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International Datacasting Corporation: International Datacasting Corporation Announces Fiscal 2010 First Quarter Results

^{Published on 2009-06-08 14:39:47, Last Modified on 2009-06-08 14:43:44 - Market Wire}
 

OTTAWA, ONTARIO--(Marketwire - June 8, 2009) - International Datacasting Corporation (TSX:IDC), a leader in providing advanced global solutions for the distribution of broadband content via satellite, announced its financial results for the three-month period ended April 30, 2009. All figures are stated in Canadian dollars.

Q1 Fiscal 2010 Highlights

- Revenue was $5.1 million, compared to $5.6 million recorded in Q1 fiscal 2009.

- Gross margin was 49%, up from 47% last year.

- EBITDA was $(0.6), compared to $(0.0) in Q1 fiscal 2009.

- Net loss $(0.8) million or $(0.01) per share, compared to net loss of $(0.2) million or $0.00 per share in Q1 fiscal 2009.

"Our large installed customer base continued to drive on-going business in Q1, however, the global economic conditions are having an impact on some of our customers and our revenues are down accordingly," said Ron Clifton, President and CEO of IDC. "Several of our customers, particularly in our broadcast radio market, are delaying purchase decisions to future periods. Despite this, we had a large increase in quoting activity during the quarter compared to the same quarter last year, interest in our products remains high, particularly in our video applications, and we believe our long-term sales pipeline remains strong. That being said, at this time we do not expect sales momentum to pick-up significantly until the second half of the year."

Operational Highlights

During the quarter, IDC generated sales in all three of its key market verticals. The Company made the most progress in the Broadcast Video market with sales primarily into IPTV, digital cinema, broadcast television and Video on Demand (VOD) applications.

Cinedigm, IDC's digital cinema customer and partner, broadcast the NBA All Star Saturday Night skills event in February to over 80 theatres across North America, equipped with CineLive(tm), which combines IDC's SuperFlex broadband satellite technology with SENSIO(^®) 3D Cinema Decoder technology for the delivery of 3D and 2D alternate content.

During the quarter, IDC's SuperFlex Pro Cinema 3D products were also used as part of the first European broadcast via satellite of a live 3D basketball game to multi locations across Italy in conjunction with IDC's customer Open Sky. IDC signed a licensing agreement with Dolby Laboratories to integrate Dolby's 3D colour correction solution with IDC's 3D live decoder hardware.

In addition to on-going growth in the digital cinema market, IDC continued to receive orders for products from customers as they continue to deploy their IPTV and Video on Demand (VOD) networks. During the quarter, the Company delivered products and services to support EchoStar's ViP-TV service and TVN Entertainment's Video on Demand network upgrade and rollout in the United States.

In the Broadcast Data market, IDC received an initial order for IDC's SuperFlex DVB-S/S2 receivers from SES NEW SKIES in Europe as they upgrade their Internet trunking service network to DVB-S2 for higher performance. IDC also received follow-on orders for an existing US government project that was initially awarded last year.

In the Broadcast Radio vertical, IDC's PROFLine subsidiary was awarded an initial contract to install a next generation satellite distribution network for Sud-West Rundfunk (SWR), a major German public broadcaster. The Company expects to start recognizing revenue from this agreement in the second half of the year.

Financial Review

Revenues were $5.1 million for Q1 fiscal 2010, compared to $5.6 million in Q1 fiscal 2009. The year-over-year decline was a result of a decrease in satellite equipment sales, which was partially offset by an increase in revenue from the Company's Broadcast Services business. The Company generated satellite equipment sales in each of its key market verticals during the quarter. Sales in all geographic regions were roughly comparable with 1Q of last fiscal year with the exception of Asia Pacific region. Due to current economic conditions, IDC is experiencing longer sales cycles, as many clients are delaying or downsizing purchasing decisions.

Gross profit was $2.5 million in Q1 fiscal 2010, representing 49% of revenues, compared to $2.6 million, or 47% of revenues, in Q1 fiscal 2009. Gross margins were positively affected by the product mix and increased manufacturing efficiencies. Management continues to work to improve gross margins over the long-term, but expects margins to continue to fluctuate with product mix and project timing on a quarterly basis.

Overall operating expenses for Q1 fiscal 2010 were $3.3 million, compared to $2.9 million in Q1 fiscal 2009. In the second half of fiscal 2009, IDC increased its investment in operations to better support its long-term strategic growth initiatives, particularly by increasing headcount in sales and research and development.

