| CONTACT: | |
| Mad Catz Interactive, Inc. Morris Perlis, 416/368-4449 ext. 239 mperlis@madcatz.com |
Jaffoni & Collins Incorporated Nathan Ellingson, Joseph Jaffoni 212/835-8500 mcz@jcir.com |
Mad Catz
Reports Fourth Quarter and Year End Financial Results
SAN DIEGO & TORONTO--(BUSINESS WIRE)--June 12, 2003--Mad Catz
Interactive, Inc. (AMEX/TSE: MCZ)-- Fourth Quarter Net Sales Rise 36.8%; GameShark Acquisition Adds Software
Content to Portfolio of Products Conference Call: Today, June 12, at 11:00 a.m. EDT Mad Catz Interactive, Inc. (AMEX/TSE: MCZ), the world's leading third party
video game accessory manufacturer, today announced financial results for the
three- and twelve-month periods ended March 31, 2003. Net sales for the fourth quarter ended March 31, 2003 increased 36.8 percent
to $21.6 million from $15.8 million for the same period a year ago. Gross profit
for the quarter was $5.9 million, a 79.3 percent increase from $3.3 million
during the same period a year ago. For the fiscal 2003 fourth quarter, selling
and administrative expenses were $5.4 million, up from $2.6 million a year ago.
Selling expenses increased to 15.0 percent of net sales, compared to 8.2 percent
for the same period last year. Administrative expenses in the fiscal 2003 fourth
quarter increased to 9.8 percent of net sales compared to 8.3 percent of net
sales in the fourth quarter of fiscal 2002. EBITDA, defined as earnings before
interest, taxes, depreciation and amortization, in the fourth quarter of 2003
was $0.5 million, down from $1.0 million in the fiscal 2002 fourth quarter. A
reconciliation of all EBITDA figures included herein, to the Company's net
income on a GAAP basis, is included in the financial tables accompanying this
release. Net income for the fourth quarter of 2003 was $0.1 million or breakeven
on a per share basis, consistent with the fourth quarter of the prior year. Net sales for the year ended March 31, 2003, increased 10.0 percent to $91.7
million from $83.3 million in the prior year, with gross profit increasing 13.8
percent to $21.0 million from $18.4 million in fiscal 2002. In fiscal 2003,
selling and administrative expenses increased $3.8 million to $16.0 million from
$12.2 million in fiscal year 2002. During fiscal 2003, selling expenses
increased to 9.5 percent of net sales compared to 8.7 percent for the same
period last year while administrative expenses in fiscal 2003 increased to 8.0
percent of net sales compared to 5.9 percent of net sales in fiscal 2002. EBITDA
for the year ended March 31, 2003, was $4.9 million, compared with $6.6 million
for the year ended March 31, 2002. Net income for full year fiscal 2003 was $1.2
million or $0.02 per share compared to net income of $1.5 million or $0.03 per
share in full year fiscal 2002. Fiscal 2003 Fourth Quarter Highlights:
Commenting on the results, Morris Perlis, President and CEO of Mad Catz
Interactive, Inc., stated, "Fiscal 2003 was an important, building year for Mad
Catz, as several significant events gave us the opportunity to further assert
Mad Catz' leadership in the third party accessories market. Over the last twelve
months the Company broadened its distribution, improved manufacturing
efficiencies, continued innovation of new and redesigned products, strengthened
its competitive position, acquired the GameShark brand and website, and posted
solid fourth quarter results despite slower overall industry performance. I am
pleased with the operational, strategic and financial progress made by Mad Catz
throughout this period and the manner in which we are positioned going
forward." Net Sales Mad Catz outperformed the industry during this period, reporting a 36.8
percent increase in net sales for the three months ended March 31, 2003 compared
to the prior year. This is the first quarterly year-on-year comparison without
North American PS2 memory card sales in the prior year and demonstrates the
strength of the underlying business. The fiscal 2003 fourth quarter marked the
first sales contribution from GameShark products to Mad Catz' net sales. During
the quarter, GameShark sales were approximately $0.4 million. This strong fourth
quarter performance was a significant factor in the Company's fiscal 2003 growth
of 10 percent over fiscal 2002. Mad Catz' sales increase reflects its broadened
retail distribution and deepened SKU penetration resulting in market share gains
