Mad Catz Fiscal 2013 Third Quarter EPS Improves to $0.05 Compared to Prior Year EPS of $0.02

  Mad Catz Fiscal 2013 Third Quarter EPS Improves to $0.05 Compared to Prior
  Year EPS of $0.02

     Continued International Success Drives 11% Year-to-Date Sales Growth

Business Wire

SAN DIEGO -- February 5, 2013

Mad Catz Interactive, Inc. (NYSE MKT/TSX: MCZ):

Conference Call:       Today, February 5, 2013 at 5:00 p.m. ET
Dial-in numbers:          (303) 223-2680 (U.S. & International)
Webcast:                  www.madcatz.com (Select “Investors”)
Replay Information:       See text of the release


Mad Catz Interactive, Inc. (“Mad Catz” or the “Company”) (NYSE MKT/TSX: MCZ),
today announced financial results for its third fiscal quarter ended December
31, 2012.

For the quarter ended December 31, 2012, the Company generated net sales of
$45.0 million, a decrease of 3% from net sales of $46.2 million in the prior
year quarter. Gross profit increased 15% to $12.9 million, from $11.2 million
in the prior year quarter, while gross profit margin improved to 29% from 24%
a year ago. Total operating expenses in the fiscal 2013 third quarter were
$8.8 million, down 3% from $9.0 million in the prior year quarter, leading to
operating income of $4.1 million, a $1.9 million improvement from the $2.2
million recorded in the prior year quarter. Foreign exchange gain was less
than $0.1 million, compared to a loss of $0.5 million in the prior year
quarter. Reflecting income tax expense of $1.1 million, the Company recorded
net income of $3.1 million, or $0.05 per diluted share, in the fiscal 2013
third quarter, compared to $1.5 million, or $0.02 per diluted share, in the
prior year quarter.

Adjusted EBITDA, a non-GAAP measure (defined as earnings before interest,
taxes, depreciation and amortization and change in fair value of warrant
liability), was $4.9 million in the fiscal 2013 third quarter, compared to
$2.5 million a year ago. Adjusted net income and adjusted income per share,
which exclude the impact of amortization of intangibles, stock-based
compensation, change in warrant liability and goodwill impairment (if any),
were $3.2 million and $0.05, respectively, versus adjusted net income and
adjusted income per share of $1.7 million and $0.03, respectively, in the
prior year quarter. A reconciliation of Adjusted EBITDA, adjusted net income
and adjusted income per share to the Company’s net income and net income per
share is included in the financial tables accompanying this release.

In the nine months ended December 31, 2012, the Company generated net sales of
$98.1 million, an increase of 11% from net sales of $88.4 million in the prior
year period. Year to date, gross profit increased 25% to $28.2 million, from
$22.6 million in the prior year period, while gross profit margin improved to
29% from 26% a year ago. Total operating expenses in the nine months ended
December 31, 2012, were $25.2 million, down 6% from $26.9 million in the prior
year period, leading to operating income of $3.0 million, compared to an
operating loss of $4.3 million in the prior year period. Foreign exchange gain
was less than $0.1 million, compared to a loss of $0.3 million in the prior
year period. Reflecting income tax expense of $1.7 million, the Company
recorded net income of $1.0 million, or $0.01 per diluted share, in the nine
months ended December 31, 2012, compared to a net loss of $2.4 million, or
$0.04 per diluted share, in the prior year period.

Adjusted EBITDA was $5.4 million in the nine months ended December 31, 2012,
compared to a loss of $2.1 million in the prior year period. Adjusted net
income and adjusted income per share were $1.8 million and $0.03,
respectively, versus adjusted net loss and adjusted loss per share of $4.4
million and $0.07, respectively, in the prior year quarter.

Summary of Fiscal 2013 Third Quarter Key Metrics:

  *Fiscal 2013 third quarter net sales decreased 3% from the prior year
    quarter to $45.0 million:

       *North American net sales decreased 13% to $19.1 million, representing
         42% of net sales;
       *European net sales increased 2% to $23.2 million, representing 52% of
         net sales; and,
       *Net sales to other countries increased 78% to $2.8 million,
         representing 6% of net sales.

