International Datacasting Corporation
TSX : IDC

International Datacasting Corporation

September 08, 2008 16:30 ET

International Datacasting Corporation Announces Fiscal 2009 Second Quarter Financial Results

Attn: Business/High-Tech Editors

OTTAWA, ONTARIO--(Marketwire - Sept. 8, 2008) - 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 second quarter ended July 31, 2008. All figures are stated in Canadian dollars.

Second Quarter Fiscal 2009 Highlights

- Revenue for the quarter was $8.9 million, an increase of 60% from the $5.6 million recorded in the second quarter of fiscal 2008.

- Gross Margin was 42%, compared to 58% for the same period last year.

- EBITDA was $1.2 million, an increase of 67% from $0.7 million in Q2 2008.

- Net income was $999,530 or $0.02 per share in Q2 2009, up from $450,278 or $0.01 per share in the same quarter from the previous year.

Year-to-Date Fiscal 2009 Highlights

- Revenue for the first six months of fiscal 2009 was $14.6 million, an increase of 28% from the $11.4 million recorded a year earlier.

- Gross Margin was 44% in the first half of the year, compared to 53% for the same period last year.

- EBITDA for the six months was $1.2 million, an increase of 4% from the $1.1 million reported a year earlier.

- Net income increased to $782,171 from $505,823 with earnings per share remaining consistent at $0.01 per share over the year.

"We are pleased to report a strong second quarter with improvements in both revenues and profitability," said Ron Clifton, President and CEO of IDC. "The quarter was dominated by a large order for our new high-speed data product, and we also won business from new and existing customers in our other vertical markets. We received repeat orders for our IPTV products, new business from a large US defense contractor, and new orders for next-generation radio networks in Europe and Asia. We also pushed forward with our digital cinema agenda this quarter, formalizing our exclusive worldwide agreement with Sensio Technology, shipping the first Live 3D Sensio systems to AccessIT for their network in the USA and winning initial orders from two new service providers in Europe. Although we have seen variations in quarterly results this year, and there is still some uncertainty in the US economy, we are pleased that at the half way point of fiscal 2009 we have already achieved approximately 60% of our total annual revenues for last year."

Operational Highlights

The focus of IDC's manufacturing resources in the second quarter was on completing the bulk of a $6 million order that had been announced earlier this year. In addition the Company won and shipped new orders in each of the broadcast video, broadcast data, and broadcast radio markets, as demand remains strong for its satellite-based broadband distribution solutions.

Financial Review

Revenues were $8.9 million for the second quarter of fiscal 2009 compared to $5.6 million a year earlier, an increase of 60%. The growth was led by the introduction of a new product in the Satellite Equipment segment, for which the majority of a $6 million order was fulfilled during the second quarter.

Gross profit was $3.8 million in the second quarter of 2009, representing 42% of revenues, compared to $3.3 million or 58% of revenues a year earlier. Margins were impacted by higher than anticipated costs associated with the introduction of a new product which was shipped in large volume during the quarter. Pricing for this product will be adjusted to correct for this on future orders.

The Company expects short term variations in gross margin and revenue due to product mix and the timing and nature of large orders throughout the year. Management does not consider the gross margin to be representative of any overall negative trend going forward.

Overall operating expenses were $2.9 million compared to $2.7 million in the second quarter 2008, as the Company increased spending to support a higher volume of business, but reduced operating expenses as a percentage of total revenue for the quarter. Selling, general and administrative (SG&A) expenses increased to $1.8 million from $1.7 million, primarily due to added staff and commission expenses associated with higher revenue. Research and development spending rose to $0.8 million from $0.7 million. Management expects increased spending rates to continue as IDC continues to invest in developing new products and markets to grow the business.

Earnings before interest, taxes, depreciation and amortization (EBITDA) increased to $1.2 million in the second quarter 2009, from $0.7 million in the second quarter of fiscal 2008. The increase is mainly attributed to the large product order in the quarter. (Please see note on Non-GAAP Financial Information below.)

Net earnings increased to $1.0 million in the second quarter, or $0.02 per share, up from $0.5 million or $0.01 per share a year earlier.

Operating cash flow of $2.7 million enabled IDC to increase its cash balance to $8.6 million at July 31, 2008 from $6.0 million at April 30, 2008. The company remains free of term debt.

A complete set of unaudited financial statements and management's discussion and analysis for the three and six months ended July 31, 2008 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 Monday, September 8, 2008 at 5:00 pm EDT to discuss this announcement. The call may be accessed by dialing 416-644-3416 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 21282111#. 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 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

July 31, 2008 January 31, 2008
(Unaudited)
Assets
Current assets
Cash and cash equivalents $8,591,020 $7,842,443
Accounts receivable 6,680,002 8,310,120
Inventories 4,098,818 2,547,142
Prepaid expenses 602,474 373,280
Future tax asset 213,297 301,125
Income taxes recoverable 98,145 34,190
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Total current assets 20,283,756 19,408,300

Plant and equipment 3,152,994 3,074,510
Future tax asset - long term portion 1,985,083 1,862,375
Intangible assets 1,008,039 1,163,127
Goodwill 2,491,030 2,491,030
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8,637,146 8,591,042
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$28,920,902 $27,999,342
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Liabilities and shareholders'
equity
Current liabilities
Accounts payable and accrued
liabilities $5,576,655 $5,103,315
Other liabilities 5,055 4,662
Amounts on deposit 4,949 4,881
Obligations under capital leases -
current portion 188,263 204,598
Term loan - current portion - 628,333
Deferred revenue 1,259,715 705,990
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Total current liabilities 7,034,637 6,651,779
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Long term liabilities
Obligations under capital leases 195,463 259,854
Term loan - long term portion - 343,645
Future tax liability 263,642 296,597
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Total long term liabilities 459,105 900,096
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Total liabilities 7,493,742 7,551,875
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Shareholders' equity
Capital stock 22,784,897 22,779,088
Contributed surplus 2,631,119 2,547,811
Accumulated other comprehensive income 205,659 97,254
Accumulated deficit (4,194,515) (4,976,686)
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Total shareholders' equity 21,427,160 20,447,467
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$28,920,902 $27,999,342
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International Datacasting Corporation
Unaudited Consolidated Statement of Operations
and Comprehensive Income
For The Six Months Ended

