Mad Catz Reports Fiscal 2013 Revenue of $122.7 Million

  Mad Catz Reports Fiscal 2013 Revenue of $122.7 Million

               - Goodwill Impairment Charge of $10.5 Million -

Business Wire

SAN DIEGO -- June 6, 2013

Mad Catz Interactive, Inc. (“Mad Catz” or “the Company”) (NYSE MKT/TSX: MCZ),
today announced financial results for the fiscal fourth quarter and full year
ended March 31, 2013.

For the fiscal year ended March 31, 2013, the Company generated net sales of
$122.7 million, an increase of 4% from net sales of $117.6 million in fiscal
2012. Gross profit for fiscal 2013 increased 10% to $34.5 million, from $31.5
million in the prior fiscal year, while gross profit margin increased to 28%,
compared to 27% in fiscal 2012. Total operating expenses in fiscal 2013,
inclusive of a $10.5 million non-cash goodwill impairment charge, were $44.0
million, an increase of $8.7 million over the prior year, leading to an
operating loss of $9.5 million, compared to an operating loss of $3.9 million
a year ago. Foreign exchange gain was $0.6 million in fiscal 2013, compared to
a loss of $0.6 million in fiscal 2012. Reflecting income tax expense of $2.0
million, the Company recorded a net loss of $11.2 million, or a loss of $0.18
per share, in the fiscal year ended March 31, 2013, compared to a net loss of
$1.6 million, or $0.03 per diluted share in the prior fiscal year.

Adjusted EBITDA, a non-GAAP measure (defined as earnings before interest,
taxes, depreciation and amortization, goodwill impairment and change in fair
value of warrant liability), was $4.6 million in fiscal 2013, compared to a
loss of $1.1 million in fiscal 2012. Adjusted net income and adjusted net
income per share, which exclude the impact of amortization of intangibles,
stock-based compensation, change in warrant liability and goodwill impairment,
were $0.0 million and $0.00, respectively, in fiscal 2013, versus $2.7 million
and $0.04, respectively, in fiscal 2012. A reconciliation of Adjusted EBITDA,
adjusted net income (loss) and adjusted diluted earnings (loss) per share to
the Company’s net income (loss) and net income loss per share is included in
the financial tables accompanying this release.

For the fiscal fourth quarter ended March 31, 2013, Mad Catz reported net
sales of $24.6 million, down 16% from $29.1 million in the fiscal 2012 fourth
quarter. Gross profit for the March 2013 quarter declined 29% to $6.4 million,
from $8.9 million in the same quarter of the prior year, while gross profit
margin declined to 26%, compared to 31% in fiscal 2012. Total operating
expenses in the fiscal 2013 fourth quarter, inclusive of a $10.5 million
non-cash goodwill impairment charge, increased 121% to $18.8 million,
resulting in an operating loss of $12.5 million, compared with operating
income of $0.3 million in the comparable prior year period. Foreign exchange
gain was $0.6 million in the fiscal 2013 fourth quarter, compared to a loss of
$0.2 million in the fiscal 2012 fourth quarter. Reflecting income tax expense
of $0.3 million, the Company reported a net loss of $12.2 million for the
quarter ended March 31, 2013, or $0.19 per diluted share, versus net income of
$0.8 million, or $0.01 per diluted share in the prior year fiscal fourth
quarter.

Adjusted EBITDA loss was $0.7 million in the fourth quarter of fiscal 2013,
compared to Adjusted EBITDA of $1.1 million in the prior year quarter.
Adjusted net loss and adjusted net loss per share of $2.2 million and $0.04,
respectively, in the fiscal fourth quarter of 2013 compared with adjusted net
income and adjusted diluted earnings per share of $1.3 million and $0.02,
respectively, in the same period a year ago.