  *Gross sales by platform:

       *Xbox 360™ products accounted for 33% of total gross sales, versus 35%
         in the prior year quarter;
       *PC and Mac products accounted for 30% of total gross sales, versus
         26% in the prior year quarter;
       *PlayStation 3 products accounted for 7% of total gross sales, versus
         5% in the prior year quarter;
       *Wii-U and Wii products accounted for 2% of total gross sales, versus
         3% in the prior year quarter;
       *Handheld platform products accounted for less than 1% of total gross
         sales, versus 2% in the prior year quarter; and,
       *All other platforms accounted for 28% of total gross sales, versus
         29% in the prior quarter.

  *Gross sales by category:

       *Audio products accounted for 54% of total gross sales, versus 39% in
         the prior year quarter;
       *PC and Mac input device products accounted for 19% of total gross
         sales, versus 13% in the prior year quarter;
       *Specialty controllers accounted for 13% of total gross sales, versus
         24% in the prior year quarter;
       *Accessories accounted for 7% of total gross sales, versus 9% in the
         prior year quarter;
       *Controllers accounted for 5% of total gross sales, versus 9% in the
         prior year quarter; and,
       *Game products accounted for 2% of total gross sales, versus 6% in the
         prior year quarter.

  *Gross sales by brand:

       *Tritton products accounted for 50% of total gross sales, versus 34%
         in the prior year quarter;
       *Mad Catz products accounted for 41% of total gross sales, versus 53%
         in the prior year quarter;
       *Saitek products accounted for 8% of total gross sales, versus 10% in
         the prior year quarter; and,
       *Other branded products accounted for 1% of total gross sales, versus
         3% in the prior year quarter.

  *Reported net position of bank loan less cash at December 31, 2012, of
    $13.5 million, compared to $15.5 million as of December 31, 2011, and
    $14.2 million at March 31, 2012.

Highlights of New Products Shipped in Fiscal 2013 Third Quarter and
Subsequent:

  *Halo 4 licensed versions of the Warhead and Trigger headsets for Xbox 360;
  *Mad Catz S.T.R.I.K.E. 5™ gaming keyboard for PC and Mac;
  *Tritton Kunai headsets for the WiiU, 3DS and DSi; and,
  *Combat Pilot, a new multi-player flight simulation experience.

Highlights of Upcoming Product Launches:

  *R.A.T.^M mobile gaming mouse for PC, Mac and smart devices ;
  *F.R.E.Q.^M headset for PC, Mac and smart devices;
  *M.O.U.S.^9  wireless mouse for PC, Mac and smart devices; and
  *C.T.R.L.^R wireless gamepad for smart devices.

Key Developments in Fiscal 2013 Third Quarter and Subsequent:

  *Announced GameSmart™ technology initiative for smart devices.

Commenting on the results, Darren Richardson, President and Chief Executive
Officer of Mad Catz, said, “Three years ago, we made a strategic decision to
shift our focus towards high-value products designed for passionate, hard core
gaming consumers. Though this major transition is still on-going, we have now
reached an inflection point in which growth in our targeted product categories
is surpassing the decline in the sales of our legacy products.

“Net sales during the holiday period declined 3% with the continuing growth in
Europe, Canada and Asia-Pacific offset by a decline in sales in the United
States. In the third quarter of fiscal 2013 sales of PC and Mac input device
products, predominately gaming mice and keyboards, grew 40% and accounted for
19% of sales. Sales of audio products grew 33% and accounted for 54% of sales.

“On a year to date basis net sales grew by 11% with European net sales up 15%,
Asia Pacific up 126% Canada up 44%, and the United States down 4%. Year to
date, sales of PC and Mac input device products grew 52% and accounted for 20%
of sales. Sales of audio products grew 33% and accounted for 48% of sales.
With 68% of our business growing at over 30% on a year over year basis, we are
confident that the strategy to reposition the Company is taking effect,
despite the on-going cautious consumer environment and challenging industry
trends.

