MGI Software Reports Q1 Financial Results
MGI Software Reports Q1 Financial Results
TORONTO (May 31) BUSINESS WIRE -May 31, 1999--
Sales Increase 75 percent, Bottom Line Improves 38
percent Over Comparable Period
MGI Software (TSE:MGI.) today announced its financial results for the
first quarter ended April 30, 1999. Revenue for the first quarter was
$4.4 million, an increase of 75 per cent over the comparable quarter
last year of $2.5 million. Gross profit was $3.8 million versus $2.1
million last year. Net loss for the first quarter, was $1.868 million
or $0.08 per share on a weighted average of 24,327,449 common shares
outstanding, a improvement of 38 per cent, as compared to $2.998
million or $0.13 per share the previous year.
A strong improvement in operating expenses balanced the company's sales
performance in the quarter. MGI Software maintained its investment in
new product and core technology development with R&D expenses
increasing slightly to $1.6 million as compared to $1.58 million in the
comparable quarter. Marketing and selling expenses remained flat at $3
million.
As at April 30, 1999, MGI had $18 million in current assets, which
included $5.6 million in trade receivables and $10.4 million in cash
and short-term investments. The company employed 141 people.
---------------------------------------------------------------
In 000's except Net Three Months Three Months
Loss per share Ended April 30, 1999 Ended April 30, 1998
---------------------------------------------------------------
Revenue $4,397 $2,508
---------------------------------------------------------------
Gross profit $3,827 $2,128
---------------------------------------------------------------
Expenses $5,722 $5,239
---------------------------------------------------------------
Interest income $27 $113
---------------------------------------------------------------
Net loss $1,868 $2,998
---------------------------------------------------------------
Net loss per share $0.08 $0.13
---------------------------------------------------------------
"We are pleased with our performance as management and employees have
exceeded expectations in typically our most difficult quarter," said
Anthony DeCristofaro, president and CEO, MGI Software. "We have
delivered on sales growth, bottom line improvements, and critical new
digital video products, which are expected to set new trends in the
industry."
Institutional investors voted with confidence to finance MGI's business
to the next stage of expansion. In the quarter, the Company completed
its sixth round of financing with the Nesbitt Burns syndicate including
Canaccord Capital Corporation and HSBC James Capel Canada Inc., and
separately with C.I. Covington Fund, securing $13.65 million for
ongoing operations and entry into new markets. As well, the Company
increased its borrowing capital to $4 million with the Royal Bank of
Canada. "Based on these financing activities MGI believes it has
secured available cash and lines of credit to adequately finance
operations through to cashflow self-sufficiency," said Ken Killin, CFO.
Once again, MGI's PC photography line represented the bulk of MGI
revenue in the period, followed by PC video products. According to
reports measuring US retail sell-through in April, MGI's flagship
products MGI PhotoSuite II and MGI VideoWave II had 44 per cent and 57
per cent unit market share respectively. The U.S. market made up 66 per
cent of total sales in the quarter.
MGI products continued their sweep of industry recognition for product
and marketing excellence. Popular Photography and Digital Focus
Newsletter at the annual Photo Marketing Association convention in Las
Vegas named MGI PhotoSuite II Best Software of 1998 Finalist. The
company also received a Codie Award Finalist in the Best New Consumer
Software Program category and a Software Packaging Award for Best
Publishing, Graphics and Multimedia package by the Software &
Information Industry Association at its Spring symposium in Los
Angeles.
In the quarter, MGI Software signed significant OEM licenses to deliver
an estimated 4 million units of MGI products to users this year. The
list includes ATI Technologies for MGI VideoWave II with the new
All-in-Wonder(TM) 128, and Taiwanese scanner manufacturers Avigramm,
Ultima, Kye Systems, and Primax for MGI PhotoSuite and MGI PhotoSuite
II SE.
With potentially the largest installed base of photo and video software
users in the world MGI has begun the process of cultivating the
Internet connection with its customers. The company released a series
of Web content releases for its MGI PhotoSuite II users and has made
its products available for sale on popular web sites such as Kodak.com,
@Home, Digital River and others. MGI products also have been optimized
to maximize the imaging experience on the Internet with support for
Microsoft Internet Explorer 5 and the Intel Pentium(R) III processor.
To ensure that MGI is well positioned to harvest this Internet
opportunity the company has hired e-commerce expert Marsha Scharf to
further MGI's complete business on the Net.
Of most importance, MGI released two digital video products in the
quarter. These are MGI DVD MAX and MGI PURE DIVA, for OEM licensing.