Summary of Fiscal 2013 and Fourth Quarter Key Metrics:

  *Fiscal 2013 net sales increased 4% to $122.7 million, while fiscal fourth
    quarter sales fell 16% to $24.6 million:

       *European net sales increased 14% to $62.0 million, and 11% to $14.0
         million, in fiscal 2013 full-year and fourth quarter periods,
         respectively. European net sales represented 50% and 57% of full-year
         and quarterly net sales, respectively;
       *North American net sales decreased 11% to $51.3 million, and 41% to
         $8.2 million, in the fiscal 2013 full-year and fourth quarter
         periods, respectively. North American net sales represented 42% and
         33% of full-year and quarterly net sales, respectively; and,
       *Net sales in other countries increased 65% to $9.4 million, and
         decreased 7% to $2.4 million, in the fiscal 2013 full-year and fourth
         quarter periods, respectively. Net sales in other countries
         represented 8% and 10% of full-year and quarterly net sales,
         respectively.

  *Gross sales by platform:

       *PC and Mac product sales were 34% and 43% of sales in the fiscal 2013
         full-year and fourth quarter, versus 28% and 32% a year ago,
         respectively;
       *Xbox 360™ products accounted for 30% and 22% of sales in the fiscal
         2013 full-year and fourth quarter, versus 31% and 26% in the
         respective prior year periods;
       *PS3 products sales accounted for 8% and 10% of fiscal 2013 full-year
         and fourth quarter sales, versus 8% and 14% in the respective prior
         year periods;
       *Wii products represented 1% and less than 1% of fiscal 2013 full-year
         and fourth quarter sales, versus 3% and 1% in the prior year periods,
         respectively;
       *Handheld platform products were 1% and less than 1% of sales in the
         fiscal 2013 full-year and fourth quarter periods, versus 2% and 1% in
         the prior year’s respective periods; and,
       *Multiple and other platforms accounted for 26% and 24% of fiscal 2013
         full-year and fourth quarter sales, versus 28% and 26% in the
         respective prior year periods.

  *Gross sales by category:

       *Audio products accounted for 48% and 45% of fiscal 2013 full-year and
         fourth quarter sales, versus 38% and 37% of sales in the prior year
         periods, respectively;
       *PC and Mac input device sales were 21% and 28% of sales in the fiscal
         2013 full-year and fourth quarter, versus 15% and 18% in the
         respective prior year periods;
       *Specialty controllers accounted for 14% and 16% of sales in the
         fiscal 2013 full-year and fourth quarter, versus 25% and 28% in the
         prior year periods, respectively;
       *Accessories sales were 8% and 7% of fiscal 2013 full-year and fourth
         quarter sales, versus 10% in each of the prior year periods;
       *Controllers represented 5% and 3% of sales in the fiscal 2013
         full-year and fourth quarter, versus 10% and 5% in the prior year
         periods, respectively; and,
       *Game sales accounted for 4% and 2% of fiscal 2013 full-year and
         fourth quarter sales, versus 2% in each of the prior year periods.

  *Gross sales by brand:

       *Mad Catz products represented 45% and 46% of sales in the fiscal 2013
         full-year and fourth quarter, versus 54% and 55% in the respective
         prior year periods;
       *Tritton products accounted for 44% and 41% of sales in the fiscal
         2013 full-year and fourth quarter, versus 32% and 31% in the prior
         year periods, respectively;
       *Saitek products accounted for 9% and 11% of sales in the fiscal 2013
         full-year and fourth quarter, versus 10% of sales in each of the
         prior year periods; and,
       *Other branded sales accounted for less than 2% of sales in both the
         full-year and fourth quarter of fiscal 2013, versus 4% in each of the
         prior year periods.

  *Reported net position of bank loan less cash at March 31, 2013 of $6.1
    million, compared to $13.5 million as of December 31, 2012, and $14.2
    million at March 31, 2012.

Highlights of New Products Shipped in Q4 of Fiscal 2013 and Subsequent to the
Fiscal Year-End:

  *The F.R.E.Q.7 surround sound gaming headset for PC, Mac and Smart Devices;
  *The M.O.U.S.9 wireless mouse for PC, Mac and Smart Devices; and,
  *The R.A.T.M gaming mouse for PC, Mac and Smart Devices.

