International Datacasting Corporation
TSX : IDC

International Datacasting Corporation

April 26, 2010 17:40 ET

International Datacasting Corporation Announces Fiscal 2010 Fourth Quarter and Year End Results

OTTAWA, ONTARIO--(Marketwire - April 26, 2010) - International Datacasting Corporation (TSX:IDC), a leader in providing advanced solutions for the distribution of broadband content via satellite, announced its financial results for the three- and 12-month periods ended January 31, 2010. All figures are in Canadian dollars unless otherwise stated.

Fiscal 2010 Financial Summary

  • Revenue was $23.3 million, compared to $29.1 million for fiscal 2009.
  • Gross margin was 43%, compared to 47% last year.
  • EBITDA(1) was negative ($1.5 million), compared to $2.6 million for fiscal 2009.
  • Net loss was $6.6 million, or $0.12 per share, compared to earnings of $3.0 million, or $0.05 per share, for fiscal 2009.

Q4 Fiscal 2010 Financial Summary

  • Revenue was $6.9 million, compared to $6.4 million in Q4 fiscal 2009.
  • Gross margin was 40%, compared to 57% in Q4 fiscal 2009.
  • EBITDA(1) was negative ($1.1 million), compared to $ 0.7 million in Q4 fiscal 2009.
  • Net loss was $2.9 million, or $.05 per share, compared to earnings of $1.6 million, or $.03 per share, in Q4 fiscal 2009.

"Fiscal 2010 was a challenging year for IDC as the economic downturn led to an industry-wide reduction in capital expenditures," said Frederick Godard, President and CEO, International Datacasting Corporation. "I believe that IDC's core technology offering, which was strengthened through the purchase of additional product lines last year, offers significant potential for growth and we are actively pursuing these opportunities."

"Going forward, we are focused on profitability and we are taking measures to increase our gross margins and to further streamline our operations in order to improve operational efficiencies." "We are uniquely positioned for the market opportunities that are available to us, including the roll out of digital cinema, IPTV and 3D live events," Mr. Godard concluded.

Fiscal 2010 Financial Review

The Corporation's consolidated revenues decreased by 20% from $29.1 million in fiscal 2009 to $23.3 million in fiscal 2010. Revenues for the Satellite Equipment segment decreased 22% from $26.5 million in fiscal 2009 to $20.6 million in fiscal 2010. Without the sales from the newly acquired Tiernan and Logic Innovations product lines, the Satellite Equipment segment revenues would have declined by $9.3 million or 35%. In fiscal 2009 the Corporation had a single order that accounted for 23% of Satellite Equipment revenue while in fiscal 2010 no order accounted for an equal percentage of revenue. Absent this order for comparative purposes, the Satellite Equipment revenues would have declined by $3.2 million or 12%.

The Corporation attributes this decline to a continued slowdown in capital equipment spending in this fiscal year resulting from the current global economic situation and is expecting further potential volatility on a quarterly basis due to order timing as the markets continue to adjust.

Included in Satellite Equipment segment sales was revenue from Tiernan and Logic Innovations' products of $3.2 million and $0.2 million respectively in fiscal 2010. The Broadcast Services segment's revenues increased 8% from $2.5 million in fiscal 2009 to $2.7 million in fiscal 2010. The increase in Broadcast Services revenue is due to the introduction of new services that resulted from the segment's contract renewal that occurred in December 2008, and the Corporation expects this increased level of service revenue to continue for the remainder of the contract.

Gross profit for fiscal 2010 was $10.0 million, or 43% of revenues, compared to $13.8 million, or

47% of revenues, in fiscal 2009. The year-over-year decline was primarily due to one-time costs the Company incurred in the second half of the year related to transitioning Tiernan product manufacturing to IDC's outsourced facilities, as well as a revaluation of existing Tiernan inventory as required by accounting rules. Excluding the impact of the acquisition of the Tiernan product lines, gross profit for fiscal 2010 was $9.3 million, or 46% of revenue.

Primarily as a result of the addition of staff related to the Company's acquisition of the Tiernan and Logic Innovations product lines, IDC realized an increase in operating expenses. In particular, fiscal 2010 Selling, General and Administrative expenses increased to $8.3 million from $7.8 million in fiscal 2009, and Research and Development expenses increased to $4.4 million from $3.4 million in fiscal 2009.

In fiscal 2010, IDC realized a net loss of $6.6 million or $0.12 per share, which included a $2.5 million non-cash goodwill impairment that the Company recorded in Q2 fiscal 2010. This is compared to net earnings of $3.0 million, or $0.05 per share for fiscal 2009.

Cash used in operating activities for fiscal 2010 was $0.4 million, compared to $1.6 million in cash generated by operating activities in fiscal 2009. As at January 31, 2010, IDC had cash of $4.7 million and working capital of $11.8 million, compared to $7.6 million in cash and working capital of $14.7 million as at January 31, 2009.

A complete set of financial statements and management's discussion and analysis for the three and 12 months ended January 31, 2010 will be available at www.sedar.com or on the Investor Information section of IDC's website at www.datacast.com.

