Vecima Networks Inc.
TSX : VCM

Vecima Networks Inc.

November 14, 2006 16:30 ET

Vecima Networks Reports Healthy Quarter

VICTORIA, BRITISH COLUMBIA--(CCNMatthews - Nov. 14, 2006) - Vecima Networks Inc. (TSX:VCM), formerly VCom Inc., today announced that its unaudited Financial Statements and Management's Discussion and Analysis for the three months ended September 30, 2006 have been filed on SEDAR. The highlights provided in this press release should be read in conjunction with the Company's Annual Report and Annual Information Form, both dated September 27, 2006 and our unaudited interim consolidated financial statements and accompanying notes for the three months ended September 30, 2005.

Our unaudited interim consolidated financial statements and accompanying notes for the quarter ended September 30, 2006 are available at: http://www.vecimanetworks.com/invest/latest_finan.html

All dollar amounts are in Canadian dollars. This is the Company's first earnings report as Vecima Networks Inc., a name that was approved as our new corporate identity at the Annual and Special Meeting of shareholders held yesterday in Victoria. The Company's stock symbol on the TSX, VCM, remains unchanged.

FINANCIAL HIGHLIGHTS

- Total revenue for the fiscal 2007 first quarter was $20.1 million, representing a 14% increase over total revenue for the three month period ended September 30, 2005. Excluding the appreciation effects of the Canadian dollar, Vecima's growth would have been in the order of 22% comparing total revenue for the same periods.

- Net income in the first quarter of the 2007 fiscal year, including an extraordinary gain, was $8.3 million or 37 cents per share up 245% over the $2.4 million, or 13 cents per share for the three months ended September 30, 2005. Our acquisition of WaveRider (Canada) Inc. in July contributed the extraordinary gain of $6.5 million or 29 cents per share. Net income before the extraordinary gain was $1.7 million or 8 cents per share for the first quarter of our 2007 fiscal year.

- On October 27, the Toronto Stock Exchange accepted Vecima's Notice of Intent to launch a Normal Course Issuer Bid (the "Bid") to acquire for cancellation, up to 500,000 Common Shares of the Corporation, representing approximately 2.2% of the issued and outstanding Common Shares of the Corporation. The Bid will commence on November 1, 2006 and terminate on October 31, 2007.

- On November 13, 2005, the Company declared a special dividend of 4 cents per share payable on December 15, 2006 to shareholders of record on December 1, 2006.

OPERATIONAL HIGHLIGHTS

- Vecima experienced a somewhat 'lumpy' quarter in the three months ended September 30, 2006 that resulted in a 9% decrease in total revenue compared to the fourth quarter of our 2006 fiscal year. We have seen increased orders and have achieved growth momentum. We continue to believe that our sales for the year ending June 30, 2007 will show revenue growth in the 20% to 30% range.

- Gross margin was 35%, within our traditional model.

- Shareholders' equity increased 11% in the three months ended September 30, 2006 to $85.0 million as compared to $76.4 million at June 30, 2006. The increase was a result of operating profits and acquisition of WaveRider.

- Vecima employs 600 personnel as of September 30, 2006, an increase of 17% from 513 personnel a year earlier.

- Operating expenses in the three months ended September 30, 2006 were 24% of total revenue (excluding the 1% of sales in non-cash stock-based compensation) as we more than doubled our research and development expenditures and increased our sales and marketing expenses by 58%. We increased our GAAP research and development costs as a percentage of sales to 9% in the three months ended September 30, 2006 from 5% in the three months ended September 30, 2005. The increase in research and development expenses pushed up our operating cost level by four percentage point to 24% of sales (excluding stock-based compensation expense). This is an increase from the level of 20% of total revenue for the three months ended September 30, 2005.

- In the first quarter of fiscal 2007, Vecima's CableVista Edge decoder received approval from a major Multiple Service Operator in the United States.

About Vecima Networks (formerly VCom)

Vecima Networks Inc. designs, manufactures and sells products that enable broadband access to cable, wireless and telephony networks. Vecima's hardware products incorporate original embedded software to meet the complex requirements of next-generation, high-speed digital networks. Service providers use Vecima's 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. Vecima's solutions allow service providers to rapidly and cost-effectively bridge the final network segment that connects the 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. Vecima's products are directed at three principal markets: Data over Cable, Broadband Wireless and Digital Video. The Company has also developed and continues to focus on developing products to address emerging markets such as Voice over Internet Protocol, fibre to the home and IP video.

At its Annual and Special meeting on November 13, 2006, the Company's shareholders approved the proposed change in corporate identity from VCom to Vecima Networks.

Vecima's website is at: www.vecimanetworks.com

Forward-Looking Statements

Certain statements in this news release may constitute forward-looking statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this news release, such statements are generally identified by the use of such words as "may", "will", "expect", "believe", "plan", "intend" and other similar terminology. These statements reflect Vecima's current expectations regarding future events and operating performance and speak only as of the date of this news release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors including, but not limited to, the factors discussed under "Risk Factors" in the Company's Annual Information Form dated September 27, 2006 available on SEDAR (www.sedar.com), could cause actual results to differ materially from the results discussed in the forward-looking statements. Although the forward-looking statements contained in this news release are based upon what management of the Company believes are reasonable assumptions, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this news release, and the Company assumes no obligation to update or revise them to reflect new events or circumstances.

Contact Information

  • Vecima Networks Inc.
    Mike Barry
    Vecima's Chief Financial Officer
    (250) 881-1982
    or
    Vecima Networks Inc.
    Alan Brick
    Vecima's Investor Relations Officer
    (250) 881-1982
    Email: invest@vecimanetworks.com