from competitors in the United States, in Canada and in Europe. PlayStation 2 Memory Card License Mad Catz' PS2 memory card license for European markets expired in November
2002, however, pursuant to its agreement, sales continued through the fourth
quarter of fiscal 2003, with the final sales of this product occurring in April
2003. During the three months ended March 31, 2003 and March 31, 2002,
approximately 14.8 percent and 15.7 percent, respectively, of total gross sales
were derived from PS2 memory card sales worldwide. During the twelve-month
periods ending March 31, 2003 and March 31, 2002, approximately 16.0 percent and
30.4 percent of total gross sales, respectively, were derived from PS2 memory
card sales worldwide. Gross Margins In the fiscal first quarter of 2003, in response to first party accessory
price reductions, Mad Catz absorbed approximately $1.3 million in price
protection costs, resulting in a gross margin of approximately 13.3 percent
during the period. Responding to the price cuts, Mad Catz' ability to focus on
reducing factory costs and on efficiencies in purchasing restored gross margins
to levels of 20 percent and above. This was successfully achieved throughout the
remainder of fiscal 2003 with gross margins in the second, third, and fourth
quarters at 22 percent or above and a full year gross margin reported at 22.9
percent. The higher gross margin of 27.2 percent reported in the fourth quarter
included recording the benefit of improved returned goods processing. Without
these adjustments, fiscal 2003 fourth quarter gross margins were in line with
those in the fiscal third quarter. Selling and Administrative Expenses Fiscal 2003 fourth quarter results reflect higher selling expenses related to
cooperative (co-op) advertising costs in some of the Company's new accounts,
particularly Europe, to establish Mad Catz' brand at these outlets and in the
markets they serve. Accordingly, selling expenses in the quarter increased $2.0
million and on a full-year basis, increased $1.4 million. Much of the increased
expense was related to front loaded co-op advertising expenses, which are a
significant portion of the full year budgets for these accounts, additional
costs related to sales growth, and expenses tied to the launch of GameShark.
Administrative expenses, including certain legal expenses, among other costs,
increased $0.8 million during the fiscal 2003 fourth quarter from the year ago
period to 9.8 percent of net sales, versus 8.3 percent of net sales in the
fiscal 2002 fourth quarter. Full-year fiscal 2003 administrative costs increased
$2.4 million, to $7.3 million or 8.0 percent of net sales. Inventory Inventory declined $3.8 million during the fiscal 2003 fourth quarter to
$18.4 million from the third quarter ended December 31, 2002. Mad Catz
strategically built inventory in the fiscal 2003 second quarter to protect
against the West Coast dockworker strike and to capture sales from the exit of a
large competitor from the marketplace. Related to increased inventory
requirements for supporting sales growth, the European direct distribution
initiative and the GameShark product line, Mad Catz' inventory at March 31, 2003
was approximately $2.5 million higher than at March 31, 2002. GameShark In the fiscal 2003 fourth quarter, Mad Catz acquired the GameShark brand,
GameShark.com web site and related intellectual property for approximately $5.1
million. One of the most widely recognized brands in the video game industry,
GameShark incorporates an "evergreen" software product to the Company's lineup
that can be regularly updated with fresh content from the GameShark website. Mad
Catz' GameShark acquisition positioned the Company as the only one-stop
accessory manufacturer in the industry. Early indications have shown that the
GameShark2 for PS2 is currently outselling its nearest competitor by as much as
a three to one margin. Mr. Perlis continued "During the fourth quarter, we named Cyril Talbot III
our Chief Financial Officer. Cy brings over 25 years of finance experience to
his role at Mad Catz and his presence strengthens the depth of our executive
management team. We look forward to his contributions to the development of the
Company as well as his ability to increase interactions with the financial
community. "At the Electronic Entertainment Exposition (E3), the industry's largest
trade show, Mad Catz once again had a positive response from retailers, gamers,
the media, and industry professionals to the Company's new product