International Datacasting Corporation          
Consolidated Balance Sheets as at            
  January 31, 2010   January 31, 2009  
ASSETS            
Current Assets            
  Cash $ 4,675,868   $ 7,554,296  
  Amounts receivable   6,171,603     6,903,984  
  Income tax receivable   -     171,766  
  Inventories (Note 4)   5,260,362     4,250,698  
  Prepaid expenses and other assets - current portion   527,228     426,989  
  Future tax asset (Note 14)   40,672     583,537  
Total Current Assets   16,675,733     19,891,270  
   
Equipment (Note 5)   2,724,108     3,113,279  
Prepaid expenses - long term portion   142,102     60,084  
Future tax asset long term portion (Note 14)   2,059,328     2,911,463  
Intangible assets (Note 6)   542,792     852,957  
Goodwill (Notes 10 and 19)   399,925     2,491,030  
Total Non-Current Assets   5,868,255     9,428,813  
   
Total Assets $ 22,543,988   $ 29,320,083  
   
LIABILITIES AND SHAREHOLDERS' EQUITY            
Current Liabilities            
  Accounts payable and accrued liabilities $ 4,238,427   $ 4,376,113  
  Customer deposits   78,745     -  
  Other liabilities (Note 16)   1,814     7,800  
  Obligations under capital leases - current portion (Note 13)   83,542     147,827  
  Deferred revenue   514,096     691,326  
Total Current Liabilities   4,916,624     5,223,066  
   
Long Term Liabilities            
  Obligations under capital leases (Note 13)   92,930     176,473  
  Future tax liability (Note 14)   108,558     217,504  
Total Non-Current Liabilities   201,488     393,977  
Total Liabilities   5,118,112     5,617,043  
   
Shareholders' Equity            
  Capital stock (Note 8)   22,965,108     22,829,784  
  Contributed surplus   2,999,748     2,680,871  
  Accumulated other comprehensive income   23,277     176,440  
  Accumulated deficit   (8,562,257 )   (1,984,055 )
Total Shareholders' Equity   17,425,876     23,703,040  
   
Total Liabilities and Shareholders' Equity $ 22,543,988   $ 29,320,083  
International Datacasting Corporation                        
Consolidated Statements of Operations and Comprehensive Income                    
   
    Year Ended     Three months ended  
  January 31, 2010   January 31, 2009   January 31, 2010   January 31,2009  
Revenue $ 23,324,239   $ 29,060,599   $ 6,882,587   $ 6,431,288  
Cost of revenue   13,366,762     15,278,327     4,124,217     2,790,518  
Gross profit   9,957,477     13,782,272     2,758,370     3,640,770  
Operating expenses                        
Selling, general and administrative   8,333,366     7,765,188     2,398,950     1,936,695  
Research and development, net of investment tax credits (Note   4,392,053     3,361,556     1,382,241     927,226  
Amortization   1,229,286     1,206,999     307,442     331,236  
Goodwill impairment (Note 19)   2,491,030     -     -     -  
    16,445,735     12,333,743     4,088,633     3,195,157  
Operating (loss) income   (6,488,258 )   1,448,529     (1,330,263 )   445,613  
Interest income (expense)                        
  Long-term   (20,426 )   (47,567 )   (4,738 )   (6,986 )
  Short-term   64,436     157,593     13,137     34,045  
Realized gain on sale of available-for-sale investment   437,384     -     -     -  
Realized gain on sale of held-for-trading investment   427,038     -     -     -  
Foreign exchange (loss)   (95,529 )   (79,451 )   20,696     (102,222 )
(Loss) earnings before income taxes and extraordinary income   (5,675,355 )   1,479,104     (1,301,168 )   370,450  
Income tax (expense) recovery (Note 14)   (1,375,554 )   1,513,527     (1,464,079 )   1,248,761  
(Loss) earnings before extraordinary income   (7,050,909 )   2,992,631     (2,765,247 )   1,619,211  
Extraordinary income (Note 9)   472,707     -     (119,179 )   -  
Net (loss) earnings $ (6,578,202 ) $ 2,992,631   $ (2,884,426 ) $ 1,619,211  
Other comprehensive (loss) income                        
Unrealized gain on revaluation of available-for-sale investment arising during the year  
$
 
446,897
 
 
 
$
 
-
 
 
 
$
 
-
 
 
 
$
 
-
 
 
Reclassification adjustment for gains included in net income   (446,897 )   -     -     -  
Change in unrealized gain on available-for-sale investment   -     -     -     -  
Unrealized (loss) gain on translation of self sustaining                        
foreign operations   (153,163 )   79,186     (202,647 )   (98,417 )
Other comprehensive (loss) income   (153,163 )   79,186     (202,647 )   (98,417 )
   
