MONTREAL, May 2 /CNW Telbec/ - 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 first quarter of its 2007 fiscal year, ended March 31.
In the first quarter of 2007, sales were $21.0 million, a decrease of 13% compared with the same period in 2006. Net income for the period was $0.9 million, compared to $3.4 million in the first quarter of 2006. This translates into a fully diluted EPS of $0.04, compared to $0.14 in 2006.
The decrease in sales was caused principally by a decline in the sales of the Kaleido-K2 multi-image processor and its impact on related products in Asia and in Europe.
Strath Goodship, President and CEO of Miranda said: "The new Kaleido-X multi-image processor is a robust platform with a number of unique features that have allowed us to win market share for larger monitor wall applications that the previous generation, Kaleido-K2, could not address. We have already installed the product for strategically significant accounts in the Americas and Europe and have seen positive customer response. However, the introduction of the Kaleido-X has negatively affected sales of the Kaleido-K2 more rapidly than anticipated and development will continue during the rest of 2007 to integrate all of the Kaleido-K2 functionalities into the new platform."
The decrease was also due to lower infrastructure equipment sales in Canada, which had been stronger in the first quarter of 2006, stimulated by intense HD conversion activity. On the other hand, sales in the United States rose by 19% during the first quarter of 2007 as a result of increased HD role-out activity.
Lower overall sales combined with higher operating expenses had a negative impact on profitability. EBITDA was $1.7 million, compared to $5.3 million in 2006. However, for a more accurate picture of operating performance, a few items should be highlighted: in the first quarter of 2007, legal fees of $0.5 million were incurred related to intellectual property litigation while last year's first-quarter results included an exchange gain of $0.4 million and a gain of $0.3 million from a settlement.
R&D investments for the quarter totalled $4.2 million, an increase of 17%. This intended increase in R&D activities allowed the Company to pursue its development plans to introduce new generation products and maintain its competitiveness. Several new products were launched at the National Broadcasters Association (NAB) show in April and the Company believes that these will have an impact on the 2007 performance as delivery of many of these products will begin in the third quarter. Some of the highlights are:
- Kaleido-X version 1.1 software, with input signal alarm features;
- Imagestore 750 next generation HD/SD master control and branding
platform;
- XVP-1801 / DAP-1701, a highly integrated and compact HD cross-converter
and companion audio processing modules;
- Jazz-800 dual cross converter/standards converter in a single compact
frame;
- Vertigo "automated promotion generation" workflow software tools;
- Three iControl software packages for set-top box, playout and remote
station monitoring;
- 3Gb/s digital video fiber and electrical distribution amplifier.
In light of the positive reaction these products received at the show,
efforts are being focused on the following key objectives.
Mr. Goodship stated: "First, we intend to maximize our sales by
accelerating the introduction of new products. This will be achieved by
further streamlining product development and manufacturing processes, with the
specific goal of substantially reducing time-to-market. We recently created
the position of Senior Vice-President of Operations to help us reach this
objective, and we now have Luc St-Georges on board to fill this position. Luc
is an engineer and a seasoned executive with over twenty years of experience
in high-end electronics manufacturing for well-established companies, such as
Marconi and Positron Technologies. His mandate is to focus on reducing new
product introduction time, and improving manufacturing output, efficiency and
quality.
Our second objective is to work on maximizing the impact of our new
products by focusing on specific markets where customers are sensitive to our
products' unique functionalities, as featured on the Kaleido-X. To that end,
we have strengthened our sales team in Asia by adding a senior sales
executive, Anita Man, whose extensive sales management experience was honed
throughout the region with leaders such as Sony Corporation and Shure
Incorporated.
Third, we are putting ever more emphasis on customer support, as well as
on the quality of our services, by increasing staff and training on complex
products to satisfy customer response expectations."
"Even though we are disappointed with our sales for the first quarter, we
are very excited with the prospects for our new products that are to be
delivered in the coming months. Our work on Kaleido-X is paying off and
allowing us to reach into the large monitor wall market," added Mr. Goodship.
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.
Conference call
Miranda Technologies Inc. will hold a conference call with financial
analysts to present its first quarter 2007 results tomorrow at 2:00 PM
(Eastern Time). Those interested should call 514-807-8791 (Montreal or
overseas) or 800-732-9303 (elsewhere in North America).
The call can also be accessed via a direct broadcast site at the following
addresses: www.miranda.com, www.newswire.ca and www.q1234.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
1-877-289-8525 and entering the code 21226714(number sign) on the telephone keypad. This
recording will be accessible from 5:00 PM on Thursday, May 3, 2007 to 11:59 PM
on Thursday, May 10, 2007.
