Miranda Technologies Inc.
TSX : MT

Miranda Technologies Inc.

February 19, 2008 16:05 ET

Miranda Reports Results for the Fourth Quarter and Fiscal Year Ended December 31, 2007

MONTREAL, QUEBEC--(Marketwire - Feb. 19, 2008) - 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 fourth quarter and its 2007 fiscal year ended December 31.

Revenue

In the fourth quarter of 2007, sales reached $31.7 million, an increase of 10% compared to the corresponding period in 2006. On a constant currency basis year over year sales increased by 26%, compared with the fourth quarter of 2006. Relative to the same year ago period, foreign currency fluctuations negatively impacted the Company's revenue by $4.6 million or 16% of revenue.

For the full year, sales reached $112.2 million, a 5% increase over last year. On a constant currency basis the sales increase was 11% ahead of last year; foreign currency fluctuations negatively impacted the Company's revenue by approximately $6 million or 6% of revenue.

"In the fourth quarter of 2007, we continued to witness the impact of our accelerating product introductions and targeting of specific regions", said Strath Goodship, President and CEO of Miranda. "All product lines have shown growth in the quarter. Our new products such as the Kaleido-X multiviewer, the Vertigo Graphics Series and the Imagestore-750 Master Control have helped us gain market share and boost revenue levels in the second half of the year. We also made important progress in new markets such as Latin America, Eastern Europe and the Middle-East. We are also pleased with our performance in Asia, where sales in 2006 had been under acute pressure."

Gross Margin

Gross margin as a percentage of sales was 56% for the fourth quarter of 2007 compared to 64% in 2006. For the full year, the gross margin decreased from 61% in 2006 to 56% this year. The sharp decline of the US dollar has affected gross margin by 1.4 percentage points for the year. Gross margin was also affected by aggressive pricing in new markets, increased sales to large customers and a different product mix.

Operating Expenses

Operating expenses in the fourth quarter were higher than expected mostly due to a foreign exchange loss compared with a gain in the same quarter last year and a one-time cost related to the settlement of an intellectual property (IP) litigation. On November 30, 2007 Miranda settled the IP litigation which had been the subject of a complaint against the Company alleging patent infringement, filed in September 2005 in the United States District Court for the Northern District of Illinois Eastern Division. The settlement, for an undisclosed one-time payment, covers all past and future products of Miranda and its affiliates and subsidiaries. The Company spent approximately $4.1 million in 2007 in relation to this matter, including fees related to the preparation for its defence and payment of the agreed settlement amount.

Net Income

EBITDA was $4.9 million in the fourth quarter of 2007, compared to $10.4 million for the same period in 2006. The decrease in EBITDA is for the most part explained by a decrease in gross margin and higher operating expenses. For the year, EBITDA was $16.3 million compared to $28.5 million in 2006.

Net income for the fourth quarter was $3.3 million compared to $7.1 million in the same period last year, translating in fully diluted earnings per share (EPS) of $0.13 compared to $0.28. For the year, fully diluted EPS were $0.38 compared to $0.76 in 2006.

Liquidity and Capital Resources

At December 31, 2007, Miranda had a stronger balance sheet than last year, with working capital of $97.8 million compared to $85.3 million at the end of 2006. Cash, cash equivalents and temporary investments totaled $75 million at the end of 2007, an increase of $12.5 million over the previous year.

The Company's cash, cash equivalents and temporary investments are held in AAA and R1 rated instruments issued mainly by Canadian chartered banks and federal Crown corporations. The Company has no exposure to any asset-backed securities.

Management Changes

In an effort to focus further on acquisitions and strategic alliances, Rene Vachon will be taking on the role of Executive Vice-President, Corporate Development effective February 20, 2008. Mr. Vachon's role of CFO, which he has held since January 2003, will be taken over by Mario Settino, effective the same day.

Mr. Settino is a seasoned professional with over 25 years of financial and operational experience in various industries such as services, manufacturing and high-end technology. Most recently, he was Senior Vice President Finance of Provigo Inc., an operating unit of Loblaw Companies. Prior to this, he held senior financial roles at Bombardier Aerospace and LGS Group (an IBM Company). Mr. Settino is a chartered accountant and began his career at Deloitte.