Comprehensive (loss) income $ (6,731,365 ) $ 3,071,817   $ (3,087,073 ) $ 1,520,794  
Net (loss) earnings per share                        
Basic $ (0.12 ) $ 0.05   $ (0.05 ) $ 0.03  
Diluted $ (0.12 ) $ 0.05   $ (0.05 ) $ 0.03  
Net (loss) earnings per share before extraordinary income                        
Basic $ (0.12 ) $ 0.05   $ (0.05 ) $ 0.03  
Diluted $ (0.12 ) $ 0.05   $ (0.05 ) $ 0.03  
Weighted average number of shares outstanding  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Basic (Note 18)   56,803,972     56,384,415     56,948,283     56,392,413  
  Diluted (Note 18)   56,803,972     59,055,942     56,948,283     57,436,921  
       
See accompanying notes to consolidated financial statements                        
                         
                         
                         
International Datacasting Corporation                        
Consolidated Statements of Cash Flows                        
    Year ended     Three months ended  
  January 31,
2010
  January 31,
2009
  January 31, 2010   January 31, 2009  
   
Operating Activities                        
  Net (loss) earnings $ (6,578,202 ) $ 2,992,631   $ (2,884,426 ) $ 1,619,211  
  Add items not requiring an outlay of cash:                        
  Goodwill impairment   2,491,030     -     -     -  
  Amortization   1,229,286     1,206,999     307,442     331,236  
  Loss on disposal of equipment   -     2,494     -     2,494  
  Gain on sale of available-for-sale investment   (437,384 )   -     -     -  
  Gain on sale of held-for-trading investment   (427,038 )   -     -     -  
  Future income taxes   1,286,054     (1,410,593 )   1,379,491     (1,235,584 )
  Stock-based compensation   357,290     149,927     78,971     27,540  
  Extraordinary income   (472,707 )   -     119,179     -  
Net change in operating components of working capital net of effects of business acquisition of Tiernan (Note 17)  
 
 
2,170,572
 
 
 
 
 
(1,335,336
 
)
 
 
 
874,264
 
 
 
 
 
(305,608
 
)
   
Cash (applied to) provided by operating activities   (381,099 )   1,606,122     (125,079 )   439,289  
   
Investing activities                        
Additions to equipment   (413,157 )   (833,039 )   (62,779 )   (115,552 )
Proceeds on disposition of available-for-sale investment   635,487     -     -     -  
Proceeds on disposition of held-for-trading investment   624,778     -     -     -  
Business acquisition of Tiernan   (2,257,900 )   -     (387,765 )   -  
Business acquisition of Logic Innovations   (579,810 )   -     (579,810 )   -  
Purchase of available-for-sale investment   (198,103 )   -     -     -  
Purchase of held-for-trading investment   (197,740 )   -     -     -  
   
Cash applied to investing activities   (2,386,445 )   (833,039 )   (1,030,354 )   (115,552 )
   
Financing activities                        
Bank loan repayments   -     (971,978 )   -     -  
Repayments of obligations under capital leases   (147,828 )   (218,337 )   (20,619 )   (58,299 )
Issue of common shares, net of issue costs   96,911     33,829     40,500     30,466  
   
Cash applied to financing activities   (50,917 )   (1,156,486 )   19,881     (27,833 )
   
Effect of foreign exchange rate changes on cash   (59,967 )   95,256     (39,269 )   51,246  
   
Decrease in cash during the year   (2,878,428 )   (288,147 )   (1,174,821 )   347,150  
   
Cash - Beginning of year   7,554,296     7,842,443     5,850,689     7,207,146  
   
Cash - End of year $ 4,675,868   $ 7,554,296   $ 4,675,868   $ 7,554,296  
   
Interest paid   20,426     68,286     4,738     7,123  
Equipment purchased under capital lease   -     78,185     -     -  
Capital lease obligations assumed   -     (78,185 )   -     -  
Income taxes paid   4,913     8,087     -     -  
   
See accompanying notes to consolidated financial statements                        

Conference Call

A conference call will be held on Tuesday, April 27, 2010 at 9:00 a.m. ET to discuss this announcement. The call may be accessed by dialing 647-427-7450 or 1-888-231-8191. A taped replay will be available for one week by dialing 416-849-0833 or 1-800-642-1687 reference number 69700748. To access the live webcast, please visit the Company's website at www.datacast.com or www.newswire.ca for directions.

About International Datacasting Corporation (IDC)

International Datacasting Corporation (TSX:IDC) is a global leader in providing IP-based datacasting solutions for the distribution of broadband multimedia content. IDC has a broad portfolio of advanced technology products marketed under the names SuperFlex, Datacast XD, Tiernan, Logic Innovations and PROFline for implementing a wide range of satellite and other broadband content contribution and distribution networks. IDC's products are in demand for radio and television broadcast networks, distance learning, digital satellite news gathering and sport contribution, 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 in the US through its

operations in San Diego, California. The Company is international in scope with installations in over 100 countries worldwide, has regional sales and service offices in the UK, Australia, Singapore and China as well as an established international network of value-added partners and distributors.

(1)Use of Non-GAAP Financial Information

Non-GAAP measures, such as EBITDA and backlog, 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.

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, any difficulties with integrating acquired product lines into IDC's business and/or manufacturing procedures, 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.

Contact Information

  • International Datacasting Corporation
    Tracy Trottier
    Marketing Communications
    613-596-4120 x 2274
    ttrottier@datacast.com