NOVEMBER 15, 1999
GTR Group Sales Increase by 169 % in Second Quarter:
Games Trader and Mad Catz Divisions Both Contribute to
Quarterly Profit
BRAMPTON, ONTARIO--GTR Group Inc. (formerly Games Trader Inc.), a
leading supplier of value-priced video games and accessories for
video game consoles, today announced financial results for the
second quarter ended September 30, 1999. These results include
one month of activity for the Company's newly acquired video game
accessories division Mad Catz, Inc. for the period of September 1,
1999 to September 30, 1999.
Sales for the second quarter ended September 30, 1999 increased by
$11 million to $17.5 million, compared to $6.5 million for the
same period last year, an increase of 169 percent. Gross profit
margin for the second quarter just ended increased to 23.1 percent
compared to 18.4 percent last year. Net income before goodwill
charges was $623,042 or $0.02 per share compared to a loss before
goodwill charges of $4,140 in the second quarter last year. Net
income for the period was $364,808 or $0.01 per share compare to a
loss of $104,246 last year. Mad Catz contributed $9.5 million is
sales to overall second quarter results.
Sales for the six months period ended September 30, 1999 increased
by 102 percent to $23.3 million, compared to $11.5 million for the
same period last year. Gross profit margin for the period
increased to 25.0 percent compared to 20.4 percent last year. Net
income before goodwill charges for the period was $1.2 million or
$0.04 per share compared to a loss of $237,680 for the same period
last year.
Mr. Peter Kozicz, President and Chief Executive Officer of GTR
commented: "We are pleased with the results of the second quarter.
Games Trader, our value-priced division and Mad Catz, our video
game accessories division both posted profits in the second
quarter. These strong results are attributable to the continued
growth of our value-priced video game business and the inclusion
of one month of results for Mad Catz. It is important to note
that Mad Catz and Games Trader sales cycle closely reflect the
retail sales cycle in the overall video game business. As a
result, we typically report 35 to 40 percent of our annual sales
in the first half of the year and consequently we report between
60 and 65 percent of our annual sales between October 1st and
March 31st. The main reason for such a strong variance is quite
simple: the last two quarters include the strong Christmas season.
We expect this year to be no exception."
"The acquisition of Mad Catz during the second quarter has
established GTR as a leading player in the interactive
entertainment industry. It also provided us with a
diversification of our product line and gave us access to
proprietary high margin products and significant exposure to the
vibrant video game accessories market. We fully expect Mad Catz
to positively impact our business in the future"
Mr Kozicz also said: "Since we bought Mad Catz, we have been
diligently working on putting in place the necessary business
infrastructure, systems, procedures and controls that will allow
us to manage, control and measure the growth of our accessories
business. We have also put in place strategies that will allow us
to maximize channel synergies. These initiatives will enable GTR
to fully capitalize on Mad Catz's potential and take advantage of
the market opportunities that broadening demographics and new
video game system introduction are creating in the accessories
market."
GTR Group Inc. is a diversified interactive entertainment company
located in Brampton, Ontario. GTR's product lines include
previously played and republished video games for Nintendo, Sega
and Sony game systems which are marketed to mass merchants
retailers and specialty retailers in North America under the Games
Trader brand and a full range of video game accessories for video
game consoles and PC gaming systems which are marketed under the
Mad Catz brand. GTR Group recently established its ZapYou.com
e-commerce division to partner with existing electronic retailers
in selling interactive entertainment products over the Internet.
This press release contains forward-looking statements that
involve a number of risks and uncertainties. Among the important
factors that could cause actual results to differ materially from
those indicated by such looking-forward statements are market and
general economic conditions and the risk factors detailed from
time to time in the company's periodic reports and registration
statements filed with the Securities and Exchange Commission.
/T/
Unaudited Consolidated Financial Statements of
GTR Group Inc.
(FORMERLY GAMES TRADER INC.)
Three months ended and six months ended September 30, 1999 with
comparative figures for the period July 1, 1998 to September 30,
1998
GTR Group Inc.
(FORMERLY GAMES TRADER INC.)
Consolidated Balance Sheets
----------------------------------------------------------
30-sept-99 31-mars-99
Unaudited Audited
----------------------------------------------------------
ASSETS
Current assets:
Cash $2,201,586 $4,758,419
Accounts receivable 18,785,417 6,462,537
Inventories 33,650,962 7,342,439
Prepaid expenses
and deposits 3,107,446 261,252
Current portion of
future income
tax assets 165,127 83,905
Income tax
receivable 4,180,844 360,823
---------------------------------------------------------
62,091,382 19,269,375
Future income tax assets 5,652,453 1,201,388
Capital assets 4,629,956 2,873,144
Shareholder advances 16,110 28,015
Goodwill and intangibles 41,238,497 4,656,958
---------------------------------------------------------
$113,628,398 $28,028,880
---------------------------------------------------------
---------------------------------------------------------
LIABILITIES and
SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $15,925,604 $-
Accounts payable
and accrued liabilities 23,036,267 4,248,092
Current portion of
bank term loan 324,000 324,000
Shareholder loan 333,333 666,667
Mad Catz obligation 11,080,978 -
---------------------------------------------------------
50,700,182 5,238,759
Bank term loan 148,269 375,361
Mad Catz obligation 6,104,397 -
Shareholders' equity:
Capital stock 53,416,365 19,957,176
Retained earnings 3,274,934 2,457,584
Cumulative exchange
gain/(loss) (15,749) -
---------------------------------------------------------
56,675,550 22,414,760
---------------------------------------------------------
$113,628,398 $28,028,880
---------------------------------------------------------
---------------------------------------------------------
GTR Group Inc.