Mr. Goodship commented: "We have been successful with the acquisition and integration of VertigoXmedia. We now want to accelerate the pace of acquisitions to reinforce our market positioning. I am pleased that Rene has accepted the challenge of this new and key role. It will allow us to put Rene's drive, considerable talents and industry knowledge to this most strategic pursuit. Mario's experience in established and successful organisations will be invaluable in preparing Miranda for further growth."

Outlook

"The past year has been a transition period for Miranda. After a slow start in the first quarter, sales picked up significantly, particularly in the second half of the year, as our new products allowed us to regain momentum. The adoption of HDTV, the emergence of developing regions and special events such as the summer Olympics and the US presidential election should continue to drive growth in the coming year.

We have continued to reinforce the Company with organisational changes, to streamline development, and improve the quality of our products. Special emphasis has been placed in improving customer service and after-sales support. In early 2008, we will be increasing manufacturing capacity in order to lessen our dependence on outsourcing and increase our manufacturing efficiencies and flexibility.

A pause in the appreciation of the Canadian dollar and the settlement of the IP litigation should have a positive impact on operating expenses. All these factors make us believe that Miranda is well positioned heading into 2008." concluded Mr. Goodship.

Conference call

Miranda Technologies Inc. will hold a conference call with financial analysts to present its fourth-quarter 2007 results on February 19 at 5:00 PM (Eastern Time). Those interested should call 514-807-8791 (Montreal or overseas) or 800-733-7571 (elsewhere in North America).

The call can also be accessed via a direct broadcast site at the following addresses: www.miranda.com and www.marketwire.com. The webcast of the conference call will be available for a period of 90 days.

Those unable to participate can hear a recording of the call by dialling 877-289-8525 and entering the code 21258992# on the telephone keypad. This recording will be accessible from 7:00 PM on Tuesday, February 19, 2008 to 11:59 PM on Tuesday, February 26, 2008.

Non-GAAP Financial Measures

We use EBITDA (earnings before interest, taxes, depreciation and amortization) to compare our operating results from one period to another. EBITDA is not an earnings measure recognized by GAAP and does not carry standard prescribed significance for GAAP. Our method for calculating EBITDA may differ from that used by other companies under the same designation. The reader is advised that EBITDA should not be substituted for determining net income as an indicator of operating results in line with GAAP, neither for cash flows from operating and investing activities as a measure of liquidity and cash flows. The financial indicator that conforms with GAAP and is the closest to EBITDA is net income.

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 the conditional or future tense. By their very nature, such statements involve risks and uncertainties. Consequently, results could differ materially from the Company's expectations. Risks that could cause results to differ materially from Miranda's expectations are discussed under the heading Risk Factors in the Company's Annual Information Form, which is available on SEDAR at www.sedar.com. The forward-looking statements contained in this press release represent Miranda's current expectations and, accordingly, are subject to change. However, the Company disclaims any intention and assumes no obligation to update or revise any forward-looking statement, whether as a result of new information or events or otherwise, unless required to do so by the applicable securities legislation.


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 HD broadcast environment. This equipment allows customers to generate additional revenue while reducing costs through more efficient distribution and management of content as well as the automation of previously manual processes. Miranda employs approximately 400 people at its Montreal headquarters and in its facilities located in Wallingford (UK), Springfield (New Jersey, USA), Paris (France), Tokyo (Japan), Beijing (China) and Hong Kong. Miranda 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 fourth quarter of the fiscal year ending December 31, 2007 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 the Company's audited consolidated financial statements and notes thereto, will be filed on SEDAR.