“We also believe that our growing portfolio of premium products have much
longer life spans and offer the best path forward as the video game industry
reaches a transition with many casual gamers migrating to mobile gaming,
leaving hard core gamers who demand superior products. We realize that
increased sales of our premium products are needed and we are committed to
increasing our sales and marketing efforts to expand awareness of these
products, while keeping a sharp eye on operating expenses.

“In addition to our focus on creating aspirational products, we continue to
expand our geographic footprint by building a worldwide sales and marketing
team. As the Internet allows for increased worldwide on-line competition, the
Company is committed to positioning itself as a leading provider of products
that optimize the passionate video gamer’s performance on a global basis.

“For example, we continue to invest in sales and marketing in the Asia Pacific
region and are starting to realize the benefits of that investment through our
expanded geographic footprint. Sales to Other Countries accounted for 2% of
net sales in fiscal 2011, 5% of sales in fiscal 2012, and 7% of sales in the
first three quarters of fiscal 2013.

“We are also excited about the GameSmart initiative announced earlier this
month. GameSmart aims to enable core gaming on smart devices, equivalent to
the console living room or PC gaming experience. We’re committed to adding
smart device compatibility to our core gaming products wherever practical and
to playing a pivotal role in bringing core gaming to smart devices. We are
excited about this new initiative and believe it fits with our long-term
strategy of designing innovative products for passionate gamers.”

Mr. Richardson concluded, “Looking ahead, we have a range of exciting
initiatives that should benefit calendar 2013 and beyond. Our expanding line
of products for passionate consumers is going into wide distribution in many
parts of the world aided by our expanding global distribution footprint. The
launch of the WiiU marked the first of a new generation of consoles that we
believe will provide additional product opportunities. We intend to increase
marketing and awareness efforts for our universally acclaimed audio products
and R.A.T. PC and Mac products and plan to further fill out the PC and Mac
product range. We intend to continue targeting software opportunities that
pose manageable downside risk by complementing our hardware initiatives. We
are also committed to supporting the professional gaming community through the
development of products that live up to their exacting demands.”

The Company will host a conference call and simultaneous webcast on February
5, 2013, at 5:00 p.m. ET, which can be accessed by dialing (303) 223-2680.
Following its completion, a replay of the call can be accessed for 30 days at
the Company's Web site (www.madcatz.com, select “About Us/Investors”) or for 7
days via telephone at (800) 633-8284 (reservation #21647758) or, for
International callers, at (402) 977-9140.

About Mad Catz

Mad Catz Interactive, Inc. (NYSE MKT/TSX: MCZ) is a global provider of
innovative interactive entertainment products marketed under its Mad Catz^®
(gaming),Tritton^® (audio), and Saitek^® (simulation) brands. Mad Catz also
develops flight simulation software through its internal ThunderHawk Studios™;
publishes games under its Mad Catz brand; and distributes games and videogame
products for third parties. Mad Catz distributes its products through most
leading retailers offering interactive entertainment products and has offices
in North America, Europe and Asia. For additional information please go to
www.madcatz.com.

Social Media

Facebook: http://www.facebook.com/MadCatzInc
Twitter: http://twitter.com/MadCatzInc
YouTube: http://www.youtube.com/MadCatzCompany


Safe Harbor

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," "should," "plan," "goal," "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; the continuing impact of current economic
conditions or a further downturn in the market or industry. 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.