introductions. We are excited about the new first party hardware announcements
and see unique opportunities to support new products like Sony's PSP. These new
introductions speak to the health of our industry and provide a great avenue for
Mad Catz' continued growth." Darren Richardson, President and COO of Mad Catz, Inc. added, "The fourth
quarter is particularly notable for the amount of ground covered by Mad Catz. It
is a great testament to Mad Catz' efficiency and design and manufacturing
capabilities that the Company was able to complete the GameShark acquisition in
January and have product out the door in March, while at the same time
coordinating the design, manufacture, and launch of our Game Boy Advance SP
products. Both product lines launched late in the fourth quarter and despite the
short lead-time and full schedule, Mad Catz was the only company to support GBA
SP with a full line of accessories at its launch. "Looking at fiscal 2004, we are excited about the new products introduced at
E3 and the universally positive response we received. From the launch of
GameShark in March to E3, we have expanded the GameShark line to include a media
player for the PS2, announced a publishing deal for GameShark code books, and
expanded the GameShark offerings to each of the major consoles and Game Boy
Advance SP. Many of our other new products announced at E3 also garnered rave
reviews. Particularly popular was the Mad Catz RetroCON controller, a premium
compact controller that evokes the design of the classic Nintendo controller.
Demonstrating our commitment to producing the best products on the market, a
number of our new product introductions were updates to existing products.
Updated products included Mad Catz' Xbox Blaster, which now offers support for
high definition televisions, and the Lynx wireless controller for Xbox, which
now operates an increased 2.4 gHz radio frequency. The updated Lynx enables us
to now ship that product internationally to markets where use of the 900 mHz
spectrum is restricted. E3 also marked the introduction of Mad Catz' first
products to support online gaming. This continues to be a quickly growing
segment of the industry and as more and more gamers move online, Mad Catz plans
to be there to support them. Additionally, we look forward to offering exciting
new options later this year for Sony's recently announced PSX and next year for
the PSP." Business Outlook and Guidance Reflecting current economic and retail demand uncertainties, the fast
changing dynamics of the industry that Mad Catz serves and the Company's
expanded line of offerings, primarily related to innovative new products under
the GameShark brand, Mad Catz will not at this time provide formal financial
guidance for fiscal 2004. Instead, Mad Catz intends to provide specific details
that contribute to an overall understanding of the Company's financial
performance in areas such as retail penetration, product innovation and
acceptance, as well as the Company's perspective on industry trends and
developments in its public filings with the appropriate regulatory agencies. The Company will host a conference call and simultaneous webcast today, June
12, 2003, at 11:00 a.m. EDT. Following its completion, a replay of the call can
be accessed for 30 days on the Internet from the Company's Web site
(www.madcatz.com, select "Investors") or for 2 days via telephone at
800/633-8284 (reservation # 21146917) or, for International callers, at
402/977-9140. About Mad Catz Interactive, Inc. Mad Catz Interactive, Inc., (www.madcatz.com), designs, develops,
manufactures and markets a full range of high quality, competitively priced
accessories for video game consoles and portables, including the industry
leading GameShark brand of video game enhancements. Mad Catz is a worldwide
leader of innovative peripherals in the interactive entertainment industry, with
distribution through nine of the top ten U.S. retailers offering interactive
entertainment products. With operating headquarters in San Diego, California,
Mad Catz has offices in Canada, the U.K. and Asia, as well as distributors in
Europe and Australia. This press release contains forward-looking statements about the Company's
business prospects that involve substantial risks and uncertainties. The Company
assumes no obligation to update the forward-looking statements contained in this
press release as a result of new information or future events or developments.
