FOR FURTHER INFORMATION PLEASE CONTACT:
MGI Software Corp.
Media/Investor Contact: Josef Zankowicz
Director Corporate Communications
(905) 707-3650
JosefZ@mgisoft.com
www.mgisoft.com
NEWS RELEASE TRANSMITTED BY CANADIAN CORPORATE NEWS
FOR: MGI SOFTWARE CORP.
TSE SYMBOL: MGI
JUNE 18, 1998
MGI Software Reports First Quarter Results
TORONTO, ONTARIO--MGI Software today announced its financial
results for the first quarter ended April 30, 1998. Revenues for
the first quarter were $2.5 million, an increase of 5.5 per cent
over the comparable quarter last year of $2.4 million.
In the quarter, the company continued its investment in new
product and core technology development. Research and development
increased 87 per cent to $1.6 million as compared to $843,000 in
the comparable quarter. Net loss for the first quarter, which
included unrecovered expenses related to the annulled arrangement
with Discreet Logic (Nasdaq - DSLGF), was $3 million or $0.13 per
share on a weighted average of 23,987,246 common shares
outstanding. As at April 30, 1998, MGI had $16 million in current
assets, which included $8.6 million in cash.
/T/
Three Months Three Months
Ended April 30, 1998 Ended April 30, 1997
Revenues $2,508 $2,378
Gross profit $2,128 $1,991
Expenses $5,239 $3,196
Net loss per share $0.13 $0.06
/T/
"In a quarter that was clearly a transition to major product
upgrades with PhotoSuite II and VideoWave II, we had primarily
focused on maintaining unit market share with our existing
products," said Anthony DeCristofaro, president and CEO, MGI
Software. "Our success is reflected in the most current PC Data
statistics, which show MGI leading US retail unit sales in both
photo and video categories."
MGI PhotoSuite represented the majority of MGI revenues in the
first quarter, as the category for consumer photo- editing
products continued to build steam. In its latest report on the
category, market researcher Dataquest revised its growth forecasts
upwards and predicted consumers will spend more than US $350
million annually on photography software by the end of 2001.
Dataquest ranked MGI the worldwide leader in retail unit sales in
1997 with 29 per cent market share.
In the quarter, MGI Software and Mitsui & Co. launched VideoWave
in Japan where it was featured in a month- long nationwide TV
commercial with Intel's Pentium II. It is reported that more than
200,000 digital camcorders were sold in Japan last year,
establishing the single largest market for such technology. MGI
VideoWave is the ideal product to edit digital videos on a Pentium
computer. Also in concert with Mitsui, MGI entered into a
worldwide licensing agreement with JVC, whereby MGI's leading
photography software will be included with JVC's digital video
camcorders, dual mode camcorders, and digital printers.
To date, MGI has sold more than 12 million copies of PhotoSuite
and VideoWave. "With major new product versions on the horizon,
MGI will have for the first time in its history the opportunity to
gain upgrade revenue form its stellar installed base," said
DeCristofaro. "Given that PhotoSuite II is a completely new
product, the upgrade potential could be notable."
The pre-releases of PhotoSuite II have garnered recognition from
industry influencers. Next week, PhotoSuite II is being showcased
at an invitation-only conference, Digital Living Room, organized
by UpSide Magazine. At Germany's CeBIT exhibition in March, CHIP
Magazine editors awarded their preview of PhotoSuite II with a
Finalist, Best of Show. The product is scheduled to ship in
August.
Intel Corporation (Nasdaq - INTC) currently owns 4.2 percent of
MGI's issued and outstanding shares. The company also holds 1
million Warrants allowing it to double its stake in MGI. The two
companies continued to work closely on a number of product
initiatives involving next generation processors, which for the
first time will enable real-time capture and replay of video
content on standard PCs. Intel is continuing to ship VideoWave
with motherboard products to OEM customers worldwide.
About MGI Software
MGI's mission is to "change the way you picture the world" by
revolutionizing the way we experience photography, video, and
other media on PCs and the Internet. The company has quickly
vaulted to the forefront in visual creation software with its
award-winning products and relationships with leading
manufacturers driving the convergence of computing with "still"
and "motion" pictures. MGI's partners include Intel Corporation,
Mitsui & Co. of Japan, and major photo finishing, camera,
computer, and printer companies. With more than 12 million copies
sold, MGI's PhotoSuite and VideoWave are the leading brands in
retail stores and OEM distribution. MGI's products are available
in 14 languages through a worldwide network of distributors and
retailers spanning 25 countries. For more information visit MGI
Software at www.mgisoft.com.
Copyright(c) 1998 MGI Software Corp. MGI, MGI PhotoSuite, MGI
VideoWave are trademarks or registered trademarks of MGI Software
Corp. All other company and/or product names are trademarks
and/or registered trademarks of their respective manufacturers.
/T/
MGI SOFTWARE CORP.
BALANCE SHEET
(unaudited)
(in thousands of dollars)
April 30 April 30
1998 1997
Assets
Current assets
Cash and short-term deposits $8,617 $2,862
Accounts receivable - trade 5,098 2,326
- other 1,035 209
Prepaids and other assets 610 406
Inventories 624 302
Investment tax credits receivable 24 170
--------- ---------
16,008 6,275
Capital assets 1,662 1,120
--------- ---------
$17,670 $7,395
--------- ---------
--------- ---------
Liabilities
Current liabilities
Accounts payable and
accrued liabilities $3,934 $2,114
--------- ---------
Shareholders' Equity
Capital stock 32,083 14,857
Deficit (18,347) (9,576)
--------- ---------
13,736 5,281
--------- ---------
$17,670 $7,395
--------- ---------
--------- ---------
MGI SOFTWARE CORP.
STATEMENT OF OPERATIONS AND DEFICIT
(unaudited)
(in thousands of dollars, except per share amounts)
Three months Three months
ended ended
April 30 April 30
1998 1997
Revenue $2,508 $2,378
Cost of sales 380 387
--------- ---------
2,128 1,991
Expenses
Marketing and selling 3,060 2,017
Administration 461 248
Research and development 1,580 843
Amortization of capital assets 138 88
--------- ---------
5,239 3,196
--------- ---------
Loss before undernoted item (3,111) (1,205)
Interest income 113 28
--------- ---------
Loss for the period (2,998) (1,177)
Deficit, beginning of period (15,349) (8,399)
--------- ---------
Deficit, end of period $(18,347) $(9,576)
--------- ---------
--------- ---------
Loss per share $(0.13) $(0.06)
--------- ---------
--------- ---------
Weighted average number of
common shares outstanding 23,987,246 18,676,169
--------- ---------
--------- ---------
MGI SOFTWARE CORP.
STATEMENT OF CHANGES IN FINANCIAL POSITION
(unaudited)
(in thousands of dollars)
Three months Three months
Ended ended
April 30 April 30
1998 1997
Cash provided by (used in)
Operating activities
Loss for the period $(2,998) $(1,177)
Items not affecting cash
Amortization 138 88
Net change in noncash
working capital amounts (841) (205)
--------- ---------
(3,701) (1,294)
--------- ---------
Financing activities
Issue of common shares 64 -
Investing activities
Purchase of capital assets (313) (257)
Decrease in note receivable 10,813 -
--------- ---------
10,500 (257)
--------- ---------
Increase (decrease) in cash resources
during the period 6,863 (1,551)
Cash and short-term deposits,
beginning of period 1,754 4,413
--------- ---------
Cash and short-term deposits,
end of period $8,617 $2,862
--------- ---------
--------- ---------
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