MAD CATZ INTERACTIVE, INC.
Consolidated Statements of Operations
(unaudited, in thousands of US$, except share and per share data)

                Three Months Ended               Nine Months Ended
                 December 31,                      December 31,
                 2012            2011            2012            2011
Net sales        $ 45,019        $ 46,188         $ 98,056        $ 88,402
Cost of sales     32,116         34,954         69,891         65,792     
Gross profit       12,903           11,234           28,165           22,610
                                                                    
Operating
expenses:
Sales and          4,084            4,455            11,323           11,467
marketing
General and        3,042            2,832            8,818            9,433
administrative
Research and       1,080            1,285            3,318            4,476
development
Acquisition        320              187              1,044            779
related items
Amortization
of intangible     233            235            698            721        
assets
Total
operating         8,759          8,994          25,201         26,876     
expenses
Operating          4,144            2,240            2,964            (4,266     )
income (loss)
                                                                    
Interest           (227       )     (371       )     (747       )     (818       )
expense, net
Foreign
exchange gain      5                (536       )     11               (338       )
(loss), net
Change in fair
value of           273              162              343              2,696
warrant
liability
Other income      31             7              108            39         
Income (loss)
before income      4,226            1,502            2,679            (2,687     )
taxes
                                                                    
Income tax
expense           1,099          (32        )    1,719          (251       )
(benefit)
Net income       $ 3,127         $ 1,534         $ 960           $ (2,436     )
(loss)
                                                                                 
Basic net
income (loss)    $ 0.05          $ 0.02          $ 0.02          $ (0.04      )
per share
Diluted net
income (loss)    $ 0.05          $ 0.02          $ 0.01          $ (0.04      )
per share
                                                                                 
Weighted
average shares    63,477,399     63,456,085     63,469,217     62,973,993 
- basic
Weighted
average shares    64,346,093     64,348,742     64,262,884     62,973,993 
- diluted


MAD CATZ INTERACTIVE, INC.
Consolidated Balance Sheets
(unaudited in thousands of US$)

                                            December 31,  March 31,
                                             2012           2012
Assets
Current assets:
Cash                                         $  4,531       $  2,474
Accounts receivable, net                        28,426          15,278
Other receivables                               1,865           1,196
Inventories                                     28,074          32,521
Deferred tax assets                             110             110
Income tax receivable                           1,747           1,747
Other current assets                           3,599        3,305   
                                                68,352          56,631
                                                            
Deferred tax assets                             435             440
Other assets                                    471             863
Property and equipment, net                     3,293           4,037
Intangible assets, net                          3,920           4,626
Goodwill                                       10,485       10,476  
Total assets                                 $  86,956     $  77,073  
                                                            
Liabilities and Shareholders' Equity
Current liabilities:
Bank loan                                    $  18,025      $   16,654
Accounts payable                                24,033          17,634
Accrued liabilities                             7,330           6,401
Contingent consideration, current               1,614           1,600
Income taxes payable                           2,096        1,375   
Total current liabilities                       53,098          43,664
Long term liabilities:
Other long term liabilities                     140             211
Deferred tax liabilities                        245             245
Contingent consideration                        2,206           2,769
Warrant liability                              350          693     
Total liabilities                               56,039          47,582
Shareholders’ equity:
Common stock                                    59,965          59,432
Other comprehensive loss                        (1,685  )       (1,618  )
Accumulated deficit                            (27,363 )     (28,323 )
Total shareholders’ equity                     30,917       29,491  
Total liabilities and shareholders’ equity   $  86,956     $  77,073  


MAD CATZ INTERACTIVE, INC.
Supplementary Data
(unaudited, in thousands of US$)

Geographical Sales Data
The Company's net sales were generated in the following geographic regions:

                            Three months ended       Nine months ended
                             December 31,             December 31,
                             2012        2011         2012        2011
Net sales:
United States                $ 17,074     $ 20,650     $ 39,257     $ 40,760
Europe                         23,164       22,781       47,930       41,849
Canada                         1,986        1,189        3,885        2,701
Other countries               2,795      1,568      6,984      3,092  
                             $ 45,019    $ 46,188    $ 98,056    $ 88,402 

Adjusted Net Income Reconciliation (non GAAP)