You can identify these statements by the fact that they use words such as
"anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and
other words and terms of similar meaning in connection with any discussion of
future operating or financial performance. Among the factors that could cause
actual results to differ materially are the following: the ability to maintain
or renew the Company's licenses; competitive developments affecting the
Company's current products; first party price reductions; the ability to
successfully market both new and existing products domestically and
internationally; difficulties or delays in manufacturing; market and general
economic conditions. A further list and description of these risks,
uncertainties and other matters can be found in the Company's reports filed with
the Securities and Exchange Commission and the Canadian Securities
Administrators.
Dial-in numbers:
800/840-6218 (US and CAN) or
212/346-7495 (International)
Webcast:
www.madcatz.com (Select "Investors")
Replay Information: See text below
MAD CATZ INTERACTIVE, INC.
Consolidated Statements Of Operations (unaudited, $US)
Three Months Ended Twelve Months Ended
March 31, March 31,
2003 2002 2003 2002
------------- ------------- ------------ -------------
Net sales $21,642,358 $15,820,318 $91,657,866 $83,337,134
Cost of sales 15,747,949 12,533,024 70,699,800 64,927,895
------------- ------------- ------------- ------------
Gross profit 5,894,409 3,287,294 20,958,066 18,409,239
Expenses:
Selling
expenses 3,242,366 1,289,440 8,683,104 7,276,113
Administrative
expenses 2,110,881 1,308,417 7,298,030 4,934,693
Interest
expense 516,315 264,025 1,757,860 1,232,123
Depreciation
and
amortization 279,364 335,940 1,172,784 1,009,936
Other income (911) - (46,936) -
Foreign
exchange
(gain) loss 20,222 28 94,220 (60,511)
------------- ------------- ------------- ------------
Total expenses 6,168,237 3,197,850 18,959,062 14,392,354
Income (loss)
before income
taxes and
goodwill
charges (273,828) 89,444 1,999,004 4,016,885
Income tax
expense
(benefit) (370,696) 36,086 788,312 1,855,544
------------- ------------- ------------- ------------
Income before
goodwill
charges 96,868 53,358 1,210,692 2,161,341
Goodwill charges - 244,118 - 976,665
------------- ------------- ------------- ------------
Income (loss)
from continuing
operations $96,868 $(190,760) $1,210,692 $1,184,676
Gain from
discontinued
operations - 302,095 - 302,095
------------- ------------- ------------- ------------
Net income $96,868 $111,335 $1,210,692 $1,486,771
Retained
deficit,
beginning of
period $(15,214,870) $(16,440,029) $(16,328,694) $(17,815,465)
------------- ------------- ------------- ------------
Retained
deficit, end
of period $(15,118,002) $(16,328,694) $(15,118,002) $(16,328,694)
============= ============= ============= =============
Income per share
before goodwill
charges and
discontinued
operations $0.00 $0.00 $0.02 $0.04
Income per share
on discontinued
operations $0.00 $0.01 $0.00 $0.01
Income (loss)
per share on
goodwill
charges $0.00 $0.00 $0.00 $(0.02)
------------- ------------- ------------- ------------
Basic net income
per share $0.00 $0.00 $0.02 $0.03
============= ============= ============= ============
Diluted net
income per
share $0.00 $0.00 $0.02 $0.03
============= ============= ============= ============
Weighted average
number of
common shares
outstanding:
Basic 53,206,719 52,902,992 53,070,890 51,188,889
============= ============= ============= ============
Diluted 53,340,423 53,513,695 53,689,972 51,956,695
============= ============= ============= ============
See accompanying notes to the consolidated financial statements
MAD CATZ INTERACTIVE, INC.
