International Datacasting Corporation

International Datacasting Corporation

June 09, 2008 16:30 ET

International Datacasting Corporation Announces Fiscal 2009 First Quarter Financial Results

OTTAWA, ONTARIO--(Marketwire - June 9, 2008) - International Datacasting Corporation (TSX:IDC), a global leader in providing advanced solutions for the distribution of broadband content via satellite, announced its financial results for the first quarter ended April 30, 2008. All figures are stated in Canadian dollars.

First Quarter Fiscal 2009 Highlights

- Revenue for the quarter was $5.6 million, a decrease of 3% from the $5.8 million recorded in the first quarter of fiscal 2008.

- Gross Margin was 47%, up from 32% in the fourth quarter of fiscal 2008 and equal to the 47% gross margin of Q1 2008.

- EBITDA was ($18,634), compared to $419,005 a year earlier.

- Net income was ($217,000) or $0.00 per share in Q1 2009, compared to $56,000 or $0.00 per share in the same quarter from the previous year.

- IDC released new products in the digital cinema, IPTV and radio broadcasting markets and participated in several major industry tradeshows.

"First quarter revenues were similar to last year but fell short of our expectations, resulting in our first net loss in the past eight quarters," said Ron Clifton, President and CEO of IDC. "While we expect to see some short term variability in our results, I am very encouraged by the progress we made during the quarter towards our long-term objectives. We saw a recovery in gross margins, continued to invest in our growth, and won a $6 million order. Final approval for that major order came late in April, and therefore the major contributions to our revenues and bottom line will occur during the second and third quarters."

Mr. Clifton continued: "We continued in this quarter to make progress in winning new customers and expanding our applications, especially in IPTV and digital cinema. Bidding and order activity remain robust and we have stepped up our marketing and trade show activities, along with new product releases, to address these expanding opportunities. The fundamentals of our business remain strong and we plan to continue our aggressive investments in new product development and marketing to grow the Company and our market share."

Operational Review

During the first quarter IDC delivered on its mandate to be a provider of leading edge technology by releasing several products for IPTV, Digital Cinema, and professional radio networks. The IDC digital cinema solution was showcased in February with long-time customer and market leader AccessIT broadcasting a live basketball game to cinemas courtesy of Disney. In April, IDC announced the European debut of the SuperFlex Pro Cinema 3D Live product line in conjunction with partner Sensio and this technology was also showcased at the annual National Association of Broadcasters exhibition. The Company was also an invited speaker and exhibited IPTV products for the European market in London, England in March.

In February, IDC announced that it was selected to provide the next generation of satellite edge receivers to TVN Entertainment Corporation, the world's largest television on-demand company. In addition, IDC also partnered with a leading professional radio broadcast company in New Zealand to modernize the radio network for RadioWorks, part of the Mediaworks NZ group of companies.

Financial Review

Revenues were $5.6 million in the first quarter of fiscal 2009, a decrease of $145,000 or 3% from the $5.8 million recorded a year earlier. Revenues were impacted by the increase in the value of the Canadian dollar compared to the U.S. dollar over the past year. Using the average first quarter 2008 exchange rate for historical comparison purposes only, the Corporation's revenues would have increased by $455,000 or 8%.

Gross profit was $2.6 million in the first quarter, representing 47% of revenues, compared to $2.7 million or 47% of revenues a year earlier. The increase in gross margin over the 32% margin reported in the fourth quarter of 2008 represented a return to historic margin levels. The Company expects short term variations in revenue and gross margin due to product mix and the timing of large orders throughout the year.

Overall operating expenses were $2.9 million compared to $2.4 million in Q1 2008. Selling, general and administrative (SG&A) expenses increased from $1.6 million to $1.8 million, primarily due to an increase in staff as well as trade show and advertising costs associated with company growth. Research and development spending increased from $0.5 million to $0.8 million primarily due to additional engineering headcount. Management expects to maintain both SG&A and R&D costs at similar levels to the Q1 2009 amount as IDC continues to invest aggressively in the continued growth of the business and the development of new products and applications.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was ($18,634) in Q1 2009, compared to $419,005 in the first quarter of fiscal 2008. EBITDA was impacted by both the reduced revenue and the increase in operating expenses. (Please see note on Non-GAAP Financial Information below.)

Net loss was $217,000 in the first quarter, or $0.00 per share, compared to net income of $56,000 or $0.00 per share a year earlier. The decrease was mostly attributable to lower than expected revenues caused by the late authority to ship a new product as discussed above, and by increased investment in growth.