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 HDTV 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 over 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 became a public company in December 2005 and 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
first 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 interim unaudited consolidated
financial statements and notes thereto, which have been filed on SEDAR.
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
March 31, 2007 and December 31, 2006
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March 31, December 31,
2007 2006
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $ 61,488 $ 40,378
Temporary investments - 22,179
Accounts receivable 14,011 17,710
Inventories 18,729 15,292
Income taxes receivable 5,076 5,279
Prepaid expenses 1,753 886
Future income taxes 619 625
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101,676 102,349
Capital assets 13,818 13,498
Intangible assets 7,490 7,937
Goodwill 3,933 3,933
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$ 126,917 $ 127,717
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued charges $ 12,780 $ 14,649
Deferred revenue 213 298
Income taxes payable 772 1,015
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13,765 15,962
Deferred revenue 1,235 1,040
Future income taxes 2,287 2,313
Shareholders' equity:
Share capital (note 3) 111,841 111,784
Contributed surplus (note 3) 1,468 1,216
Deficit (3,663) (4,598)
Accumulated other comprehensive
income (notes 2 and 4) (16) -
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109,630 108,402
Contingencies (note 5)
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$ 126,917 $ 127,717
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See accompanying notes to unaudited
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Three-month periods ended March 31, 2007 and 2006
(In thousands of dollars, except per share amounts)
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2007 2006
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Sales $ 21,029 $ 24,101
Cost of sales 8,650 9,741
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12,379 14,360
Operating expenses:
Selling, general and administrative 7,905 6,786
Research and development 4,166 3,567
Research and development tax credits (999) (550)
Interest (729) (445)
Foreign exchange gain (100) (423)
Stock-based compensation 252 85
Amortization of intangible assets 447 459
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10,942 9,479
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Income before income taxes 1,437 4,881
Income taxes:
Current 584 667
Future (35) 816
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549 1,483
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Net income $ 888 $ 3,398
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Net earnings per share (note 3 (c)):
Basic $ 0.04 $ 0.14
Diluted 0.04 0.14
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Basic weighted average number
of shares outstanding 24,725,976 23,951,855
Diluted weighted average number
of shares outstanding 25,119,436 25,051,052
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See accompanying notes to unaudited consolidated financial statements.
CONSOLIDATED STATEMENTS OF DEFICIT
(Unaudited)
Three-month periods ended March 31, 2007 and 2006
(In thousands of dollars)
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2007 2006
-------------------------------------------------------------------------
Deficit, beginning of period $ (4,598) $ (23,576)
Adjustment due to the new accounting
policies adopted regarding financial
instruments (net of income taxes
of $22) (note 2) 47 -
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Adjusted balance (4,551) (23,576)
Net income 888 3,398
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Deficit, end of period $ (3,663) $ (20,178)
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Consolidated Statements of Comprehensive Income
(Unaudited)
Three-month periods ended March 31, 2007 and 2006
(In thousands of dollars)
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2007 2006
-------------------------------------------------------------------------
Net income $ 888 $ 3,398
Other comprehensive income:
Change in fair value of available-
for-sale financial assets (9) -
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Comprehensive income $ 879 $ 3,398
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See accompanying notes to unaudited consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three-month periods ended March 31, 2007 and 2006
(In thousands of dollars)
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-------------------------------------------------------------------------
2007 2006
-------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 888 $ 3,398
Adjustments for:
Depreciation of capital assets 505 401
Amortization of intangible assets 447 459
Stock-based compensation 252 85
Gain on disposal of investment - (100)
Future income taxes (35) 816
Effect of exchange rates on cash
and cash equivalents 81 (89)
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2,138 4,970
Net change in non-cash balances
related to operations (2,344) (782)
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(206) 4,188
Cash flows from financing activities:
Issuance of share capital 57 -
Cash flows from investing activities:
Additions to capital assets (825) (754)
Proceeds from sale of investment - 100
Proceeds from sale of temporary investments 22,179 -
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21,354 (654)
Effect of exchange rates on cash and
cash equivalents (81) 89
Effect of comprehensive income on cash
and cash equivalents (14) -
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Net increase in cash and cash equivalents 21,110 3,623
Cash and cash equivalents, beginning of period 40,378 58,664
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Cash and cash equivalents, end of period $ 61,488 $ 62,287
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Cash and cash equivalents are comprised of:
Cash $ 10,857 $ 9,072
Cash equivalents 50,631 53,215
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$ 61,488 $ 62,287
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See accompanying notes to unaudited consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Three-month periods ended March 31, 2007 and 2006
(In thousands of 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, except for
recognition and measurement of financial instruments presented per Section
3855 of CICA Handbook, Financial Instruments - Recognition and Measurement,
which required prospective applications. 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, 2006 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. Changes in accounting policies:
Effective at the beginning of its 2007 fiscal year, the Company has
adopted the Canadian Institute of Chartered Accountants ("CICA") Handbook
Section 1530, Comprehensive Income, CICA Handbook Section 3251, Equity, CICA
Handbook Section 3855, Financial Instruments -Recognition and Measurement,
CICA Handbook Section 3861, Financial Instruments - Disclosure and
Presentation, and CICA Handbook Section 3865, Hedges. These new Handbook
Sections, which apply to fiscal years beginning on or after October 1, 2006,
provide comprehensive requirements for the recognition and measurement of
financial instruments, as well as standards on when and how hedge accounting
may be applied. Handbook Section 1530 also establishes standards for reporting
and displaying comprehensive income. Comprehensive income is defined as the
change in equity from transactions and other events from non-owner sources.