Key Developments in Q4 of Fiscal 2013 and Subsequent to the Fiscal Year-End:

  *Introduced the GameSmart technology initiative that allows control
    products to function through the Bluetooth ^ Smart stack and be game and
    hardware independent;
  *Announced a new range of products featuring the Company's new GameSmart
    technology, including the R.A.T.M mobile gaming mouse, the F.R.E.Q.M
    headset, the M.O.U.S.9 wireless mouse, and the C.T.R.L.R wireless gamepad;
  *Signed an agreement with CSR, which will enable the Company to utilize the
    state-of-the-art aptX Low Latency codec across a new range of GameSmart
    wireless Bluetooth products;
  *Began accepting pre-orders for new range of mobile products featuring
    GameSmart technology;
  *Introduced HD-PA components from STMicroelectronics that incorporate
    Soundcore R3 technology from Soundchip in our forthcoming range of
    GameSmart headsets;
  *Signed license agreement with Microsoft to produce and distribute a range
    of products for use with the Xbox One;
  *Announced an agreement with AM3D to utilize AM3D Audio Enhancement
    Technology across a new range of GameSmart enabled wireless Headsets;
  *Announced an agreement with Bayer to incorporate ViviTouch ^ ™ 4D Sound
    Technology in headsets;
  *Announced the appointment of Karen McGinnis as Chief Financial Officer
    effective June10, 2013; and,
  *Announced an agreement with Nvidia Corporation to participate in the Built
    for Tegra^® program and jointly promote the standardization and
    enhancement of gaming on Smart Devices.

Commenting on the results, Darren Richardson, President and Chief Executive
Officer of Mad Catz, said, “Fiscal 2013 was a year of further transition for
Mad Catz as we made progress toward our goal of bringing to market high-value
products built with a focus on passionate, hard core gamers. While this
initiative is ongoing, our success to date is reflected in the continued
strong sales growth of our Tritton premium audio products and Mad Catz mice
and keyboard products as well as the continued strength of our Saitek flight
simulation products. We are very excited about our current and upcoming
product lines as we believe they reflect our efforts over the past several
years to address ever-changing consumer demands with quality, well designed
products.

“Fiscal 2013 net sales of $122.7 million were the second highest in the
Company’s history. We also made improvements in gross margin from 27% to 28%.
Operating expenses excluding goodwill impairment were reduced by 5%. We also
made significant improvement to our balance sheet with inventory decreasing
from $32.5 million to $23.8 million, a decrease of $8.7 million. Net debt was
also reduced from $14.2 million to $6.1 million. This leaves the Company
favorably positioned for the upcoming console transition.

“A key initiative that became a reality in fiscal 2013 was the launch of
GameSmart, our line of interactive mobile gaming accessories including
controllers, mice, keyboards and headsets. Smart devices have made
considerable inroads in delivering all forms of entertainment including games,
music, movies, books, and social media. Mobile gaming is a vibrant and
exciting space and, while we don’t see controller-based games replacing touch
screen games, we expect controller-based games to enhance and enlarge the
smart device gaming experience to include the living room experience.

“At next week’s Electronic Entertainment Expo (E3) in Los Angeles we will
unveil the keystone product in our GameSmart initiative, Project M.O.J.O., an
android micro console configured to harness the maximum gaming horsepower from
an android device. The Project M.O.J.O. android micro console is being
designed to interact seamlessly with our GameSmart controllers, mice,
keyboards and headsets. With our long history in the gaming industry, Mad Catz
has the technical capability, product breadth, global distribution, and
developer and publisher relationships that uniquely position our company to
embark on this ambitious initiative. We believe the GameSmart initiative fits
perfectly with our long-term strategy of designing innovative products for
passionate gamers and our strategy of expanding into emerging markets.

“Be it our Saitek simulation products, Tritton audio products, R.A.T. gaming
mice or our GameSmart line of products, we are confident these premium
products hold much longer product life spans and offer the best path forward
as the video game industry reaches another inflection point with both the
introduction of new gaming consoles as well as the growing shift by casual
gamers towards tablet and smartphone gaming. We realize and understand that
more sales of these key 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. We look forward to these factors
benefiting our fiscal 2014 results.

