Mitec Telecom announces year-end and fourth quarter results for fiscal 2010
MONTREAL, July 28 /CNW Telbec/ - Mitec Telecom (TSX: MTM) today announced its year-end and fourth quarter results for the 2010 fiscal year, which ended April 30, 2010.
Annual Results
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Annual sales in fiscal 2010 were $25.4 million, compared with $40.3 million in fiscal 2009. The Corporation's net loss for the year was $11.4 million, or $0.05 per share compared with a net loss of $4.6 million, or $0.02 per share in the previous year. These results also include a one-time, non-cash, accounting charge of $2.7 million for goodwill and intangible assets impairment associated with the prior acquisition of the Corporation's U.S. operations. Without this adjustment, Mitec's net loss for the year would have been reduced to $8.7 million.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for fiscal 2010 were negative $6.7 million, compared with negative $0.7 million for fiscal 2009.
Fourth Quarter Results
----------------------
Sales for the fourth quarter of fiscal 2010 were $6.4 million, compared with $6.9 million in fiscal 2009.
The net loss for the quarter was $5.2 million, or $0.02 per share compared with a net loss of $3.1 million, or $0.01 in the fourth quarter of 2009. Results for the quarter also include the one-time, non-cash, accounting charge of $2.7 million referred to in the summary of year-end results above. Without this adjustment, the fourth quarter net loss would have been $2.5 million, compared with a net loss of $2.0 million in the fourth quarter of the previous year.
EBITDA for the quarter was negative $1.8 million compared to negative $1.4 million during the fourth quarter of fiscal 2009.
Management Commentary
---------------------
The period encompassing fiscal 2010 was a challenging period worldwide for companies in the Telecommunications industry. In addition to reacting to the realities that the unprecedented global financial crisis and worldwide recession presented, Mitec had to revisit its sales strategy to adapt to constantly changing requirements from customers having to deal with reduced capital expenditure budgets while at the same time fulfilling the demand that the growth of wireless communication, broadcasting and social networking trends continue to generate.
During the same period, Mitec succeeded in penetrating the Satcom market with a series of new Very Small Aperture Terminal (VSAT) products, which have generated global interest and have been accepted by its customer base as Mitec's standard line of products going forward. Significant R&D and marketing efforts were made during fiscal 2010, which impacted the profitability of this new line of products as the company transitioned out of the legacy product line into the next generation MTX product line, which is now well positioned to deliver long-term, profitable revenues for these products going forward.
The Corporation's San Diego, California based Military division, Keragis Corporation, was also negatively impacted by ongoing budget approval delays which inhibited its backlog. These delays are only now being gradually lifted as military spending budgets are now slowly reaching approval. Nevertheless, Keragis' patented and disruptive Solid State Power Amplifier (SSPA) technology is considered the industry leader for a variety of applications currently being assessed by Keragis.
Management, the board of directors and the company's major shareholders continued to support a strategy of streamlining product lines to service niche markets and shifting its focus away from supplying generic components in what continues to be a highly competitive marketplace. During fiscal 2009, major shareholders reinforced their commitment to supporting Mitec by providing funds required to redeem maturing debt. In addition, the Corporation continues to evaluate ways to ensure that it is able to continue to have the financial strength to stay competitive and achieve long-term profitability.
"Although Mitec's operations in fiscal 2010 generated losses, in order to stay competitive and protect our position as a niche player in various sectors, we continued to design and deliver state of the art solutions which provide our customers with ways of reducing operating costs and expanding bandwidth", commented Dan Piergentili, Mitec's President and CEO. "We are beginning to see that these solutions are gaining traction now that we have finished shifting our focus into these areas and are optimistic about our wireless portfolio going forward", he said.