Selling, General and Administrative (SG&A) expenses were $2.0 million in Q1 fiscal 2010, compared to $1.8 million in Q1 fiscal 2009. IDC's SG&A expense tends to be seasonally higher in Q1, as the Company incurs a greater proportion of industry trade show expenses during the quarter. Research and Development (R&D) costs were $1.0 million in fiscal 2010, compared to $0.8 million in Q1 fiscal 2009. Management is monitoring expenses, but continues to believe that an increased level of investment is required to maintain the Company's competitive position and successfully drive growth over the long-term. In fiscal 2010, management expects operating expenses as a percentage of revenue to fluctuate on a quarterly basis with revenues.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was $(0.6) million in fiscal 2010, compared to $(0.0) million in Q1 fiscal 2009. The year-over-year decrease was due to lower revenues, increased expenses and a larger net foreign exchange loss in Q1 fiscal 2010 compared to Q1 fiscal 2009. (Please see note on Non-GAAP Financial Information below.)

In Q1 fiscal 2010, the Company recorded a net loss of $0.8 million, or $0.01 per share, compared to a net loss of $0.2 million, or $0.00 per share, in Q1 fiscal 2009.

IDC's cash balance was $7.1 million at April 30, 2009, compared to $7.6 million at January 31, 2009, with $ 0.1 million of cash applied to operating activities in Q1 fiscal 2010, compared to $0.5 million of cash applied to operating activities in Q1 fiscal 2009. The Company remains free of long-term debt and has unused bank credit lines totaling $2 million.

A complete set of audited financial statements and management's discussion and analysis for the three months ended April 30, 2009 will be available at [ www.sedar.com ] or on the Investor Information section of IDC's website at [ www.datacast.com ].

Conference Call

A conference call will be held on Tuesday, June 9, 2009 at 9:00 a.m. ET to discuss this announcement. The call may be accessed by dialing 416-644-3417 or 1-800-732-6179. A taped replay will be available for one week by dialing 416-640-1917 or 1-877-289-8525, reference number 21307338#. To access the live webcast, please visit the Company's website at [ www.datacast.com ] or [ www.newswire.ca ] for directions.

Use of Non-GAAP Financial Information

Non-GAAP measures, such as EBITDA, are provided to enhance the overall understanding of our current financial performance and our prospects for the future. Specifically, we believe non-GAAP results provide useful information to both management and investors by excluding specific expenses we believe are not indicative of our core operating results. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with generally accepted accounting principles.

EBITDA (earnings before interest, taxes, depreciation and amortization) is not a recognized measure under Canadian generally accepted accounting principles (GAAP), does not have standardized meaning, and is unlikely to be comparable to similar measures used by other companies. Accordingly, investors are cautioned that EBITDA should not be construed as an alternative to revenue, net earnings or loss determined in accordance with GAAP as an indicator of the financial performance of the Company or as a measure of the Company's liquidity and cash flows.

About International Datacasting Corporation (IDC)

International Datacasting Corporation (TSX:IDC) is a global leader in providing advanced solutions for the distribution of broadband content via satellite. IDC is at the forefront of delivering IP-based datacasting solutions via satellite and content distribution technologies with installations in more than 100 countries worldwide. IDC's products are in demand for radio and television broadcast networks, distance learning, digital signage, digital cinema, IPTV distribution and other content distribution applications. IDC is headquartered in Ottawa, Canada, operates in Europe through its wholly owned subsidiary PROFline B.V. in Arnhem, the Netherlands and has an established international network of value-added partners and distributors.

This press release contains forward-looking statements that may involve risks and uncertainties. Actual results may differ materially. Factors that might cause a difference include, but are not limited to, competitive developments, risks associated with IDC's growth, the development of the satellite datacasting market, regulatory risks, intellectual property infringement and other factors. IDC assumes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect IDC's financial and business results is included in the public documents IDC files from time to time with Canadian securities regulatory authorities.

