------------------------------------------------------------
    Deferred revenue                                       8,239       9,048
    -------------------------------------------------------------------------
    Deferred leasehold inducement                          1,100           -
    -------------------------------------------------------------------------
    Long term compensation                                   666         451
    -------------------------------------------------------------------------
    Future tax liabilities                                 3,330       4,362
    -------------------------------------------------------------------------
    Total liabilities                                     41,040      41,834
    -------------------------------------------------------------------------
    Shareholders' equity                                 121,269     131,160
    -------------------------------------------------------------------------
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY        $  162,309  $  172,994
    -------------------------------------------------------------------------


                         March Networks Corporation
    -------------------------------------------------------------------------
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------
                   (Canadian dollars, amounts in thousands)
                                 (Unaudited)

    -------------------------------------------------------------------------
                                 Three Months Ended       Fiscal Year Ended
    -------------------------------------------------------------------------
                                April 30,   April 30,   April 30,   April 30,
                                    2009        2008        2009        2008
    -------------------------------------------------------------------------
    Cash flows from operating
     activities:
    -------------------------------------------------------------------------
    Net loss                  $   (1,860) $   (3,124) $   (6,590) $   (6,515)
    -------------------------------------------------------------------------
    Items not affecting cash:
    -------------------------------------------------------------------------
    Amortization of capital
     assets                          543         364       2,069       1,367
    -------------------------------------------------------------------------
    Amortization of acquired
     intangible assets               899         399       3,779         810
    -------------------------------------------------------------------------
    Stock based compensation
     and shares issued to
     directors                       296         476       1,412       2,790
    -------------------------------------------------------------------------
    Unrealized foreign
     exchange (gain)/loss           (192)        152         488        (229)
    -------------------------------------------------------------------------
    Future income taxes and
     non-refundable investment
     tax credits                     464      (1,520)       (207)     (1,756)
    -------------------------------------------------------------------------
    Net change in non-cash
     items                         4,234      (4,963)     (4,228)      7,131
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net cash generated
     (consumed) by operating
     activities                    4,384      (8,216)     (3,277)      3,598
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Cash flows from investing
     activities:
    -------------------------------------------------------------------------
    Redemption (purchase) of
     short-term investments       (2,887)     34,442      18,469      23,725
    -------------------------------------------------------------------------
    Purchase of capital assets       (47)       (263)     (4,146)       (757)
    -------------------------------------------------------------------------
    Acquisition of business            -     (26,078)       (698)    (26,078)
    -------------------------------------------------------------------------
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    Net cash generated
     (consumed) by investing
     activities                   (2,934)      8,101      13,625      (3,110)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Cash flows from financing
     activities:
    -------------------------------------------------------------------------
    Issuance (repurchase) of
     share capital, net                -         141      (4,628)        314
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net cash generated
     (consumed) by financing
     activities                        -         141      (4,628)        314
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Net increase in cash           1,450          26       5,720         802
    -------------------------------------------------------------------------
    Foreign exchange gain
     (loss) on foreign cash
     held                           (114)        (55)        219        (141)
    -------------------------------------------------------------------------
    Cash, beginning of
     period                        8,790       4,216       4,187       3,526
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash, end of period       $   10,126  $    4,187  $   10,126  $    4,187
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

For further information: Ken Taylor, Chief Financial Officer, March
Networks Corporation, (613) 591-8181, ktaylor@marchnetworks.com

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