Vecima Networks Inc.
TSX : VCM

Vecima Networks Inc.

September 27, 2006 16:30 ET

VCom Revenue Increases 27% Year over Year

VICTORIA, BRITISH COLUMBIA--(CCNMatthews - Sept. 27, 2006) - VCom Inc. (TSX:VCM) today announced that its 2006 fiscal year financial statements and Management's Discussion and Analysis for the year ended June 30, 2006 have been filed on the SEDAR system. The highlights provided in this press release should be read in conjunction with the Company's final prospectus dated November 3, 2005, relating to our initial public offering of shares, and our audited annual consolidated financial statements and accompanying notes for the years ended June 30, 2006 and June 30, 2005. Our audited annual consolidated financial statements and accompanying notes for the year ended June 30, 2006 are available at:

http://www.vcom.com/invest/latest_finan.html.

The webcast can be viewed at:

http://services.choruscall.com/links/vcom060927.html

All dollar amounts are in Canadian dollars. This is VCom's first annual report filed as a public company.

FINANCIAL HIGHLIGHTS

- Total revenue for the 2006 fiscal year was $80.0 million, representing a 27% increase over revenue for the fiscal year ended June 30, 2005.

- Increased productivity and economies of scale allowed the Company to increase sales and maintain gross margin in spite of the 880 basis point appreciation in the average value of the Canadian dollar during the 2006 fiscal year as compared to the previous year. Without the foreign exchange effect and non-recurring items, VCom's year-over-year growth would have exceeded 40% in the 2006 fiscal year.

- Gross margin was 38%, within our model of 35 to 39%.

- Net income for the 2006 fiscal year was $10.6 million or $0.50 per share. Excluding the effects of non-cash stock based compensation expense, adjusted net income for the 2006 fiscal year was $11.6 million or $0.55 per share. As stated in our final prospectus, net income for the year ended June 30, 2005 benefited from recognition of unearned revenue on the termination of an OEM supply contract. Excluding the effect of non-cash stock based compensation expense and that non-recurring event in the 2005 fiscal year, our adjusted net income of $11.6 million this fiscal year represents an increase of 32% over the adjusted net income for the fiscal year ended June 30, 2005.

- Shareholders' equity almost doubled in the year ended June 30, 2006 to $76.4 million as compared to $38.5 million at June 30, 2005. The increase was a result of operating profits and successful completion of our initial public offering.

OPERATIONAL HIGHLIGHTS

- VCom continues to make progress in introducing new products in digital video markets while controlling operational expenses. Operating expenses in the year ended June 30, 2006 were 20% of total revenue (excluding the 1% of sales in non-cash stock-based compensation).

- VCom ended the fiscal year with 593 employees, representing a 20% increase from the 495 personnel at June 30, 2005.

- The fourth quarter of fiscal year 2006 was the second three-month period in which YourLink reported a positive EBITDA, which contributed to an improvement in consolidated EBITDA.

- On July 1st, the day after the Company's 2006 fiscal year ended, it acquired WaveRider Communications (Canada) Inc. for a total consideration of $1.6 million. This transaction will result in an estimated extraordinary gain of $6.7 million or $0.32 per share in the first quarter of our 2007 fiscal year.

- Total research and development costs net of deferrals, amortization of deferred development costs and income tax credits for the year ended June 30, 2006 were $7.6 million, or 9% of revenue, an increase of 106% from the $3.7 million, or 6% of revenue, for the year ended June 30, 2005. The increased expenditures for research and development reflect VCom's fulfillment of commitments in its prospectus dated November 3, 2005 to increase its expenditures in this area.

- At the conclusion of fiscal 2006 VCom had evaluation orders for WiMAX gear in place with 7 customers, 4 WiMAX field trials worldwide, and discussions were in the advanced stages for an additional 11 field trials and evaluation orders. The company signed a major distributor agreement with MRO-TEK for the deployment of 3.5 GHz WiMAX networks throughout India. Four of these agreements or field trials are targeted at large nationwide broadband infrastructure deployments and initiatives.

- In fiscal 2006, VCom's CableVista Edge decoder received approval from Cox, Adelphia and other major MSOs.

On November 14, 2005, the Company successfully completed its initial public offering of 3,335,000 common shares at a purchase price of $7.50 per share for gross proceeds of $25,012,500. On November 25, 2005, our underwriters exercised their over-allotment option by purchasing an additional 500,250 common shares (of which 225,250 were issued by VCom and 275,000 were sold by its principal shareholders) at $7.50 per share. The Company's common shares began trading on November 14, 2005 on the Toronto Stock Exchange under the symbol "VCM".

About VCom

We design, manufacture and sell products that enable broadband access to cable, wireless and telephony networks. Our hardware products incorporate embedded software developed by us to meet the complex requirements of next-generation, high-speed digital networks. Service providers use our solutions to deliver services to a converging worldwide broadband market, including what are commonly known as "triple play" (voice, video and data) and "quadruple play" (voice, video, data and wireless) services. Our solutions allow service providers to rapidly and cost-effectively bridge the final network segment that connects a system directly to end-users, commonly referred to as "the last mile", by overcoming the bottleneck resulting from insufficient carrying capacity in legacy last-mile infrastructures. Visit VCom at www.vcom.com.

Forward-Looking Statements

This news release contains forward-looking statements which are not historical facts, but are based on certain assumptions and reflect VCom's current expectations. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including those detailed under "Risk Factors" in Management's Discussion and Analysis for the fiscal year ended June 30, 2006, a copy of which is available on SEDAR at www.sedar.com. Except as required by law, VCom disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

Contact Information

  • VCom Inc.
    Mike Barry
    VCom's Chief Financial Officer
    (250) 881-1982
    Website: www.vcom.com