International Datacasting Corporation
Consolidated Balance Sheet as at
 April 30, January 31, 
 2009 2009
ASSETS
Current Assets
 Cash $7,064,709 $7,554,296
 Amounts receivable 5,146,919 6,903,984
 Income tax receivable 117,968 171,766
 Inventories 3,655,383 4,250,698
 Prepaid expenses 462,843 487,073
 Future tax asset 583,537 583,537
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Total Current Assets 17,031,359 19,951,354

Equipment 3,018,079 3,113,279
Held-for-trading investment 100,505 -
Available-for-sale investment 375,000 -
Future tax asset long term portion 2,911,463 2,911,463
Intangible assets 775,416 852,957
Goodwill 2,491,030 2,491,030
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 9,671,493 9,368,729

 $26,702,852 $29,320,083
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LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
 Accounts payable and accrued 
 liabilities $2,763,643 $4,376,113
 Other liabilities - 7,800
 Obligations under capital leases - 
 current portion 118,459 147,827
 Deferred revenue 318,074 691,326
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Total Current Liabilities 3,200,176 5,223,066
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Long Term Liabilities
 Obligations under capital leases 155,533 176,473
 Future tax liability 155,083 217,504
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Total Long Term Liabilities 310,616 393,977
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Total Liabilities 3,510,792 5,617,043
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Shareholders' equity
 Capital stock 22,904,113 22,829,784
 Contributed surplus 2,730,802 2,680,871
 Accumulated other comprehensive income 360,625 176,440
 Accumulated deficit (2,803,480) (1,984,055)
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Total Shareholders' Equity 23,192,060 23,703,040
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 $26,702,852 $29,320,083
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International Datacasting Corporation
Unaudited Consolidated Statement of Operations and
Comprehensive Loss
For The Three Months Ended
 April 30, April 30,
 2009 2008

Revenue $5,110,203 $5,622,527

Cost of revenue 2,625,909 3,005,753
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Gross profit 2,484,294 2,616,774
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Operating expenses
Selling, general and administrative 1,960,451 1,763,999
Research and development, net of
 investment tax credits 1,032,057 811,713
Amortization 322,087 307,395
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 3,314,595 2,883,107
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Operating loss (830,301) (266,333)
Interest income (expense)
 Long-term (5,818) (19,041)
 Short-term 16,315 29,320
Unrealized gain on revaluation of
 held-for-trading investment 48,608 -
Foreign exchange (loss) (108,423) (59,696)
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Loss before income taxes (879,619) (315,750)
Income tax recovery 60,194 98,390
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Net loss $(819,425) $(217,360)
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Other comprehensive income

Unrealized gain on revaluation of
 available-for-sale investment $176,897 $-
Unrealized gain on translation of self
 sustaining foreign operations 7,288 78,387
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Other comprehensive income 184,185 78,387
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Comprehensive (loss) $(635,240) $(138,973)
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Net loss per share
Basic $(0.01) $(0.00)
Diluted $(0.01) $(0.00)

Weighted average number of
shares outstanding
 Basic 56,740,719 56,358,621
 Diluted 58,289,004 59,938,856



International Datacasting Corporation
Consolidated Statement of Cash Flows
for the three months ended
 April 30, April 30, 
 2009 2008

Operating Activities
 Net loss $(819,425) $(217,360)
 Add items not requiring an outlay 
 of cash:
 Amortization 322,087 307,396
 Bad debt expense 41,759 -
 Unrealized gain on revaluation of
 held-for-trading investment (48,608) -
 Future income taxes (62,421) (19,773)
 Stock-based compensation 67,849 46,403
Net change in operating components of
 working capital 408,875 (627,673)
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Cash (applied to) operating activities (89,884) (511,007)
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Investing activities
 Additions to equipment (147,089) (298,180)
 Purchase of held-for-trading investment (51,897) -
 Purchase of available-for-sale investment (198,103) -
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Cash (applied to) investing activities (397,089) (298,180)
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Financing activities
Bank loan repayments - (971,978)
Repayments of obligations under capital
 leases (50,308) (55,941)
Issue of common shares, net of issue costs 56,411 (1,537)
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Cash provided by (applied to) financing
 activities 6,103 (1,029,456)
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Effect of foreign exchange rate changes on
 cash (8,717) 36,521

(Decrease) in cash during the period (489,587) (1,802,122)

Cash - Beginning of period 7,554,296 7,842,443
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Cash - End of period $7,064,709 $6,040,321
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Interest paid 5,818 36,806
Equipment purchased under capital lease - 24,841
Capital lease obligations assumed - (24,841)
Income taxes paid 2,227 -