Miranda Technologies Inc.
TSX : MT

Miranda Technologies Inc.

May 10, 2006 06:01 ET

Miranda reports first quarter results

MONTREAL, May 10 - Miranda Technologies Inc. (TSX:MT), a
global developer, manufacturer and marketer of high-performance hardware and
software for the television broadcast industry, today reported results for the
first quarter of its fiscal year 2006, ended March 31.



Highlights
----------

- At $24.1 million, sales increased 37% year-over-year for the quarter
- Adjusted EBITDA(1) reached $5.0 million at 21% of sales
- Net earnings were $3.4 million, an increase of 77% year-over-year
- Fully diluted net earnings per share stood at $0.14 versus $0.10 in
Q1-2005


In the first quarter, which is historically a seasonally slower quarter
for the Company, sales were $24.1 million, an increase of $6.5 million or 37%
over the same period last year. This rise in sales, which surpassed the 32%
year-over-year growth rate registered in the last quarter of 2005, continues
to be the result of the increasing adoption of the Company's products and
solutions. The accelerating transition to HDTV (High Definition Television),
the greater penetration of the US market and the success met by Miranda's
infrastructure products all contributed to the growth.

Sales increased in all regions, but were particularly successful in
Europe and Asia where the year-over-year growth rate was 48% and 89%
respectively.

Net earnings were $3.4 million compared with $1.9 million in the
corresponding period in 2005. Earnings per share (EPS) on a fully diluted
basis were $0.14 compared with $0.10 in the same period in 2005.

Adjusted EBITDA, which the Company considers to be an appropriate measure
of its performance, also increased during the quarter.



Reconciliation of net income to Adjusted EBITDA

Three Months Ended March 31
(In thousands of Canadian dollars) 2006 2005
-------------------------------------------------------------------------

Net income 3,398 1,920
Interest (445) 158
Taxes 1,483 953
Depreciation 401 372
Amortization of intangible assets 459 459
-------------------------------------------------------------------------
EBITDA before undernoted items 5,296 3,862
Previous years' investment tax credit
recorded in period - (1,000)
Other non recurring items (300) -
-------------------------------------------------------------------------
Adjusted EBITDA 4,996 2,862
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Adjusted EBITDA was $5.0 million in the quarter compared with
$2.9 million in the first quarter of 2005, an increase of 75%. The Adjusted
EBITDA margin, expressed as a percentage of sales, grew to 21% in the first
quarter against 16% in the first quarter of the previous year. This growth was
achieved through growth in sales and control of operating expenses. Selling,
general and administrative expenses increased by $1.5 million or 26% in the
first quarter of 2006 compared with the corresponding quarter in 2005 due to
sales growth and the recording of expenses related to operating as a public
company. Research and development expenses increased by $0.7 million or 26%
year-over-year. Net earnings were also positively impacted by a $0.4 million
net interest income in the quarter versus a $0.2 million net interest expense
recorded in the first quarter of 2005. This change is attributable to the
company debt repayment at the end of 2005 and the accumulation of interest on
cash balances in the first quarter of 2006. Finally, a $0.4 million foreign
exchange gain recorded in the first quarter of 2006, versus a foreign exchange
loss of $0.3 million in the previous year's first quarter, also contributed to
the positive year-over-year comparison.

"We are pleased with the results of the first quarter; a period of the
year where our market is characteristically quieter. Overall, we have
continued to see a growing demand for "HD-ready" products across all our
ranges, and from an increasingly diverse base of customers," said Mr. Strath
Goodship, Miranda's President and Chief Executive Officer. "We are also
encouraged by the buoyancy of Asian and European business, particularly in
some of our newer markets such as China and the Middle East," added
Mr. Goodship. "Innovation is at the centre of our success and we have
accelerated our investment in R&D. We have announced several innovative
products at the National Association of Broadcasters convention in April, as
well as a strategic acquisition, that will further our competitive position in
each of our product segments.", he concluded.