                             Three Months Ended        Nine Months Ended
                             December 31,             December 31,
                             2012         2011         2012         2011
Pre-tax income (loss)        $ 4,226      $ 1,502      $ 2,679      $ (2,687 )
Amortization of intangible     233          236          698          721
assets
Change in fair value of
warrant                        (273   )     (162   )     (343   )     (2,696 )

liability
Stock-based compensation      141       189       525       468    
cost
Adjusted pre-tax income       4,327     1,765     3,559     (4,194 )
(loss)*
Adjusted provision for
income taxes (at effective    1,090     (59    )   1,787     (203   )
rate)
Adjusted net income          $ 3,237    $ 1,824    $ 1,772    $ (3,991 )
(loss)*
Adjusted diluted earnings    $ 0.05     $ 0.03     $ 0.03     $ (0.06  )
(loss) per share*

*Adjusted net income and adjusted diluted loss per share are non-GAAP
financial measures and are not intended to be considered in isolation from, as
a substitute for, or superior to, the financial information prepared and
presented in accordance with GAAP, and may be different from non-GAAP
financial measures used by other companies. In addition, these non-GAAP
measures have limitations in that they do not reflect all of the amounts
associated with the Company's results of operations as determined in
accordance with GAAP. Mad Catz believes that certain non-GAAP financial
measures, when taken together with the corresponding GAAP financial measures,
provide meaningful supplemental information regarding the Company's
performance by excluding certain items that may not be indicative of the
Company's core business, operating results or future outlook. Mad Catz’
management uses, and believes that investors benefit from referring to, these
non-GAAP financial measures in assessing the Company’s operating results, as
well as when planning, forecasting and analyzing future periods. These
non-GAAP measures, specifically those that adjust for stock-based
compensation, amortization of intangibles and goodwill impairment, and change
in fair value of warrant liability, also facilitate comparisons of the
Company’s performance to prior periods.

EBITDA and Adjusted EBITDA Reconciliation (non GAAP)

                               Three months ended     Nine months ended
                               December 31,           December 31,
                                2012       2011       2012       2011
Net income (loss)               $ 3,127    $ 1,534     $ 960      $ (2,436 )
Adjustments:
Interest expense                  227         371         747         818
Income tax expense (benefit)      1,099       (32   )     1,719       (251   )
Depreciation and amortization    740       798       2,304     2,431  
                                                                             
EBITDA                           5,193     2,671     5,730     562    
Change in fair value of          (273  )    (162  )    (343  )    (2,696 )
warrant liability
Adjusted EBITDA (loss)          $ 4,920    $ 2,509    $ 5,387    $ (2,134 )


EBITDA, a non-GAAP financial measure, represents net income or loss before
interest, taxes, depreciation and amortization. To address the Warrants issued
in the first quarter of fiscal 2012 and the resulting gain/loss on the change
in the related warrant liability, we have excluded this non-operating,
non-cash charge and defined the result as “Adjusted EBITDA”. We believe this
to be a more meaningful measurement of performance than the previously
calculated EBITDA. Adjusted EBITDA represents net loss plus interest, taxes,
depreciation and amortization and change in fair value of warrant liability.
Adjusted EBITDA is not intended to represent cash flows for the period, nor is
it being presented as an alternative to operating income 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 the United States. As defined,
Adjusted EBITDA is not necessarily comparable to other similarly titled
captions of other companies due to potential inconsistencies in the method of
calculation. We believe, however, that in addition to the operating
performance measures found in our financial statements, Adjusted EBITDA is a
useful financial performance measurement for assessing our Company’s operating
performance. Our management uses Adjusted EBITDA as a measurement of operating
performance in comparing our performance on a consistent basis over prior
periods, as it removes from operating results the impact of our capital
structure, including the interest expense resulting from our outstanding debt,
and our asset base, including depreciation and amortization of our capital and
intangible assets. In addition, Adjusted EBITDA is an important measure for
our lender.

Contact:

Mad Catz Interactive, Inc.
Allyson Evans, CFO
619-683-9830
or
JCIR
Joseph Jaffoni, Norberto Aja, James Leahy
212-835-8500 or mcz@jcir.com
 
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