MIRANDA TECHNOLOGIES INC.
Consolidated Balance Sheets

December 31, 2007 and 2006
(In thousands of Canadian dollars)

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2007 2006
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(Unaudited) (Audited)

Assets

Current assets:
Cash and cash equivalents $47,146 $40,378
Temporary investments 27,890 22,179
Accounts receivable 22,442 17,710
Inventories 14,580 15,292
Income taxes and tax credits receivable 4,006 4,238
Prepaid expenses 807 886
Future income taxes - 625
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116,871 101,308

Tax credits receivable 449 1,041
Capital assets 13,656 13,498
Intangible assets 6,186 7,937
Goodwill 3,933 3,933

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$141,095 $127,717
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Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and accrued charges $13,644 $14,649
Deferred revenue 1,958 298
Income taxes payable 740 1,015
Future income taxes 2,738 -
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19,080 15,962

Deferred revenue 2,055 1,040
Future income taxes 477 2,313

Shareholders' equity:
Share capital (note 2) 112,088 111,784
Contributed surplus 2,465 1,216
Retained earnings (deficit) 4,930 (4,598)
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119,483 108,402

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$141,095 $127,717
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See accompanying notes to unaudited consolidated financial
statements.



MIRANDA TECHNOLOGIES INC.
Consolidated Statements of Income
(Unaudited)

Three-month and twelve-month periods ended December 31, 2007 and 2006
(In thousands of Canadian dollars, except per share amounts)

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Three-month Twelve-month
periods ended periods ended
December 31, December 31,
---------------------------------------------------------------------
2007 2006 2007 2006
---------------------------------------------------------------------
Sales $31,702 $28,783 $112,219 $106,675

Cost of sales 13,953 10,317 48,876 41,505
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17,749 18,466 63,343 65,170

Operating expenses:
Selling,
general and
administrative 10,065 6,568 34,408 28,789
Research and
development 3,606 3,950 15,624 15,300
Research and
development tax
credits (894) (915) (3,720) (3,915)
Interest (702) (830) (2,658) (2,268)
Foreign exchange
(gain) loss 221 (1,274) 1,568 (2,302)
Stock-based
compensation 375 308 1,249 744
Amortization of
intangible assets 447 449 1,788 1,809

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Income before
income taxes 4,631 10,210 15,084 27,013

Income taxes:
Current (798) 1,940 3,700 5,210
Future 2,174 1,143 1,903 2,825
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1,376 3,083 5,603 8,035

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Net income $3,255 $7,127 $9,481 $18,978
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Net earnings per share:
Basic $0.13 $0.29 $0.38 $0.78
Diluted 0.13 0.28 0.38 0.76

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Basic weighted average
number of common
shares
outstanding 24,776,157 24,690,529 24,746,867 24,384,951
Diluted weighted
average number
of common shares
outstanding 25,117,690 25,106,554 25,101,422 25,097,351

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See accompanying notes to unaudited consolidated financial
statements.



MIRANDA TECHNOLOGIES INC.
Consolidated Statements of Retained Earnings
(Unaudited)

Three-month and twelve-month periods ended December 31, 2007 and 2006
(In thousands of Canadian dollars)

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Three-month Twelve-month
period ended period ended
December 31, December 31,
---------------------------------------------------------------------
2007 2006 2007 2006
---------------------------------------------------------------------

Retained earnings
(deficit),
beginning of
period $1,675 $(11,725) $(4,598) $(23,576)

Adjustment due to
the new accounting
policies adopted
regarding financial
instruments, net
of income taxes
of $22 - - 47 -

Net income 3,255 7,127 9,481 18,978

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Retained earnings
(deficit), end of
period $4,930 $(4,598) $4,930 $(4,598)
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See accompanying notes to unaudited consolidated financial
statements.



MIRANDA TECHNOLOGIES INC.
Consolidated Statements of Comprehensive Income
(Unaudited)

Three-month and twelve-month periods ended December 31, 2007 and 2006
(In thousands of Canadian dollars)

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Three-month Twelve-month
period ended period ended
December 31, December 31,
---------------------------------------------------------------------
2007 2006 2007 2006
---------------------------------------------------------------------

Net income $3,255 $7,127 $9,481 $18,978

Other comprehensive
income:
Change in fair
value of
available-for-
sale financial
assets - - 7 -

---------------------------------------------------------------------
Comprehensive
income $3,255 $7,127 $9,488 $18,978
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See accompanying notes to unaudited consolidated financial
statements.