As mentioned, growth was achieved in all territories served by the
Company. Sales increases in the quarter reached 49% when adjusted for the
exchange rate variation. This variation was due to the strengthening of the
Canadian dollar against the US dollar, the Euro, the British pound and the
Yen, currencies that have declined versus the Canadian dollar in the first
quarter. The variation in the exchange rate negatively impacted Miranda's
sales by $2.0 million in the first quarter 2006.

The quarter also produced positive cash flows. The Company generated
$4.2 million from operating activities compared with a $1.3 million use of
cash in the corresponding period in 2005. At the end of the first quarter
2006, the Company's cash position stood at $62.3 million, representing a
$3.6 million increase over the year-end 2005 level.

Following the end of the quarter, on April 22, Miranda announced the
acquisition of VertigoXmedia, a privately held, Montréal-based manufacturer of
high-end graphics automation software and systems, for an approximate price of
Cdn$11 million, subject to closing conditions. Those conditions were met and
the transaction was completed on May 2. This acquisition complements and
strengthens Miranda's already successful suite of playout branding products
and reinforces its competitive edge in the midst of the current large-scale
high definition (HD) upgrade taking place in the broadcast industry worldwide.

Forward-looking Statements

This press release contains forward-looking statements reflecting
Miranda's objectives, estimates and expectations. Such statements may be
marked by the use of verbs such as 'believe', 'anticipate', 'estimate',
'looking ahead' and 'expect' as well as the use of conditional or future
tense. By their very nature, such statements involve risks and uncertainty.
Consequently, results could differ materially from the Company's expectations.
For detailed information with respect to risk factors affecting Miranda's
business, please refer to our annual information form under the heading "Risk
Factors", which is available on SEDAR at www.sedar.com. The forward-looking
statements contained in this press release represent our current expectations
and, accordingly, are subject to change. However, we disclaim any intention
and assume no obligation to update or revise any forward-looking statements,
whether as a result of new information or events or otherwise.

Conference Call

Miranda Technologies Inc. will hold a conference call with financial
analysts to present its first quarter 2006 results today at 2:00 p.m. (Eastern
Time). Those interested should call (514) 940-2795 (Montréal or overseas) or
1 800 814-4862 (elsewhere in North America). The call can also be accessed via
a direct broadcast site at the following addresses: www.miranda.com and www.q1234.com.

Those unable to participate can hear a recording of the call by dialing
1 877 289-8525 and entering the code 21180961(pound key) on the telephone
keypad. This recording will be accessible from 5:00 p.m. on Wednesday, May 10,
2006 until 11:59 p.m. on Wednesday, May 17, 2006. The webcast of the
conference call will also be available during a period of 60 days at
www.miranda.com and www.q1234.com.

Annual Meeting of Shareholders

Miranda will hold its first Annual Meeting of Shareholders since becoming
a public company, this morning at 10:00 a.m., in the Oval Ballroom of the
Ritz-Carlton Hotel, 1228 Sherbrooke Street West, Montréal.

About Miranda

Miranda Technologies Inc. (TSX: MT) develops, manufactures and markets
high-performance hardware and software for the television broadcast industry.
Its solutions are purchased by content creators, broadcasters, specialty
channels and television service providers to enable and enhance the transition
to a complex multi-channel digital and HDTV broadcast environment. This
equipment allows customers to generate additional revenue while reducing costs
through the more efficient distribution and management of content as well as
the automation of previously manual processes. Miranda employs over 400 people
at its Montréal headquarters and in its offices located in Wallingford (UK),
Paris (France), Tokyo (Japan), Hong Kong, Beijing (China) and Springfield (New
Jersey). Miranda became a public company in December 2005 and is listed on the
Toronto Stock Exchange. For more information, please visit www.miranda.com.

The selected consolidated financial information set out below for the
first quarter of the fiscal year ending December 31, 2006 is unaudited,
presented in Canadian dollars and prepared in accordance with Canadian
generally accepted accounting principles. The following information should be
read in conjunction with our interim unaudited consolidated financial
statements and notes related thereto which have been filed on SEDAR.