Other comprehensive income refers to items recognized in comprehensive income
but that are excluded from net income calculated in accordance with generally
accepted accounting principles.
Under these new standards, all financial instruments are classified into
one of the following five categories: held for trading, held-to-maturity
investments, loans and receivables, available-for-sale financial assets or
other financial liabilities. All financial instruments, including derivatives,
are included on the consolidated balance sheet and are measured either at fair
market value with the exception of loans and receivables, investments
held-to-maturity and other financial liabilities, which will be measured at
amortized cost. Subsequent measurement and recognition of changes in fair
value of financial instruments depend on their initial classification.
Held-for-trading financial investments are measured at fair value and all
gains and losses are included in net income in the period in which they arise.
Available-for-sale financial instruments are measured at fair value with
revaluation gains and losses included in other comprehensive income until the
asset is removed from the balance sheet.
The standards require derivative instruments to be recorded as either
assets or liabilities measured at their fair value unless exempted from
derivative treatment as a normal purchase and sale. Certain derivatives
embedded in other contracts must also be measured at fair value. All changes
in the fair value of derivatives are recognized in earnings unless specific
hedge criteria are met, which requires the Company to formally document,
designate and assess the effectiveness of transactions that receive hedge
accounting. Derivatives that qualify as hedging instruments must be designated
as either a ''cash flow hedge,'' when the hedged item is a future cash flow,
or a ''fair value hedge,'' when the hedged item is a recognized asset or
liability. The unrealized gains and losses related to a cash flow hedge are
included in other comprehensive income. For a fair value hedge, both the
derivative and the hedged item are recorded at fair value in the consolidated
balance sheet and the unrealized gains and losses from both items are included
in earnings. Any derivative instrument that does not qualify for hedge
accounting is marked-to-market at each reporting date and the gains or losses
are included in earnings.
These new standards have to be applied without restatement of prior period
amounts. Upon initial application, all adjustments to the carrying amount of
financial assets and liabilities shall be recognized as an adjustment to the
opening balance of deficit or accumulated other comprehensive income,
depending on the classification of existing assets or liabilities. As at
January 1, 2007, the Company has recorded a $47 (net of income taxes of $22)
reduction to the opening balance of deficit with respect to the financial
assets and liabilities and embedded derivatives and a $7 (net of income taxes
of $3) reduction to the opening balance of accumulated other comprehensive
income with respect to the available-for-sale financial assets.
As at December 31, 2006 and March 31, 2007, all outstanding forward
foreign exchange contracts were reported on a mark-to-market basis and the
gains or losses were included in earnings, because the Company elected not to
follow hedge accounting for these derivatives. The adoption of these standards
did not have a significant impact on the consolidated statement of income.
