Mitec reports third quarter results



    MONTREAL, March 13 /CNW Telbec/ - Mitec Telecom Inc. (TSX: MTM) today
announced the results for the three months period ended January 31, the third
quarter of its 2007 fiscal year.
    According to Dan Piergentili, President and CEO of Mitec Telecom, results
for the third quarter of fiscal 2007 show that the stated objectives of
generating cash flow and increasing shareholder value are on track. "Our gross
margins are up to 22.1% from 20.1% in the second quarter," said Mr.
Piergentili. "Mitec's EBITDA without restructuring costs and foreign exchange
gain improved $1.1M from the second quarter of 2007." Mr. Piergentili added
that Mitec is taking advantage of new opportunities to improve sales in the
current quarter while continuing to pursue its program to align costs to its
revenue base.
    Sales for the third quarter were $8.5 million, a decrease of $2.8 million
compared to the $11.4 million reported in the third quarter of fiscal 2006,
but gross profit for the quarter increased to $1.9 million, representing 22.1%
of total sales, versus a gross profit of $1.8 million or 15.9% of the sales
reported in the third quarter of 2006; an increase of 40% on a percentage
basis. Operating expenses for the third quarter of fiscal 2007 totaled
$3.3 million, compared to operating expenses of $3.9 million for the same
period last year. The Company generated a net loss of $2.6 million or $0.02
per share which included a restructuring cost of $1.2 million, compared to a
net loss of $2.8 million or $0.04 per share for the comparable quarter of the
last fiscal year.
    For the year-to-date, revenues were $26.1 million, as compared to
$34.2 million for same period of the previous year. The net loss from
continuing operations for the period was $11.2 million or $0.10 cents per
share, versus a net loss of $12.7 million or $0.17 for the comparable period
in the previous year. At the end of January 31, 2007, Mitec had cash and cash
equivalents of $6.4 million and a working capital position of $12.7 million.

    About Mitec:

    Mitec Telecom is a leading designer and provider of radio frequency (RF)
products for the telecommunications and satellite communications industries,
as well as a variety of other sectors. The Company sells its products
worldwide to network providers for incorporation into high-performing wireless
networks used in voice and data/Internet communications. Headquartered in
Montreal, Canada, the Company also operates a facility in China.
    Except for historical information provided herein, this press release may
contain information and statements of a forward-looking nature concerning the
future performance of the Company. These statements are based on suppositions
and uncertainties as well as on management's best possible evaluation of
future events. Such factors may include, without excluding other
considerations, fluctuations in quarterly results, evolution in customer
demand for the Company's products and services, the impact of price pressures
exerted by competitors, and general market trends or economic changes. As a
result, readers are advised that actual results may differ from expected
results.

    
    MITEC TELECOM INC.
    INTERIM CONSOLIDATED BALANCE SHEETS
    (In thousands of Canadian dollars)
    Unaudited                                              As at       As at
                                                      January 31,   April 30,
                                                            2007        2006
                                                               $           $
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash and cash equivalents                              6,364       1,468
    Short-term investments                                    -       10,089
    Trade receivables                                      6,500      10,849
    Other receivables                                        680         632
    Income tax recoverable                                   980       1,075
    Inventories                                            8,079       7,546
    Prepaid expenses and other                               528         491
    Current assets related to discontinued operations         -          278
    -------------------------------------------------------------------------
    Total current assets                                  23,131      32,428
    -------------------------------------------------------------------------
    Property, plant and equipment                          7,560       8,564
    Intangible assets                                      2,598       3,851
    Deferred charges                                       1,481       2,129
    -------------------------------------------------------------------------
                                                          34,770      46,972
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Bank indebtedness                                         -        6,016
    Accounts payable and accrued liabilities               9,896      11,912
    Current portion of long-term debt                        500         953
    Current liabilities related to discontinued
     operations                                                -          63
    -------------------------------------------------------------------------
    Total current liabilities                             10,396      18,944
    Long-term debt                                           583         958
    -------------------------------------------------------------------------
                                                          10,979      19,902
    -------------------------------------------------------------------------
    Shareholders' equity
    Common shares                                        123,826     116,357
    Contributed surplus                                    8,615       8,126
    Deficit                                             (106,919)    (95,680)
    Cumulative translation adjustment                     (1,731)     (1,733)
    -------------------------------------------------------------------------
    Total shareholders' equity                            23,791      27,070
    -------------------------------------------------------------------------
                                                          34,770      46,972
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MITEC TELECOM INC.
    INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT)
    (In thousands of Canadian dollars, except per share data
    and number of shares)
    Unaudited
                                       For the three            For the nine
                                        months ended            months ended
                                          January 31,             January 31,
                                    2007        2006        2007        2006
                                       $           $           $           $
    -------------------------------------------------------------------------
    Sales                          8,536      11,350      26,050      34,160
    Cost of sales                  6,649       9,544      22,195      30,059
    -------------------------------------------------------------------------
    Gross profit                   1,887       1,806       3,855       4,101
    -------------------------------------------------------------------------