Condensed Consolidated Balance Sheets ($US)
March 31, March 31,
2003 2002
(unaudited) (audited)
------------------ -----------------
Assets
Current assets:
Cash $1,234,104 $1,902,966
Accounts receivable 16,530,226 10,276,547
Inventories 18,413,299 15,918,898
Prepaid expenses and deposits 1,032,830 754,261
Current portion of future income
tax assets 3,030,550 2,070,835
Income tax receivable 598,137 267,495
------------------ -----------------
40,839,146 31,191,002
Deferred financing fees 238,649 722,442
Capital assets 1,729,310 1,919,749
Intangible assets 5,046,634 -
Goodwill 17,737,549 16,362,175
------------------ -----------------
$65,591,288 $50,195,368
================== =================
Liabilities and Shareholders' Equity
Current liabilities:
Bank loan $17,076,993 $4,335,084
Accounts payable and accrued
liabilities 16,004,283 16,106,044
------------------ -----------------
33,081,276 20,441,128
Future tax liabilities 85,829 136,886
Shareholders' equity:
Capital stock 45,793,085 45,554,910
Retained deficit (15,118,002) (16,328,694)
Cumulative translation
adjustment 1,749,100 391,138
------------------ -----------------
32,424,183 29,617,354
------------------ -----------------
$65,591,288 $50,195,368
================== =================
See accompanying notes to the consolidated financial statements
MAD CATZ INTERACTIVE, INC.
Consolidated Cash Flow Statements (unaudited, $US)
Three Months Ended Twelve Months Ended
March 31, December 31,
Cash provided by (used in) 2003 2002 2003 2002
----------- ----------- ----------- -----------
Operating activities:
Net income $96,868 $111,335 $1,210,692 $1,486,771
Adjusted for income
from discontinued
operations - (302,095) - (302,095)
Items not involving
cash:
Amortization of
deferred financing
fees 119,325 119,375 483,793 603,465
Foreign exchange
losses (gains) 20,222 28 94,220 (60,511)
Depreciation and
amortization 279,364 562,614 1,172,784 1,986,601
Future income tax
assets and
liabilities (909,089) 276,452 (1,010,772) 143,267
Changes in non-cash
operating working
capital:
Accounts receivable 16,379,868 17,279,731 (6,122,433) (3,462,953)
Prepaid expenses and
deposits (135,683) 380,051 (271,969) (96,663)
Inventories 3,747,677 (3,425,290) (2,393,654) (2,411,279)
Accounts payable and
accrued liabilities (5,987,112) (7,693,731) (228,863) 7,377,328
Income tax
(receivable) payable (1,260,986) (1,873,811) (326,483) 12,027
----------- ----------- ----------- -----------
Cash provided by (used
in) continuing
operations 12,350,454 5,434,659 (7,392,685) 5,275,958
----------- ----------- ----------- -----------
Cash provided by
discontinued
operations - 302,095 - 302,095
----------- ----------- ----------- -----------
Investing activities:
Purchase of capital
assets (98,119) (396,382) (939,490) (1,103,614)
Purchase of
intangible assets (5,082,803) - (5,082,803) -
----------- ----------- ----------- -----------
Cash used in investing
activities (5,180,922) (396,382) (6,022,293) (1,103,614)
----------- ----------- ----------- -----------
Financing activities:
Bank loan (6,647,529) (4,293,000) 12,741,909 (4,349,018)
Proceeds from issue of
share capital - 5,283 239,666 367,100
----------- ----------- ----------- -----------
Cash provided by (used
in) financing
activities (6,647,529) (4,287,717) 12,981,575 (3,981,918)
=========== =========== =========== ===========
Effects of exchange
rate changes on cash (71,866) (6,219) (235,459) (45,035)
Net increase (decrease)
in cash 450,137 1,046,436 (668,862) 447,486
Cash at beginning of
period 783,967 856,530 1,902,966 1,455,480
----------- ----------- ----------- -----------
Cash at end of period $1,234,104 $1,902,966 $1,234,104 $1,902,966
=========== =========== =========== ===========
See accompanying notes to the consolidated financial statement
MAD CATZ INTERACTIVE, Inc. Notes to consolidated financial statements
Note 1: BASIS OF PRESENTATION AND DISCONTINUED OPERATIONS
The unaudited interim period consolidated financial statements as at March 31, 2003, have been prepared by the Company in accordance with Canadian generally accepted accounting principles for interim financial statements and do not include all disclosures required in annual financial statements. The preparation of financial data is based on accounting policies and practices consistent with those used in the preparation of the audited annual consolidated financial statements, except for the changes disclosed in Notes 3 and 4. The accompanying unaudited consolidated financial statements should be read in conjunction with the notes to the Company's audited consolidated financial statements for the year ended March 31, 2002.