IDC had a cash balance of $6.0 million at April 30, 2008, compared to $7.8 million at January 31, 2008. The Company improved its balance sheet and reduced future interest expenses through the retirement of nearly $1 million of term loans during the first quarter, leaving IDC with no term debt.

A complete set of unaudited financial statements and management's discussion and analysis for the quarter ended April 30, 2008 will be available at or on the Investor Information section of IDC's website at

Conference Call

A conference call will be held on Monday, June 9, 2008 at 5:00 pm EDT to discuss this announcement. The call may be accessed by dialing 416-644-3414 or 1-800-733-7560. A taped replay will be available for one week by dialing 416-640-1917 or 1-877-289-8525, reference number 21273811#. To access the live webcast, please visit the Company's website at or for directions.

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.

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,
2008 2008

Current assets

Cash and cash equivalents $6,040,321 $7,842,443
Amounts receivable 6,528,595 8,310,120
Inventories 3,082,841 2,547,142
Prepaid expenses 531,402 373,280
Future tax asset 367,570 301,125
Income taxes recoverable 99,979 34,190
Total current assets 16,650,708 19,408,300

Plant and equipment 3,181,251 3,074,510

Future tax asset - long term portion 1,795,930 1,862,375

Intangible assets 1,085,580 1,163,127

Goodwill 2,491,030 2,491,030
8,553,791 8,591,042

$25,204,499 $27,999,342

Liabilities and shareholders' equity

Current liabilities

Accounts payable and accrued liabilities $3,408,521 $5,103,315
Other liabilities - 4,662
Amounts on deposit 4,868 4,881
Obligations under capital leases - current
portion 203,810 204,598
Term loan - current portion - 628,333
Deferred revenue 727,577 705,990
Total current liabilities 4,344,776 6,651,779

Long term liabilities

Obligations under capital leases 229,539 259,854
Term loan - long term portion - 343,645
Future tax liability 276,824 296,597
Total long term liabilities 506,363 900,096
Total liabilities 4,851,139 7,551,875

Shareholders' equity

Capital stock 22,778,420 22,779,088
Contributed surplus 2,593,345 2,547,811
Accumulated other comprehensive income 175,641 97,254
Accumulated deficit (5,194,046) (4,976,686)
Total shareholders' equity 20,353,360 20,447,467
$25,204,499 $27,999,342

International Datacasting Corporation
Unaudited Consolidated Statement Of Operations
For The Three Months Ended

April 30, 2008 April 30, 2007

Revenue $5,622,527 $5,767,942

Cost of revenue 3,005,753 3,050,796

Gross profit 2,616,774 2,717,146

Operating expenses
Selling, general and administrative 1,763,999 1,634,450
Research and development, net of
investment tax credits 811,713 491,595
Amortization 307,395 232,671

2,883,107 2,358,716

Operating income (loss) (266,333) 358,430
Interest income (expense)
Long-term (19,041) (20,311)
Short-term 29,320 (4,618)
Foreign exchange gain (loss) (59,696) (172,096)
Earnings (loss) before income taxes (315,750) 161,405
Income tax provision (recovery) (98,390) 105,859

Net earnings (loss) $(217,360) $55,546

Earnings (loss) per share
Basic $(0.00) $0.00
Diluted $(0.00) $0.00

Weighted average number of sharesOutstanding
Basic 57,268,621 42,813,398
Diluted 59,938,856 44,102,495

International Datacasting Corporation
Unaudited Consolidated Statement of Cash Flows
For The Three Months Ended

April 30, 2008 April 30, 2007

Operating Activities
Net earnings (loss) $(217,360) $55,546
Add items not requiring an outlay of cash:
Amortization 307,396 232,671
Future income taxes (19,773) -
Stock-based compensation 46,403 39,109
Net change in operating components of
working capital (627,673) (399,624)

Cash (applied to) operating activities (511,007) (72,298)

Investing activities
Additions to plant and equipment (298,180) (88,152)
Payments on PROFline acquisition - (319,601)

Cash (applied to) investing activities (298,180) (407,753)

Financing activities
Bank loan repayments (971,978) (125,001)
Repayments of capital lease obligation (55,941) (35,776)
Issue of common shares 1,813 1,062
Share issue costs (3,350) -

Cash (applied to) financing activities (1,029,456) (159,715)

Effect of foreign exchange rate changes
on cash 36,521 10,119
(Decrease) in cash during period (1,802,122) (629,647)

Cash - Beginning of period 7,842,443 3,228,166

Cash - End of period $6,040,321 $2,598,519

Supplemental cash flow information
Interest received 10,279 42,964
Plant and equipment purchased under
capital lease 24,841 -
Capital lease obligations assumed (24,841) -

Contact Information