These software products are designed to capitalize on the next major
trend in PC manufacturing with CD-ROM drives being replaced with
DVD-ROM units and introduction of the Intel Pentium III processor
capable of supporting real-time video recording and playback. MGI's
products provide manufacturers new selling and cost reduction
opportunities. For instance, MGI PURE DIVA turns a Pentium III
processor-based system into a sophisticated digital entertainment
center, complete with the first digitalVCR(TM) for the PC, a DVD and
audio CD player, and time-shift TV capabilities. While MGI DVD MAX
eliminates the need for specialized decoder chipsets, relying instead
on the main processor to playback video content. These products
represent tremendous opportunity for MGI as the company expects to see
these products shipped with PCs this holiday season. About MGI
Software
MGI Software is one of the world's leading digital media companies. The
company's early focus on delivering digital media editing technology to
the mass market has led to leadership in the PC photo and video editing
market, with more than 19 million units of its PhotoSuite and VideoWave
products shipped in retail and OEM channels spanning 25 countries. The
company has recently expanded its technological leadership to encompass
all digital entertainment media, including television, movies, and
music, with its DVD MAX, and PURE DIVA products. Through its ever
growing network of partnerships with major consumer electronics
manufacturers, computer hardware and software vendors, photo retailers
and the entertainment industry, MGI is uniquely positioned to take
advantage of the revolution shaping our digital lifestyles.
MGI Software shares trade on The Toronto Stock Exchange (Symbol: MGI).
For more information visit mgisoft.com.
(c) MGI Software Corp., 1999. MGI, MGI PhotoSuite, MGI VideoWave, DVD
MAX, PURE DIVA 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.
MGI SOFTWARE CORP.
BALANCE SHEETS
(unaudited)
(in thousands of dollars)
April 30 April 30
1999 1998
-------------------------------------
Assets
Current assets
Cash $793 $418
Short-term investments 9,681 8,199
Accounts receivable
Trade 5,554 5,098
Other 454 1,059
Prepaids and other assets 743 610
Inventories 823 624
--------- ---------
18,048 16,008
Capital assets 2,690 1,662
--------- ---------
20,738 17,670
--------- ---------
--------- ---------
Liabilities
Current liabilities
Accounts payable and accrued
liabilities 3,299 3,394
Current portion of long term
debt 167 -
Current portion of capital leases 28 -
--------- ---------
3,494 3,934
Convertible debt 2,854 -
Long term debt 290 -
Capital leases 71 -
--------- ---------
6,709 3,934
--------- ---------
Shareholders' Equity
Capital stock 32,656 32,083
Special warrants 7,041 -
Deficit (25,668) (18,347)
--------- ---------
14,029 13,736
--------- ---------
20,738 17,670
--------- ---------
--------- ---------
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
1999 1998
-----------------------------------------
Revenue $4,397 $2,508
Cost of sales 570 380
--------- ---------
3,827 2,128
Expenses
Marketing and selling 2,976 3,060
Research and development 1,617 1,580
Administration 999 461
Amortization of capital assets 130 138
--------- ---------
5,722 5,239
--------- ---------
Loss before undernoted item (1,895) (3,111)
Interest income 27 113
--------- ---------
Loss for the period (1,868) (2,998)
Deficit, beginning of period (23,800) (15,349)
--------- ---------
Deficit, end of period (25,668) (18,347)
--------- ---------
--------- ---------
Loss per share $(0.08) $(0.13)
--------- ---------
--------- ---------
Weighted average number of
common shares outstanding 24,327,449 23,987,246
---------- ----------
---------- ----------
MGI SOFTWARE CORP.
STATEMENT OF CASH FLOWS
(unaudited)
(in thousands of dollars)
Three months Three months
Ended ended
April 30 April 30
1999 1998
----------------------------------
Cash provided by (used in)
Operating activities
Loss for the period $(1,868) $(2,998)
Items not affecting cash
Amortization of capital assets 130 138
Other 9 -
Net change in noncash working capital
amounts (2,017) (841)
--------- ---------
(3,746) (3,701)
--------- ---------
Financing activities
Issue of common shares 136 64
Issue of special warrants, net of
issue costs 7,041 -
Proceeds on issuance of
convertible debt 3,000 -
Repayment of long term dept (43) -
Repayment of capital lease (6) -
--------- ---------
10,128 64
--------- ---------
Investing activities
Purchase of capital assets, net (376) (313)
(Increase) decrease in short term
investments (7,654) 2,614
--------- ---------
(8,030) 2,301
--------- ---------
Increase (decrease) in cash
resources during the period (1,648) (1,336)
Cash, beginning of period 2,441 1,754
--------- ---------
Cash, end of period 793 418
--------- ---------
--------- -------- |