These unaudited interim consolidated financial statements reflect all adjustments, all of which are normal and recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the respective interim periods presented.
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, 1328158 Ontario Inc. ("Mad Catz Canada"), Xencet U.S. Inc., Singapore Holdings Inc., Mad Catz, Inc., FX Unlimited Inc., Madcatz Europe Ltd, Madcatz Ltd, Mad Catz (Asia) Limited and Mad Catz Interactive Asia Ltd.
During the year ended March 31, 2001 the Company adopted a formal plan to dispose of the assets and business operations of its GTI (previously played video game business) and ZapYou.com (internet distribution) business units. As at September 30, 2001, all of the assets of GTI and Zapyou.com had been disposed.
Note 2: FOREIGN EXCHANGE
The United States dollar is the functional currency of the Company's United States operations. The Canadian dollar is the functional currency of the Company's Canadian operations, which is translated to United States dollars using the current rate method.
The British Pound is the functional currency of the Company's UK operations, which is translated to United States dollars using the current rate method.
The Hong Kong Dollar is the functional currency of the Company's Hong Kong operations, which is translated to United States dollars using the current rate method.
Note 3: GOODWILL AND INTANGIBLE ASSETS
The Company adopted Handbook Section 3062 ("Section 3062"), "Goodwill and Other Intangible Assets", on April 1, 2002. Section 3062 discontinues the amortization of goodwill and intangible assets with indefinite useful lives. In accordance with Section 3062, beginning April 1, 2002, the Company no longer amortizes goodwill. Instead, the Company will review these assets periodically for impairment in accordance with the provisions of Section 3062. As of September 30, 2002, the Company completed its implementation of Section 3062 and conducted the required transitional impairment tests. The Company determined that it has one reporting unit and that this single reporting unit is the entire company, or Mad Catz Interactive, Inc. This conclusion was reached due to the integrated nature of the operations of Mad Catz Interactive, Inc. and its subsidiaries and the lack of differing economic characteristics between them. The Company conducted the first step of the transitional impairment test using this one reporting unit and concluded that no impairment of goodwill existed as of April 1, 2002.
Net income and earnings per share on a pro forma basis, excluding goodwill amortization expense is as follows if Section 3062 had been adopted on April, 1, 2001:
Three Months Ended Twelve Months Ended
March 31 March 31,
2003 2002 2003 2002
-------- --------- ----------- -----------
Reported net income $96,868 $111,335 $1,210,692 $1,486,771
Adjustments:
Amortization of goodwill - 244,118 - 976,665
-------- --------- ----------- -----------
Adjusted net income $96,868 $355,453 $1,210,692 $2,463,436
======== ========= =========== ===========
Basic and diluted earnings
per share:
As reported $0.00 $0.00 $0.02 $0.03
As adjusted $0.00 $0.01 $0.02 $0.05
On January 21, 2003, the Company acquired the rights to the
GameShark brand, intellectual property, and the www.gameshark.com web
site from InterAct, a subsidiary of Recoton Corporation, for total
cash consideration of $5,082,083. GameShark is the industry leader in
video game enhancement software, which enables players to take full
advantage of the secret codes, short cuts, hints and cheats
incorporated by video game publishers into their game offerings. In
connection with the GameShark acquisition, the Company entered into a
multi-year technology agreement with Fire International, Ltd. to
implement Fire's technology in the GameShark brand of video game
enhancements. For the year ended March 31, 2003, amortization of
$36,169 with respect to these assets was recorded.