MIRANDA TECHNOLOGIES INC.
Consolidated Statements of Cash Flows
(Unaudited)

Three-month and twelve-month periods ended December 31, 2007 and 2006
(In thousands of Canadian dollars)

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Three-month Twelve-month
periods ended periods ended
December 31, December 31,
---------------------------------------------------------------------
2007 2006 2007 2006
---------------------------------------------------------------------

Cash flows from
operating activities:
Net income $3,255 $7,127 $9,481 $18,978
Adjustments for:
Depreciation of
capital assets 513 575 2,105 1,960
Amortization of
intangible assets 447 449 1,788 1,809
Stock-based
compensation 375 308 1,249 744
Future income
taxes 2,174 1,143 1,903 2,825
Other - - - (100)
Effect of exchange
rates on cash
and cash
equivalents 401 (980) 3,004 (1,217)
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7,165 8,622 19,530 24,999
Net change in
operating working
capital items (499) (3,553) (1,751) (9,806)
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6,666 5,069 17,779 15,193

Cash flows from
financing activities:
Repayment of
long-term debt - - - (502)
Reimbursement
of loan granted
to management - - - 2,366
Issuance of common
shares 241 62 304 1,483
Tax benefits
related to the
exercise of stock
options - 265 - 265
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241 327 304 3,612

Cash flows from
investing activities:
Additions to
capital assets (516) (632) (2,263) (3,105)
Proceeds from sale
of investment - - - 100
Additions to
short-term
investments (27,890) (22,179) (5,711) (22,179)
Addition to
other assets (300) - (337) (192)
Business
acquisition
including
bank indebtedness - - - (12,932)
---------------------------------------------------------------------
(28,706) (22,811) (8,311) (38,308)

Effect of exchange
rates on cash and
cash equivalents (401) 980 (3,004) 1,217
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Net (decrease)
increase in cash
and cash
equivalents (22,200) (16,435) 6,768 (18,286)

Cash and cash
equivalents,
beginning of
period 69,346 56,813 40,378 58,664
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Cash and cash
equivalents, end
of period $47,146 $40,378 $47,146 $40,378
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Cash and cash
equivalents are
comprised of:
Cash $26,835 $15,988 $26,835 $15,988
Cash equivalents 20,311 24,390 20,311 24,390
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$47,146 $40,378 $47,146 $40,378
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---------------------------------------------------------------------

See accompanying notes to unaudited consolidated financial
statements.


MIRANDA TECHNOLOGIES INC.
Notes to Consolidated Financial Statements
(Unaudited)

Three-month and twelve-month periods ended December 31, 2007 and 2006
(In thousands of Canadian dollars, except per share amounts)

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Miranda Technologies Inc. (the "Company") was amalgamated under Part 1A of the Companies Act (Quebec). 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, 2007 audited consolidated financial statements and the notes thereto.

Our sales are subject to seasonal fluctuation. Normally, the first quarter of each year is the weakest and sales activity is more evenly spread over the remaining quarters.

2. Share capital:

Issued and paid share capital:



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2007 2006
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24,804,614 common shares (24,706,813 as at
December 31, 2006) $112,088 $111,784
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3. Segmented information:

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



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Three-month Twelve-month
periods ended periods ended
December 31, December 31,
---------------------------------------------------------------------
2007 2006 2007 2006
---------------------------------------------------------------------

Canada $1,708 $3,194 $8,940 $12,315
United States 15,373 14,479 52,117 48,785
Other countries 14,621 11,110 51,162 45,575

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$31,702 $28,783 $112,219 $106,675
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Capital assets, goodwill and December 31,
intangible assets 2007
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Capital Intangible
assets Goodwill assets
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Canada $12,428 $3,933 $6,186
United States 38 - -
Other countries 1,190 - -

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$13,656 $3,933 $6,186
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Capital assets, goodwill and December 31,
intangible assets 2006
---------------------------------------------------------------------

Capital Intangible
assets Goodwill assets
---------------------------------------------------------------------

Canada $12,183 $3,933 $7,937
United States 50 - -
Other countries 1,265 - -

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$13,498 $3,933 $7,937
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Contact Information

  • Miranda Technologies Inc.
    Investors and Media: Mario Settino
    Chief Financial Officer
    514-333-1772