“As games are increasingly crossing geographic borders brought on by the
borderless on-line play afforded by the Internet, we will continue our efforts
to expand our geographic footprint and position the Company as a leading
provider of products that optimize the passionate video gamer’s performance on
a global basis. We are starting to realize the benefits of our investment in
an expanded geographic footprint in the Asia Pacific region and Europe.
European net sales increased 14% to $62.0 million in the fiscal 2013 full-year
period, while net sales to other countries increased 65% to $9.4 million.

Mr. Richardson concluded, “So far in fiscal 2014, we’re seeing a sharp
reduction in our console product sales due to the upcoming console transition.
This decline, however, is being partially offset by continuing strong growth
in our PC & Mac product sales. We are hopeful that our GameSmart products will
begin to make a positive contribution as the year unfolds, and we also expect
to see added revenue from our drive into emerging markets. We are eagerly
looking forward to the upcoming launch of the Xbox One and PlayStation 4
consoles and are excited about the opportunity to develop a range of
innovative products to support the platforms that we expect will help drive
new revenue streams and additional scope for innovation.”

The Company will host a conference call and simultaneous webcast on June 6,
2013, at 5:00 p.m. ET, which can be accessed by dialing (303) 223-4390.
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 #21659043) 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™;
operates flight simulation centers under its Saitek brand; 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

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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; the effect of console transitions on the gaming industry; the
ability to successfully market both new and existing products domestically and
internationally; difficulties or delays in manufacturing; or a 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                    Twelve Months Ended

                     March 31,                             March 31,
                     2013            2012               2013            2012
                                                                              
Net sales            $ 24,608           $ 29,150           $ 122,664          $ 117,552
                                                                              
Cost of sales         18,257            20,260            88,148            86,052
                                                                              
Gross profit           6,351              8,890              34,516             31,500
                                                                              
Operating
expenses:
Sales and              3,935              3,846              15,397             15,313
marketing
General and            3,110              2,978              11,941             12,411
administrative
Research and           1,040              1,158              4,205              5,634
development
Acquisition            43                 288                1,088              1,067
related items
Goodwill               10,468             -                  10,468             -
impairment
Amortization          234               234               933               955
of intangibles
Total
operating              18,830             8,504              44,032             35,380
expenses
Operating              (12,479)           386                (9,516)            (3,880)
income (loss)
Interest               (147)              (305)              (894)              (1,123)
expense, net
Foreign
exchange gain          603                (222)              615                (560)
(loss), net
Change in fair
value of               201                (139)              544                2,557
warrant
liability
Other income          (21)              76                87                115
Income (loss)
before income          (11,843)           (204)              (9,164)            (2,891)
taxes
                                                                                
Income tax
(expense)             (317)             1,008             2,036             1,264
benefit
                                                                                
Net income           $ (12,160)         $ 804              $ (11,200)         $ (1,627)
(loss)
                                                                              
                                                                              
Net income
(loss) per
share:
Basic                $ (0.19)           $ 0.01             $ (0.18)           $ (0.03)
Diluted              $ (0.19)           $ 0.01             $ (0.18)           $ (0.03)
                                                                              
Weighted
average number
of common
shares
outstanding:
Basic                  63,477,399         63,462,399         63,471,235         63,094,422
Diluted                63,477,399         64,106,597         63,471,235         63,094,422
                                                                              

                                                             
MAD CATZ INTERACTIVE, INC.
Consolidated Balance Sheets
(unaudited in thousands of US$)
                                                                    
                                                   March 31,        March 31,
                                                   2013             2012
Assets
                                                                    
Current assets:
Cash                                               $ 2,773          $ 2,474
Accounts receivable, net                             13,884           15,278
Other receivables                                    1,374            1,196
Inventories                                          23,795           32,521
Deferred tax assets                                  257              110
Income tax receivable                                344              1,747
Other current assets                                2,711           3,305
Total current assets                                 45,138           56,631
                                                                    