Over the past several months, Mitec has announced several major wireless wins relating to these product lines, including:
- Selection as lead supplier for a core component (diplexers) for point-
to-point radios by one of the world's largest and fastest growing
telecom providers. To date, volume production has been set up in
Mitec's Suzhou, China facility and remains on schedule for $3.0 million
in orders for the balance of the year;
- Selection as lead supplier for an additional core component (flexible
waveguide) for point-to-point radios by the same customer referred to
above. To date volume production has generated over $1.5 million in
orders and should reach $2.0 million as anticipated;
- Receipt of first commercial order for its Distributed Antenna System
(DAS network) from a North American integrator. Although this
technology has been field tested over the past several years,
deliveries have now been made and Mitec is optimistic that its solution
can be a significant entrant in this growing, valuable telecom market;
- Selection as lead supplier and initial shipment of Long Term Evolution
(LTE) 4G wireless network components to the same customer referred to
above. These initial shipments, which totalled $1.7 million, are part
of a larger volume initiative to support 4G growth worldwide with this
customer;
- Selection as supplier of low noise amplifiers as part of a European
Telecom company's network upgrade with a value of $1.5 million;
- Selection for mobile broadcast trials for a North American satellite
radio service provider involving Mitec's proven, high performance
filters. These trials are expected to generate a series of higher
volume, follow-on orders in 2011.
About Mitec Telecom
Mitec is a leading designer and provider of radio frequency (RF) products for the telecommunications and satellite communications industries, as well as a variety of other sectors. Mitec sells its products worldwide to network providers for incorporation into high-performing wireless networks used in voice and data/internet communications. Headquartered in Montreal, Canada, Mitec also operates facilities in California and China. Mitec is listed on the Toronto Stock Exchange under the symbol MTM. On-line information about Mitec is available at www.mitectelecom.com.
Due to confidentiality provisions, Mitec is generally not able to disclose the names of its major customers or the financial data related to sales transactions. Certain statements in this release, including statements regarding future results and performance, are forward-looking statements based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, decreases in demand for Mitec's products, fluctuations in selling prices and adverse changes in general market and industry conditions and other factors listed in Mitec's public filings with the appropriate securities regulatory authorities.
MITEC TELECOM INC.
CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars)
Audited
As at As at
April 30, April 30,
2010 2009
$ $
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ASSETS
Current
Cash 1,886 4,485
Short-term investments 181 181
Trade receivables 5,732 5,592
Other receivables 288 126
Income tax recoverable 380 323
Inventories 5,447 8,088
Prepaid expenses and other assets 493 629
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Total current assets 14,407 19,424
Property, plant and equipment 4,510 5,493
Intangible assets 1,762 3,263
Goodwill - 1,991
Investments 25 25
Future income tax - 125
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20,704 30,321
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Credit facility 733 -
Accounts payable and accrued liabilities 6,061 5,449
Current portion of long-term debt - 1,215
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Total current liabilities 6,794 6,664
Long-term debt 1,157 -
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7,951 6,664
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Shareholders' equity
Common shares 132,142 132,142
Warrants 1,152 1,925
Equity component of convertible debentures 768 14
Contributed surplus 10,802 9,836
Deficit (131,427) (119,980)
Accumulated other comprehensive loss (684) (280)
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Total shareholders' equity 12,753 23,657
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20,704 30,321
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MITEC TELECOM INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands of Canadian dollars, except per share data and number of
shares)
Unaudited Audited
For For
the three months ended the twelve months ended
April 30, April 30,
2010 2009 2010 2009
$ $ $ $
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Sales 6,358 6,927 25,424 40,348
Cost of sales 5,403 5,844 21,756 31,836
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Gross profit 955 1,083 3,668 8,512
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Expenses
Research and
development 777 1,137 3,559 4,369
Selling and
administrative 1,794 2,087 6,712 7,510
Financial expenses 299 178 834 853
Foreign exchange loss
(gain) 287 (470) 969 (1,706)
Loss on disposal and
impairment of property,
plant and equipment 33 80 8 470
Impairment of intangible
assets 724 50 724 50
Impairment of goodwill 1,991 1,607 1,991 1,607
Stock-based compensation 44 45 193 607