    Expenses
    Selling and administrative     1,852       2,017       5,953       7,171
    Research and development       1,405       1,849       5,220       5,386
    Amortization of intangible
     assets                          249         527       1,144       1,577
    Financial expenses              (528)        254        (228)      1,095

    Interest income                  (10)        (87)        (70)       (257)
    Stock-based compensation          57         113         489         785
    Write-down of property,
     plant and equipment              85          -           85          -
    Write-down of intangibles
     assets                          156          -          156          -
    Restructuring and other
     expenses                      1,176          57       2,518       1,533
    -------------------------------------------------------------------------
                                   4,442       4,730      15,267      17,290
    -------------------------------------------------------------------------

    Loss from continuing
     operations before
     income taxes                 (2,555)     (2,924)    (11,412)    (13,189)
    Income tax recovery                -        (147)       (181)       (445)
    -------------------------------------------------------------------------
    Loss from continuing
     operations                   (2,555)     (2,777)    (11,231)    (12,744)
    Loss from discontinued
     operations                        -         (22)         (8)        (52)
    -------------------------------------------------------------------------
    Net loss for the period       (2,555)     (2,799)    (11,239)    (12,796)

    Deficit, beginning
     of the period              (104,364)    (88,514)    (95,680)    (78,517)
    -------------------------------------------------------------------------
    Deficit, end of
     the period                 (106,919)    (91,313)   (106,919)    (91,313)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted loss
     per common share from
     continuing operations         (0.02)      (0.04)      (0.10)      (0.17)
    Basic and diluted loss
     per common share from
     discontinued operations       (0.00)      (0.00)      (0.00)      (0.00)
    Basic and diluted loss
     per common share              (0.02)      (0.04)      (0.10)      (0.17)
    -------------------------------------------------------------------------
     Weighted average
     number of outstanding
     common shares           125,344,636  76,405,263 109,031,512  76,405,263
    -------------------------------------------------------------------------


    MITEC TELECOM INC.
    INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands of Canadian dollars)
    Unaudited
                                       For the three            For the nine
                                        months ended            months ended
                                          January 31,             January 31,
                                    2007        2006        2007        2006
                                       $           $           $           $
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Loss from continuing
     operations                   (2,555)     (2,777)    (11,231)    (12,744)
    Add items not affecting cash
      Amortization of property,
       plant and equipment,
       intangible assets and
       deferred charges              862       1,276       2,991       3,964
      Loss on disposal of
       property, plant and
       equipment                       7           1           9          26
      Write-down of intangible
       assets                        156           -         156           -
      Write-off of fixed assets       85           -          85           -
      Stock-based compensation        57         113         489         785
    -------------------------------------------------------------------------
                                  (1,388)     (1,387)     (7,501)     (7,969)
    Changes in non-cash working
     capital balances related
     to continuing operations        104         807       1,810       4,420
    -------------------------------------------------------------------------
    Cash flows used in operating
     activities                   (1,284)       (580)     (5,691)     (3,549)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Additions to property,
     plant and equipment
     and intangible assets           (35)       (131)       (241)       (334)
    Proceeds on disposal of
     property, plant and
     equipment                        23          46          27          54
    Purchases of short-term
     investments                       -      (6,921)       (597)    (13,098)
    Sales of short-term investments    -       7,587      10,686      19,881
    -------------------------------------------------------------------------
    Cash flows provided (used) in
     investing activities            (12)        581       9,875       6,503
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Increase in bank indebtedness      -         977         349       2,847
    Repayment of bank indebtedness     -        (478)     (6,365)     (2,493)
    Repayment of long-term debt     (472)       (179)       (828)       (533)
    Repayment of obligations under
     capital lease                     -          (2)          -         (32)
    Issuance of common shares
     and warrants                     18           -       7,469           -
    -------------------------------------------------------------------------
    Cash flows provided (used) by
     financing activities           (454)        318         625        (211)
    -------------------------------------------------------------------------

    Effect of exchange rate
     fluctuations changes on
     cash and cash equivalents      (137)       (357)        123        (189)
    -------------------------------------------------------------------------
    Net increase (decrease) in
     cash and cash equivalents
     from continuing operations   (1,887)        (38)      4,932       2,554

    Cash flows used in
     discontinued activities           -         103         (36)       (481)
    Cash and cash equivalents,
     beginning of the period       8,251       7,577       1,468       5,569
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of the period             6,364       7,642       6,364       7,642
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

For further information: Dan Piergentili, President & CEO, Mitec
Telecom, (514) 694-9000; Bruno Dumais, Vice President, Finance and CFO, Mitec
Telecom, (514) 694-9000

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