-----------------------------------
(1) The Company uses Adjusted EBITDA (earnings before interest, taxes,
depreciation and amortization) to compare performance from one period to
another. In doing so, it excludes certain items (interest, taxes,
depreciation and amortization) as well as restructuring and other
non-recurring items which it views as outside its core operating results.
Adjusted EBITDA is not an earnings measure recognized by Canadian
generally accepted accounting principles (GAAP) and does not have a
standardized meaning prescribed by GAAP. Our method of calculating
Adjusted EBITDA may differ from the method used by other issuers and,
accordingly, our Adjusted EBITDA may not be comparable to similarly
titled measures used by other issuers. (See reconciliation of net income
to Adjusted EBITDA below).


Consolidated Balance Sheets
(In thousands of dollars)

-------------------------------------------------------------------------
-------------------------------------------------------------------------
March 31, December 31,
2006 2005
-------------------------------------------------------------------------
(Unaudited) (Audited)
Assets

Current assets:
Cash and cash equivalents $62,287 $58,664
Accounts receivable 13,905 17,201
Inventories 11,773 9,281
Income taxes receivable 3,840 3,287
Prepaid expenses 822 805
Future income taxes 1,365 1,519
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93,992 90,757

Capital assets 12,492 12,139
Intellectual property 153 612
Future income taxes 2,928 4,643

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$109,565 $108,151
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-------------------------------------------------------------------------


Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and accrued charges $14,527 $16,006
Deferred revenues 2,141 2,182
Income taxes payable 2,254 1,845
Future income taxes - 814
-------------------------------------------------------------------------
18,922 20,847

Deferred revenues 685 590
Future income taxes 1,909 2,148

Shareholders' equity:
Share capital (note 2) 107,611 107,611
Contributed surplus (note 2) 616 531
Deficit (20,178) (23,576)
-------------------------------------------------------------------------
88,049 84,566

Contingencies (note 3)
Subsequent event (note 5)
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$109,565 $108,151
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See accompanying notes to unaudited consolidated financial statements.


Consolidated Statements of Income
(Unaudited)

Three-month periods ended March 31, 2006 and 2005
(In thousands of dollars, except per share amounts)

-------------------------------------------------------------------------
-------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------
Sales $24,101 $17,558

Cost of sales 9,741 6,602
-------------------------------------------------------------------------
14,360 10,956

Operating expenses:
Selling, general and administrative 7,086 5,636
Research and development 3,567 2,842
Research and development tax credits (550) (1,375)
Interest (445) 158
Foreign exchange (gain) loss (423) 297
Stock-based compensation 85 66
Amortization of intangible assets 459 459
-------------------------------------------------------------------------
9,779 8,083

Other revenue (300) -

-------------------------------------------------------------------------
Income before income taxes 4,881 2,873

Income taxes:
Current 667 708
Future 816 245
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1,483 953

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Net income $ 3,398 $ 1,920
-------------------------------------------------------------------------
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Net earnings per share (note 2 (c)):
Basic $ 0.14 $ 0.11
Diluted 0.14 0.10
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Basic weighted average number of shares
outstanding 23,951,855 17,838,717
Diluted weighted average number of shares
outstanding 25,051,052 19,100,886
-------------------------------------------------------------------------
-------------------------------------------------------------------------

See accompanying notes to unaudited consolidated financial statements.


Consolidated Statements of Deficit
(Unaudited)

Three-month periods ended March 31, 2006 and 2005
(In thousands of dollars)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------

Deficit, beginning of year $(23,576) $(38,862)

Net income 3,398 1,920

-------------------------------------------------------------------------
Deficit, end of year $(20,178) $(36,942)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

See accompanying notes to unaudited consolidated financial statements.