July 31, 2008 July 31, 2007

Revenue $14,554,827 $11,351,858

Cost of revenue 8,175,935 5,376,414
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Gross profit 6,378,892 5,975,444
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Operating expenses
Selling, general and administrative 3,597,143 3,375,616
Research and development,
net of investment tax credits 1,619,787 1,223,845
Amortization 586,397 465,637
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5,803,327 5,065,098
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Operating income 575,565 910,346
Interest income (expense)
Long-term (32,042) (38,839)
Short-term 82,726 (14,973)
Foreign exchange gain (loss) on
forward exchange contract (102,347) -
Foreign exchange gain (loss) 117,825 (241,689)
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Earnings before income taxes 641,727 614,845
Income tax (provision) recovery 140,444 (109,022)
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Net earnings $782,171 $505,823
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Other comprehensive income

Unrealized gain (loss) on translation
of self sustaining foreign operations $108,405 $(91,820)
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Other comprehensive income 108,405 (91,820)
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Comprehensive income $890,576 $414,003
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Net earnings per share
Basic $0.01 $0.01
Diluted $0.01 $0.01

Weighted average number of
shares outstanding
Basic 56,371,362 43,256,163
Diluted 59,580,079 44,677,054




International Datacasting Corporation
Unaudited Consolidated Statement of Operations and
Comprehensive Income
For The Three Months Ended

July 31, 2008 July 31, 2007

Revenue $8,932,300 $5,583,916

Cost of revenue 5,170,182 2,325,617
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Gross profit 3,762,118 3,258,299
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Operating expenses
Selling, general and administrative 1,833,145 1,741,166
Research and development, net of
investment tax credits 808,074 732,250
Amortization 279,002 232,966
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2,920,221 2,706,382
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Operating income 841,897 551,917
Interest income (expense)
Long-term (13,001) (18,528)
Short-term 53,406 (10,355)
Foreign exchange gain (loss) on
forward exchange contract (102,347) -
Foreign exchange gain (loss) 177,521 (69,593)
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Earnings before income taxes 957,476 453,441
Income tax (provision) recovery 42,054 (3,163)
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Net earnings $999,530 $450,278
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Other comprehensive income

Unrealized gain (loss) on translation
of self sustaining foreign operations $30,018 $(105,242)
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Other comprehensive income 30,018 (105,242)
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Comprehensive income $1,029,548 $345,036
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Earnings per share
Basic $0.02 $0.01
Diluted $0.02 $0.01

Weighted average number of
shares outstanding

Basic 56,383,826 43,256,163
Diluted 58,910,921 44,918,378





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

July 31, 2008 July 31, 2007

Operating Activities
Net earnings $782,171 $505,823
Add items not requiring an outlay
of cash:
Amortization 586,397 465,637
Future income taxes (32,955) -
Stock-based compensation 85,755 77,017
Net change in operating components
of working capital 793,471 (2,407,519)
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Cash provided by (applied to)
operating activities 2,214,839 (1,359,042)
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Investing activities
Additions to plant and equipment (468,426) (223,675)
Payments on PROFline acquisition - (319,601)
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Cash (applied to) investing activities (468,426) (543,276)
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Financing activities
Bank loan repayments (971,978) (150,001)
Capital lease payments (105,567) (72,357)
Issue of common shares 6,713 98,343
Share issue costs (3,350) -
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Cash (applied to) financing
activities (1,074,182) (124,015)
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Effect of foreign exchange rate
changes on cash 76,346 (101,700)
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Increase (Decrease) in cash and cash
equivalents during period 748,577 (2,128,033)

Cash and cash equivalents -
Beginning of period 7,842,443 3,228,166
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Cash and cash equivalents -
End of period $8,591,020 $1,100,133
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Supplemental cash flow information
Net interest received (paid) 50,684 (55,622)
Plant and equipment purchased under
capital lease 24,841 -
Capital lease obligations assumed (24,841) -




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

July 31, 2008 July 31, 2007
Operating Activities
Net earnings $999,530 $450,278
Add items not requiring an
outlay of cash:
Amortization 279,002 232,966
Future income taxes (13,182) -
Stock-based compensation 39,352 37,908
Net change in operating components
of working capital 1,421,144 (2,007,896)
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Cash provided by (applied to)
operating activities 2,725,846 (1,286,744)
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Investing activities
Additions to plant and equipment (170,247) (135,523)
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Cash (applied to) investing activities (170,247) (135,523)
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Financing activities
Bank loan repayments - (25,001)
Capital lease payments (49,626) (36,581)
Issue of common shares 4,900 97,281
Share issue costs - -
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Cash (applied to) financing activities (44,726) 35,699
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Effect of foreign exchange rate changes
on cash 39,826 (111,818)
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Increase (Decrease) in cash and cash
equivalents during period 2,550,699 (1,498,386)

Cash and cash equivalents -
Beginning of period 6,040,321 2,598,519
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Cash and cash equivalents -
End of period $8,591,020 $1,100,133
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Supplemental cash flow information
Net interest received 40,405 12,658
Plant and equipment purchased under
capital lease - -
Capital lease obligations assumed - -


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