International Datacasting Corporation Announces Fiscal 2010 Fourth Quarter and Year End Results

April 26, 2010

Ottawa, ON – April 26, 2010 – – International Datacasting Corporation (TSX: IDC), a leader in providing advanced solutions for the distribution of broadband content via satellite, announced its financial results for the three- and 12-month periods ended January 31, 2010. All figures are in Canadian dollars unless otherwise stated.

 Fiscal 2010 Financial Summary

·       Revenue was $23.3 million, compared to $29.1 million for fiscal 2009.

·       Gross margin was 43%, compared to 47% last year.

·       EBITDA¹ was negative ($1.5 million), compared to $2.6 million for fiscal 2009.

·       Net loss was $6.6 million, or $0.12 per share, compared to earnings of $3.0 million, or $0.05 per share, for fiscal 2009.

 Q4 Fiscal 2010 Financial Summary

·       Revenue was $6.9 million, compared to $6.4 million in Q4 fiscal 2009.

·       Gross margin was 40%, compared to 57% in Q4 fiscal 2009.

·       EBITDA¹ was negative ($1.1 million), compared to $ 0.7 million in Q4 fiscal 2009.

·       Net loss was $2.9 million, or $.05 per share, compared to earnings of $1.6 million, or $.03 per share, in Q4 fiscal 2009.

 “Fiscal 2010 was a challenging year for IDC as the economic downturn led to an industry-wide reduction in capital expenditures,” said Frederick Godard, President and CEO, International Datacasting Corporation. “I believe that IDC’s core technology offering, which was strengthened through the purchase of additional product lines last year, offers significant potential for growth and we are actively pursuing these opportunities.” 

 “Going forward, we are focused on profitability and we are taking measures to increase our gross margins and to further streamline our operations in order to improve operational efficiencies.” “We are uniquely positioned for the market opportunities that are available to us, including the roll out of digital cinema, IPTV and 3D live events,” Mr. Godard concluded.

 Fiscal 2010 Financial Review

The Corporation’s consolidated revenues decreased by 20% from $29.1 million in fiscal 2009 to $23.3 million in fiscal 2010. Revenues for the Satellite Equipment segment decreased 22% from $26.5 million in fiscal 2009 to $20.6 million in fiscal 2010. Without the sales from the newly acquired Tiernan and Logic Innovations product lines, the Satellite Equipment segment revenues would have declined by $9.3 million or 35%. In fiscal 2009 the Corporation had a single order that accounted for 23% of Satellite Equipment revenue while in fiscal 2010 no order accounted for an equal percentage of revenue.  Absent this order for comparative purposes, the Satellite Equipment revenues would have declined by $3.2 million or 12%.

The Corporation attributes this decline to a continued slowdown in capital equipment spending in this fiscal year resulting from the current global economic situation and is expecting further potential volatility on a quarterly basis due to order timing as the markets continue to adjust. 

Included in Satellite Equipment segment sales was revenue from Tiernan and Logic Innovations’ products of $3.2 million and $0.2 million respectively in fiscal 2010. The Broadcast Services segment’s revenues increased 8% from $2.5 million in fiscal 2009 to $2.7 million in fiscal 2010. The increase in Broadcast Services revenue is due to the introduction of new services that resulted from the segment’s contract renewal that occurred in December 2008, and the Corporation expects this increased level of service revenue to continue for the remainder of the contract.

Gross profit for fiscal 2010 was $10.0 million, or 43% of revenues, compared to $13.8 million, or 47% of revenues, in fiscal 2009. The year-over-year decline was primarily due to one-time costs the Company incurred in the second half of the year related to transitioning Tiernan product manufacturing to IDC’s outsourced facilities, as well as a revaluation of existing Tiernan inventory as required by accounting rules. Excluding the impact of the acquisition of the Tiernan product lines, gross profit for fiscal 2010 was $9.3 million, or 46% of revenue.

Primarily as a result of the addition of staff related to the Company’s acquisition of the Tiernan and Logic Innovations product lines, IDC realized an increase in operating expenses. In particular, fiscal 2010 Selling, General and Administrative expenses increased to $8.3 million from $7.8 million in fiscal 2009, and Research and Development expenses increased to $4.4 million from $3.4 million in fiscal 2009.

In fiscal 2010, IDC realized a net loss of $6.6 million or $0.12 per share, which included a $2.5 million non-cash goodwill impairment that the Company recorded in Q2 fiscal 2010. This is compared to net earnings of $3.0 million, or $0.05 per share for fiscal 2009.

Cash used in operating activities for fiscal 2010 was $0.4 million, compared to $1.6 million in cash generated by operating activities in fiscal 2009. As at January 31, 2010, IDC had cash of $4.7 million and working capital of $11.8 million, compared to $7.6 million in cash and working capital of $14.7 million as at January 31, 2009.

A complete set of financial statements and management’s discussion and analysis for the three and 12 months ended January 31, 2010 will be available at http://www.sedar.com/ or on the Investor Information section of IDC’s website at www.datacast.com.