Consolidated Statements of Cash Flows
(Unaudited)

Three-month periods ended March 31, 2006 and 2005
(In thousands of dollars)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------

Cash flows from operating activities:
Net income $ 3,398 $ 1,920
Adjustments for:
Capitalized interest on long-term debt - 23
Depreciation of capital assets 401 372
Amortization of intangible assets 459 459
Stock-based compensation 85 66
Gain on disposal of investment (100) -
Future income taxes 816 245
Unrealized loss on foreign exchange - 9
Effect of exchange rates on cash and cash
equivalents (89) (41)
-------------------------------------------------------------------------
4,970 3,053

Net change in operating working capital items (782) (4,385)
-------------------------------------------------------------------------
4,188 (1,332)

Cash flows from financing activities:
Repayment of long-term debt - (950)

Cash flows from investing activities:
Additions to capital assets (754) (397)
Proceeds from sale of investment 100 -
-------------------------------------------------------------------------
(654) (397)

Effect of exchange rates on cash and cash
equivalents 89 41

-------------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents 3,623 (2,638)

Cash and cash equivalents, beginning of year 58,664 13,615

-------------------------------------------------------------------------
Cash and cash equivalents, end of year $62,287 $10,977
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Cash and cash equivalents are comprised of:
Cash $ 9,072 $ 2,306
Cash equivalents 53,215 8,671

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$62,287 $10,977
-------------------------------------------------------------------------
-------------------------------------------------------------------------

See accompanying notes to unaudited consolidated financial statements.


Notes to Consolidated Financial Statements
(Unaudited)

Three-month periods ended March 31, 2006 and 2005
(In thousands of dollars, except per share amounts)
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Miranda Technologies Inc. (the "Company") was amalgamated under Part 1A
of the Companies Act (Québec). The Company develops, manufactures and markets
high performance solutions for the television broadcast industry.

1. Basis of presentation:

The accompanying unaudited interim consolidated financial statements of
the Company have been prepared in accordance with Canadian generally accepted
accounting principles on a basis consistent with those followed in the most
recent audited annual consolidated financial statements. These unaudited
interim consolidated financial statements do not include all information and
note disclosures required by Canadian generally accepted accounting principles
for annual financial statements, and, therefore, should be read in conjunction
with the December 31, 2005 audited consolidated financial statements and the
notes thereto.

2. Share capital:

(a) Issued and paid share capital:



-------------------------------------------------------------------------
-------------------------------------------------------------------------
March 31, December 31,
2006 2005
-------------------------------------------------------------------------

23,951,855 common shares $107,611 $107,611
-------------------------------------------------------------------------
-------------------------------------------------------------------------


(b) Stock option plan:

The Company established a stock option plan to attract, retain and
provide an incentive to the employees, directors, officers and consultants, by
providing these persons with the opportunity, through stock options, to
acquire an ownership interest in the Company. The current stock option plan
was adopted in June 2003 to replace prior plans and has been amended and
restated in November 2005 to conform to applicable securities rules and
practices for public companies. The stock option plan is administered by the
Board of Directors. The Board of Directors may determine, in accordance with
the terms of the stock option plan, the terms relating to each option,
including the number of shares subject to each option, exercise price and
expiration date of each option and the extent to which each option is
exercisable during the term of the option. The term of an option granted after
November 2005 cannot exceed 5 years (10 years under the previous plan) and
will usually be vested over three years. All of the options granted pursuant
to the stock option plan before the November 2005 amendment have vested upon
closing of the initial public offering of the Company.

A total of 2,395,185 common shares are reserved for issuance upon
exercise of options issued under the stock option plan. As a result, a total
of approximately 10% of the outstanding capital is reserved for issuance upon
exercise of all options or issuable under the stock option plan. After taking
into account issued and cancelled options, 734,527 common shares are available
for issuance under this stock option plan.