The acquired intangible assets are summarized as follows:
Cost Useful life
(years)
------------------ ------------------
Trademarks $4,111,932 Indefinite
Copyrights $456,881 5
Website $513,990 4
------------------
$5,082,803
==================
Note 4: STOCK BASED COMPENSATION
The Company adopted Handbook Section 3870 ("Section 3870"), "Stock-Based
Compensation and Other Stock-Based Payments", on April 1, 2002. Section 3870 is
applied prospectively to all stock-based payments granted in the fiscal year
beginning on or after January 1, 2002 and sets out a fair value based method of
accounting that is required for certain, but not all, stock-based transactions.
Section 3870 permits the Company to continue its existing policy whereby no
compensation cost is recorded for stock option grants to employees. For the
calculation of pro forma compensation expense, the Company applied the Black
Scholes option pricing model with the following assumptions for the three months
and year ended March 31, 2003: volatility of 76%, risk-free interest rate of 5%,
and an expected life of 3 years. Had the fair value based method been used to
account for employee stock options, the Company would have recorded net income
and basic and diluted earnings per share as follows:
Three Months Twelve Months
Ended Ended
March 31, 2003 March 31, 2003
--------------- ----------------
Net income as reported $96,868 $1,210,692
Stock based compensation using the
fair value method (34,677) (261,841)
--------------- ----------------
Adjusted net income $62,191 $948,851
=============== ================
Basic and diluted earnings per share
as reported and as adjusted: $0.00 $0.02
=============== ================
Note 5: SEGMENTED DATA
The Company's sales and capital assets are attributable to the
following countries:
Three Months Ended Twelve Months Ended
March 31 March 31,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Sales
Canada $1,393,103 $191,306 $4,510,916 $1,450,556
United States 14,722,564 12,808,143 66,394,503 71,743,787
International 5,526,691 2,820,869 20,752,447 10,142,791
------------ ------------ ------------ ------------
$21,642,358 $15,820,318 $91,657,866 $83,337,134
============ ============ ============ ============
Revenues are attributed to countries based on the location of the
customer. During the year ended March 31, 2003, the Company sold
approximately 35% of its products to two customers (2002 -
approximately 48% to two customers).
March 31, 2003 March 31, 2002
----------------- -----------------
Capital assets:
Canada $3,782 $1,175
United States 1,607,360 1,830,877
International 118,168 87,697
----------------- -----------------
1,729,310 1,919,749
Goodwill and intangible assets:
Canada 17,737,549 16,362,175
United States 5,046,634 -
----------------- -----------------
22,784,183 16,362,175
----------------- -----------------
$24,513,493 $18,281,924
================= =================
Note 6: EBITDA RECONCILIATION (Unaudited)
EBITDA represents net income plus interest, taxes, depreciation
and amortization.
The Company believes that EBITDA is a useful supplement to net
income as an indication of operating performance. EBITDA is a key
financial measure but is not intended to represent cash flows for the
period, nor has it been presented as an alternative to operating or
net income as an indicator of operating performance and should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with accounting principles generally accepted
in Canada. As defined, EBITDA is not necessarily comparable to other
similarly titled captions of other companies due to potential
inconsistencies in the method of calculation.
Three Months Ended Twelve Months Ended
March 31, March 31,
2003 2002 2003 2002
----------- -------- ---------- ----------
Net income 96,868 111,335 1,210,692 1,486,771
Adjustments:
Interest expense 516,315 264,025 1,757,860 1,232,123
Income tax expense
(benefit) (370,696) 36,086 788,312 1,855,544
Depreciation and
amortization 279,364 335,940 1,172,784 1,009,936
Goodwill amortization - 244,118 - 976,665
----------- -------- ---------- ----------
EBITDA 521,851 991,504 4,929,648 6,561,039
=========== ======== ========== ==========