3. Share capital:
(a) Issued and paid share capital:
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March 31, December 31,
2007 2006
-------------------------------------------------------------------------
24,740,197 common shares (24,706,813
at December 31, 2006) $ 111,841 $ 111,784
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(b) Stock option plan:
The Company established a stock option plan to attract, retain and provide
an incentive to the employees, directors, officers and consultants, by
providing these persons with the opportunity, through stock options, to
acquire an ownership interest in the Company. The current stock option plan
was adopted in June 2003 to replace prior plans and has been amended and
restated in November 2005 to conform to applicable securities rules and
practices for public companies. The stock option plan is administered by the
Board of Directors. The Board of Directors may determine, in accordance with
the terms of the stock option plan, the terms relating to each option,
including the number of shares subject to each option, exercise price and
expiration date of each option and the extent to which each option is
exercisable during the term of the option. The term of an option granted after
November 2005 cannot exceed 5 years (10 years under the previous plan) and
will usually be vested over three years. All of the options granted pursuant
to the stock option plan before the November 2005 amendment have vested upon
closing of the initial public offering of the Company.
A total of 2,395,185 common shares are reserved for issuance upon exercise
of options issued under the stock option plan. As a result, a total of less
than 10% of the outstanding capital is reserved for issuance upon exercise of
all options or issuable under the stock option plan. After taking into account
issued and cancelled options, 527,991 common shares are available for issuance
under this stock option plan.
The following table summarizes information on stock options outstanding at
March 31, 2007:
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Weighted
Number average
of options exercise price
-------------------------------------------------------------------------
Balance, beginning of period 931,236 $ 8.83
Granted 181,000 14.00
Exercised (33,384) 1.71
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Balance, end of period 1,078,852 $ 9.92
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The outstanding options at March 31, 2007 are presented in the table
below:
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Number of Number of Residual
outstanding vested life
Exercise price options options (years)
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$ 1.71 208,102 208,102 6.3
$ 3.96 115,000 115,000 8.0
$ 3.96 175,000 175,000 8.2
$ 16.46 324,000 107,976 4.0
$ 17.08 50,000 16,665 4.0
$ 18.82 20,000 - 4.2
$ 17.24 5,750 - 4.4
$ 14.00 181,000 - 4.9
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1,078,852 622,743
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Compensation cost charged against income was $252 for the period ended
March 31, 2007 (2006 - $85). The offsetting credit has been recorded as
contributed surplus.
The fair value of the stock options was estimated using the Black-Scholes
option pricing model using the following assumptions:
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Risk-free interest rate 3.99%
Dividend yield 0%
Expected life 3.5 years
Expected volatility 50%
Weighted average fair value of each option at grant date $ 5.63
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(c) Earnings per share:
The following table provides the reconciliation between basic and diluted
earnings per share:
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2007 2006
-------------------------------------------------------------------------
Net income $ 888 $ 3,398
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Weighted average number of common
shares outstanding 24,725,976 23,951,855
Dilutive effect:
Employees' stock options 393,460 1,099,197
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Weighted average number of diluted common
shares outstanding 25,119,436 25,051,052
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Basic earnings per share $ 0.04 $ 0.14
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Diluted earnings per share $ 0.04 $ 0.14
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4. Accumulated other comprehensive income:
Available-for-sale financial assets constitute the sole item in
accumulated other comprehensive income. The changes that occurred during the
period were as follows:
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March 31,
2007
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Adjusted opening balance due to the
new accounting policies adopted regarding
financial instruments (net of income taxes
of $3) (note 2) $ (7)
Change in fair value, net of income taxes of $5,
during the period (9)
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Balance, end of period $ (16)
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5. Contingencies:
A complaint alleging patent infringement was filed in the United States
District Court for the Northern District of Illinois Eastern Division against
the Company and other defendants in 2005. The complaint alleges that certain
products of the Company infringe one or more of seven United States patents
for which the plaintiffs assert they hold a license. The complaint requests
injunctive relief, damages, costs and such other and further relief against
the Company as the court deems proper. Based on management's review and the
assessment of reports from the Company's United States legal counsel, the
Company believes that the plaintiff's' claim is without merit. The Company
has filed a defense and intends to vigorously defend its position in court.
6. Segmented information:
The Company determined that it operates 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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March 31, March 31,
Sales 2007 2006
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Canada $ 1,449 $ 3,370
United States 9,817 8,258
Other countries 9,763 12,473
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$ 21,029 $ 24,101
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Capital assets, goodwill and March 31,
intangible assets 2007
-------------------------------------------------------------------------
Capital Intangible
assets Goodwill assets
Canada $ 12,356 $ 3,933 $ 7,490
United States 46 - -
Other countries 1,416 - -
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$ 13,818 $ 3,933 $ 7,490
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Capital assets, goodwill and March 31,
intangible assets 2006
-------------------------------------------------------------------------
Capital Intangible
assets Goodwill assets
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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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Sales are attributed to the geographic locations based on the location of
the customers.