(FORMERLY GAMES TRADER INC.)
Consolidated Statements of Operations - Unaudited
Three months ended and six months ended September 30, 1999
with comparative figures for the period April 1, 1998 to
September 30, 1998
-------------------------------------------------------------------
Three Three Six Six
months months months months
ended ended ended ended
30-sept-99 30-sept-98 30-sept-99 30-sept-98
------------------------------------------------------------------
Sales $17,499,632 $6,507,185 $23,283,922 $11,551,125
Cost of sales 13,448,548 5,311,712 17,456,517 9,191,828
------------------------------------------------------------------
Gross profit 4,051,084 1,195,473 5,827,405 2,359,297
Expenses:
Selling expenses 1,270,775 412,009 1,649,414 790,729
Administrative
expenses 1,647,168 430,776 2,359,221 842,627
Interest on term
loan and
debentures 0 211,726 0 526,151
Interest on
shareholder loan 11,188 0 26,591 0
Interest on bank
term loan 138,161 0 153,032 0
Amortization 331,098 113,253 633,215 411,638
Other (income)
expenses (146,870) 77,828 (233,686) 84,345
Foreign exchange
gain (21,422) (75,140) (163,177) (117,896)
------------------------------------------------------------------
3,230,098 1,170,452 4,424,610 2,537,594
------------------------------------------------------------------
Income (loss)
before income taxes 820,986 25,021 1,402,795 (178,297)
Income taxes 197,944 29,161 228,166 59,383
------------------------------------------------------------------
Income (loss) before
goodwill charges 623,042 (4,140) 1,174,629 (237,680)
Goodwill charges
(Net of Tax) 258,234 100,106 357,279 199,151
------------------------------------------------------------------
Net income (loss) 364,808 (104,246) 817,350 (436,831)
Retained earnings
(deficit), beginning
of period 2,910,126 (2,159,028) 2,457,584 (1,826,443)
------------------------------------------------------------------
Retained earnings
(deficit), end
of period $3,274,934 $(2,263,274) $3,274,934 $(2,263,274)
------------------------------------------------------------------
------------------------------------------------------------------
Earnings (loss)
per share before
goodwill charges $0.02 $(0.00) $0.04 $(0.02)
Earnings (loss)
per share on
goodwill charges $(0.01) $(0.01) $(0.01) $(0.02)
------------------------------------------------------------------
Earnings (loss)
per share $0.01 $(0.01) $0.03 $(0.04)
------------------------------------------------------------------
GTR Group Inc.
(FORMERLY GAMES TRADER INC.)
Consolidated Cash Flow Statements - Unaudited
Three months ended and six months ended September 30, 1999
with comparative figures for the period April 1, 1998
to September 30, 1998
-------------------------------------------------------------------
Three months Three months Six months Six months
ended ended ended ended
30-sept-99 30-sept-98 30-sept-99 30-sept-98
-------------------------------------------------------------------
Cash flows from
operating activities
Net Income (loss) $364,808 $(104,246) $817,350 $(436,831)
Adjustments for:
Amortization 618,493 242,520 1,049,877 670,172
Foreign exchange
gain (2,100,416) - (2,096,608) -
Changes in non-Cash
operating working
capital
Increase in trade
and other
receivables (9,604,164) (3,426,540) (8,576,140) (240,068)
Increase in prepaid
expenses (945,287) 14,688 (1,669,803) (13,186)
Increase in
inventories (4,332,724) 370,707 (12,172,163) (2,419,548)
Increase in trade
payables and accrued
liabilities 7,006,825 429,544 8,930,836 (1,145,835)
Income tax
receivable 219,919 - 219,919 -
-------------------------------------------------------------------
Cash flows from
operating
activities (8,772,546) (2,473,327)(13,496,732) (3,585,296)
-------------------------------------------------------------------
Cash flows from
investing activities
Net assets of Mad Catz
net of debt
acquired (8,715,441) - (8,715,441) -
Goodwill (37,030,691) - (37,030,691) -
Investment in
subsidiary (7,412,900) - (7,412,900) -
Purchase of capital
assets (1,729,094) (519,031) (1,906,964) (641,098)
-------------------------------------------------------------------
Cash flows used in
investing
activities (54,888,125) (519,031) (55,065,996) (641,098)
-------------------------------------------------------------------
Cash flows from
financing activities
Obligation to former
shareholders of
Mad Catz 37,037,198 - 37,037,198 -
Payments to former
shareholders of
Mad Catz (19,851,823) - (19,851,823) -
Proceeds from
issue of share
capital 21,281,541 - 36,142,151 -
Transaction costs (1,200,284) - (2,682,961) -
Repayment of bank
term loan (113,546) 926,452 (227,092) 926,452
Repayment of secured
debenture (160,718)(1,039,996) (321,433) (1,039,996)
-------------------------------------------------------------------
Cash flows used
in financing
activities 36,992,368 (113,544) 50,096,040 (113,544)
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