The following table summarizes information on stock options outstanding
at March 31, 2006:



-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted
Number average
of exercise
options price
-------------------------------------------------------------------------

Balance, beginning of year 1,286,444 $ 2.37

Granted 374,000 16.54

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Balance, end of year 1,660,444 $ 5.56
-------------------------------------------------------------------------
-------------------------------------------------------------------------

The outstanding options at March 31, 2006 are presented in the table
below:

-------------------------------------------------------------------------
-------------------------------------------------------------------------
Number of Number of Residual
outstanding vested life
Exercise price options options (years)
-------------------------------------------------------------------------

$1.71 791,444 791,444 7.3
$1.71 120,000 120,000 8.3
$3.96 200,000 200,000 8.9
$3.96 175,000 175,000 9.2
$16.46 324,000 - 5.0
$17.08 50,000 - 5.0

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1,660,444 1,286,444
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Compensation cost charged against income was $85 for the period ended
March 31, 2006 (2005 - $66). The offsetting credit has been recorded as
contributed surplus.

The fair value of the stock options was estimated using the Black-Scholes
option pricing model using the following assumptions:

-------------------------------------------------------------------------
-------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------

Risk-free interest rate 3.25% 4.0%
Dividend yield 0% 0%
Expected life 5 years 5 years
Expected volatility 31.31% 0%
Weighted average fair value of each
option at grant date $ 5.99 $ 0.71
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(c) Earnings per share:

The following table provides the reconciliation between basic and diluted
earnings per share:

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-------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------

Net income $ 3,398 $ 1,920
-------------------------------------------------------------------------
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Weighted average number of common shares
outstanding 23,951,855 17,838,717
Dilutive effect:
Employees stock options 1,099,197 1,262,169
Weighted average number of diluted common
shares outstanding 25,051,052 19,100,886

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Basic earnings per share $ 0.14 $ 0.11
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Diluted earnings per share $ 0.14 $ 0.10
-------------------------------------------------------------------------
-------------------------------------------------------------------------

3. Contingencies:

A complaint alleging patent infringement was filed in the United States
against the Company on September 29, 2005. Based on the Company's review and
the assessment of preliminary reports from its legal counsel in the United
States, the Company believes that it has meritorious defenses to the complaint
and intends to vigorously defend its case in court.

Also, a number of legal proceedings against the Company are still
outstanding. In the opinion of the management of the Company, the outcome of
these proceedings is not expected to have a material effect on the Company's
results or its financial position.

4. Segmented information:

The Company determined that it operates in a single reportable segment,
the broadcast equipment segment, and it derives its revenues from the sale of
hardware and software solutions including related services, training and
commissioning.

-------------------------------------------------------------------------
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March 31, March 31,
Sales 2006 2005
-------------------------------------------------------------------------

America $12,606 $10,372
Europe, Middle East, Africa ("EMEA") 7,554 5,099
Asia 3,941 2,087

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$24,101 $17,558
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Capital assets and March 31, December 31,
intellectual property 2006 2005
-------------------------------------------------------------------------

Capital Intellectual Capital Intellectual
assets property assets property
-------------------------------------------------------------------------

America $11,610 $ - $11,442 $ -
EMEA 816 153 672 612
Asia 66 - 25 -

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$12,492 $ 153 $12,139 $ 612
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Sales are attributed to the geographic locations based on the location of
the customers.


5. Subsequent event:

On April 22, 2006, the Company announced the acquisition of VertigoXmedia
for an approximate purchase price of $11 million in cash, subject to closing
conditions. Those conditions were met and the transaction was completed on
May 2, 2006. VertigoXmedia is a privately-held, Montréal-based manufacturer of
high-end graphics automation software and systems and a recognized innovator
in this field. The transaction will add a powerful suite of software workflow
and graphics capabilities to the Company's existing playout branding products.

Contact Information

  • Investors: René Vachon, Executive Vice
    President & CFO, Miranda Technologies Inc., (514) 333-1772; Media: Jean
    Walter, Vice President, MaisonBrison/BarnesMcInerney, Capital Market
    Communications, (514) 731-0000; Source: Miranda Technologies Inc.