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5,949 4,714 14,990 13,760
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Loss before income taxes (4,994) (3,631) (11,322) (5,248)
Income tax expense
(recovery) 242 (523) 125 (640)
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Net loss for the year (5,236) (3,108) (11,447) (4,608)
Net change in the
unrealized (loss)
gain on translating
financial statements of
self-sustaining foreign
operations (21) (575) (404) 614
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Comprehensive loss for
the year (5,260) (3,683) (11,851) (3,994)
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Basic and diluted loss
per outstanding common
share (0.02) (0.01) (0.05) (0.02)
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Weighted average
number of
outstanding
common shares 220,666,756 220,666,756 220,666,756 220,658,990
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MITEC TELECOM INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands of Canadian dollars, except for number of shares)
Audited
Equity
component
of conver-
tible de-
Common shares Warrants bentures
Number Number
(000) $ (000) $ $
-------------------------------------------------------------------------
Balance,
April 30, 2008 220,312 132,097 38,016 1,931 46
Issued upon
conversion of
convertible
debentures 354 45 - - (32)
Expired warrants - - (187) (6) -
Stock-based
compensation - - - - -
Other comprehensive
profit for the year - - - - -
Net loss for the year - - - - -
-------------------------------------------------------------------------
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Balance,
April 30, 2009 220,666 132,142 37,829 1,925 14
Issued under a
convertible
debenture
financing - - - - 754
Expired warrants - - (14,226) (773) -
Stock-based
compensation - - - - -
Other comprehensive
loss for the year - - - - -
Net loss for the year - - - - -
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Balance,
April 30, 2010 220,666 132,142 23,603 1,152 768
-------------------------------------------------------------------------
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Accu-
mulated
other
Contri- compre- Share-
buted hensive holders'
surplus Deficit loss equity
$ $ $ $
-------------------------------------------------------------------------
Balance,
April 30, 2008 9,223 (115,372) (894) 27,031
Issued upon
conversion of
convertible
debentures - - - 13
Expired warrants 6 - - -
Stock-based
compensation 607 - - 607
Other comprehensive
profit for the year - - 614 614
Net loss for the year - (4,608) - (4,608)
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Balance,
April 30, 2009 9,836 (119,980) (280) 23,657
Issued under a
convertible
debenture
financing - - - 754
Expired warrants 773 - - -
Stock-based
compensation 193 - - 193
Other comprehensive
loss for the year - - (404) (404)
Net loss for the year - (11,447) - (11,447)
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Balance,
April 30, 2010 10,802 (131,427) (684) 12,753
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MITEC TELECOM INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars)
Unaudited Audited
For For
the three months ended the twelve months ended
April 30, April 30,
2010 2009 2010 2009
$ $ $ $
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CASH FLOW FROM
OPERATING ACTIVITIES
Net loss for the period (5,236) (3,108) (11,447) (4,608)
Items not affecting cash
Amortization 405 478 1,714 2,327
Loss on disposal and
impairment of
property, plant and
equipment 33 80 8 470
Impairment of
intangibles assets 724 50 724 50
Impairment of goodwill 1,991 1,607 1,991 1,607
Income tax charge
(recovery) 242 (523) 125 (640)
Stock-based compensation 140 45 193 607
Accretion expense 44 104 448 636
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(1,657) (1,267) (6,244) 449
Changes in non-cash
working capital
balances related to
operating activities 746 2,246 2,787 435
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(911) 979 (3,457) 884
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CASH FLOW FROM INVESTING
ACTIVITIES
Additions to property,
plant and equipment (5) (437) (166) (786)
Additions to intangible
assets - (3) (10) (3)
Proceeds on disposal of
property, plant and
equipment 14 2 31 15
Purchase of short-term
investment - (337) (181) (516)
- 335 181 412
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9 (440) (145) (878)
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CASH FLOW FROM FINANCING
ACTIVITIES
Convertible debentures
issued - - 1,678 -
Repayment of long-term
debt - (68) (1,400) (458)
Credit facility 733 - 733 -
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733 (68) 1,011 (458)
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(Loss) gain on foreign
cash and cash held 19 153 (8) 153
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Net decrease in cash (150) 624 (2,599) (299)
Cash, beginning of
the year 2,036 3,861 4,485 4,784
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Cash, end of the
period 1,886 4,485 1,886 4,485
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%SEDAR: 00002350EF
For further information: Mr. Jeffrey Mandel, Executive Chairman and Director, Investor and Corporate Relations, Tel.: (514) 694-9000, [email protected]; Source: Mitec Telecom Inc.
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