Deferred tax assets                                  370              440
Other assets                                         359              863
Property and equipment, net                          2,977            4,037
Intangible assets, net                               3,679            4,626
Goodwill                                            -               10,476
Total assets                                       $ 52,523         $ 77,073
                                                                    
Liabilities and Shareholders' Equity
                                                                    
Current liabilities:
Bank loan                                          $ 8,888          $ 16,654
Accounts payable                                     15,573           17,634
Accrued liabilities                                  6,652            6,401
Contingent consideration, current                    1,650            1,600
Income taxes payable                                258             1,375
Total current liabilities                            33,021           43,664
Contingent consideration                             2,214            2,769
Warrant liability                                    149              693
Deferred tax liabilities                             152              245
Other long-term liabilities                         109             211
Total liabilities                                    35,645           47,582
Shareholders’ equity:
Common stock, no par value, unlimited shares
authorized; 63,477,399 shares issued and
outstanding
at March 31, 2013 and 63,462,399 issued and          60,102           59,432
outstanding at March 31, 2012
Accumulated other comprehensive loss                 (3,701)          (1,618)
Accumulated deficit                                 (39,523)        (28,323)
Total shareholders’ equity                          16,878          29,491
Total liabilities and shareholders’ equity         $ 52,523         $ 77,073

                                             
Geographical Sales Data

The Company's net sales were generated in the following geographic regions:
                                                    
                      Three Months Ended            Year Ended

                      March 31,                     March 31,
                      2013        2012           2013         2012
Net sales
Europe                $ 14,030       $ 12,663       $ 61,960        $ 54,512
United States           7,355          12,805         46,612          53,565
Canada                  819            1,097          4,704           3,798
Other countries        2,404         2,585         9,388          5,677
                      $ 24,608       $ 29,150       $ 122,664       $ 117,552
                                                                      

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

Adjusted Net Income (Loss) Reconciliation (non GAAP)
                                                                     
                      Three Months Ended             Year Ended
                      March 31,                      March 31,
                      2013             2012          2013            2012
                                                                     
Pre-tax income        $ (12,480)       $ (204)       $ (9,164)       $ (2,891)
(loss)
Amortization of
intangible              235              234           933             955
assets
Stock-based
compensation            138              181           663             649
cost
Goodwill                10,468           -             10,468          -
impairment
Change in fair
value of               (201)           139          (544)          (2,557)
warrant
liability
Adjusted
pre-tax income         (1,840)         350          2,356          (3,844)
(loss)*
Adjusted
provision for
income
                       384             (942)        2,171          (1,145)
taxes (at
effective
rate)*
Adjusted net          $ (2,224)        $ 1,292       $ 185           $ (2,699)
income (loss) *
Adjusted
diluted income
(loss)                  ($0.04)        $ 0.02        $ 0.00            ($0.04)

per share*
                                                                     

*Adjusted net income and adjusted diluted earnings 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
and amortization of intangibles, also facilitate comparisons of the Company’s
performance to prior periods.

                                             
EBITDA and Adjusted EBITDA Reconciliation (non GAAP)
                                                    
                   Three Months Ended               Year Ended

                   March 31,                        March 31,
                   2013          2012            2013          2012
                                                                     
                                                                     
Net income         $ (12,160)       $ 804           $ (11,200)       $ (1,627)
(loss)
                                                                     
Adjustments:
                                                                     
Interest             147              305             894              1,123
expense
Income tax
expense              317              (1,008)         2,036            (1,264)
(benefit)
Depreciation
and                 718          822         3,022           3,253
amortization
EBITDA             $ (10,978)       $ 923           $ (5,248)        $ 1,485
Goodwill             10,468           -               10,468           -
impairment
Change in
fair value          (201)           139            (544)           (2,557)
of warrant
liability
Adjusted
EBITDA             $ (711)          $ 1,062         $ 4,676          $ (1,072)
(loss)
                                                                       

EBITDA, a non-GAAP financial measure, represents net income (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 Adjusted EBITDA. 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.
Darren Richardson, 619-683-9830
CEO
or
JCIR
Joseph Jaffoni, Norberto Aja, James Leahy
212-835-8500
mcz@jcir.com
 
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