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Mad Catz Reports Fiscal 2008 Second Quarter Diluted Earnings Per Share of $0.02.

Announces Strategic Acquisition of Leading PC Games Peripherals Provider Saitek

SAN DIEGO -- Mad Catz Interactive, Inc. (AMEX/TSX: MCZ):

Mad Catz Interactive, Inc. ("Mad Catz" or "the Company") (AMEX/TSX: MCZ), a leading third-party interactive entertainment accessory provider, today announced financial results for the fiscal 2008 second quarter ended September 30, 2007. The Company also announced the signing of a definitive agreement to acquire 100 percent of a leading PC games peripherals provider, Saitek, for $30 million, subject to working capital adjustment. The acquisition is expected to close within the next week and is expected to be accretive to the Company's fiscal 2008 earnings and cash flows.

Net sales for the fiscal 2008 second quarter ended September 30, 2007 were $16.9 million, a 34.6% decrease from $25.8 million in the fiscal 2007 second quarter. Gross profit for the quarter decreased 11.1% to $5.0 million from $5.6 million in the fiscal 2007 second quarter. Gross profit margin for second quarter of fiscal 2008 was 29.4% compared to 21.6% in fiscal 2007 second quarter. Net income for the quarter ended September 30, 2007 was $0.9 million, or $0.02 per basic and diluted share, compared to a net income of $0.2 million, or break even on a basic and diluted per share basis, for the quarter ended September 30, 2006. EBITDA, a non-GAAP measure (defined as earnings before interest, taxes, depreciation and amortization), was $2.0 million in the fiscal 2008 second quarter, a 67.3% increase over EBITDA of $1.2 million in the fiscal 2007 second quarter. A reconciliation of EBITDA to the Company's net income (loss) is included in the financial tables accompanying this release.

Net sales for the six-month period ended September 30, 2007 were $31.4 million, a decrease of 28.5% from $43.9 million in the same six-month period of the prior fiscal year. Gross profit for the first half of fiscal 2008 increased 5.6% to $9.6 million from $9.1 million in the prior year period. Gross profit margin for the six-month period ended September 30, 2007 was 30.6% compared to 20.8% in the prior year period. Net income for the first half of fiscal 2008 was $0.7 million or $0.01 per basic and diluted share, compared to net loss of $0.7 million or $(0.01) per basic and diluted share for the six months ended September 30, 2006. EBITDA for the six months ended September 30, 2007 rose 208.1% to $2.4 million compared to EBITDA of $0.8 million in the same period of the prior fiscal year.

Fiscal 2008 Second Quarter and Recent Highlights:

Commenting on the results, Darren Richardson, Mad Catz' President and CEO, stated, "During the second quarter, our bottom line and balance sheet continued to benefit from enhanced operating efficiencies and our focus on higher-margin product lines. The net sales comparisons reflect a combination of the Company's culling process to reduce low-margin product placements, the continuing impact of the console transition and strong software sales in the year-ago quarter attributable to Real World Golf 2. Our announcement today of an agreement to purchase Saitek, one of the world's leading PC games peripherals makers is a benchmark in our history, enabling us to immediately add world-class people and products to our organization and to become a leader in the highly-attractive, adjacent PC games category which leverages our core competencies. With this exciting opportunity close on the heels of consummating the Joytech acquisition in September, and, more recently, shipping our AirDrives and AirDrives for Kids products moving us into the high-growth portable audio category, we have made unprecedented progress on our plan to accretively grow Mad Catz. Our net debt is down 70% from the prior year period to $3.9 million at September 30. This strengthened balance sheet leaves us well-positioned to continue to execute on our growth strategy for increasing shareholder value, consisting of three initiatives: continue to pursue growth and efficiencies in our core business; diversify our product offerings through adjacent product categories; and publish new hardware/software bundles."

Mr. Richardson concluded, "Together with our impressive portfolio of brand licenses aligning many of our accessory offerings with some of the most highly-anticipated software products for the year, and with recent console price reductions which we expect to drive growth in the installed base of current-generation hardware, we are very much looking forward to the upcoming holiday shopping season. More broadly, we believe that we are still in the relatively early days of this hardware cycle for our products and, especially with the addition of Saitek to the Mad Catz family, we are as excited as we've ever been about the prospects for the Company."

The Company will host a conference call and simultaneous webcast today November 14, 2007, at 8:30 a.m. ET. Following its completion, a replay of the call can be accessed for 30 days at the Company's Web site (, select "Investors") or for 7 days via telephone at 800/633-8284 (reservation # 21354223) or, for International callers, at 402/977-9140.

About Mad Catz

Mad Catz is a leading provider of innovative peripherals for the worldwide interactive entertainment industry. Mad Catz designs and markets accessories under its Mad Catz, GameShark and Joytech brands for video game systems, and publishes video game software, including the industry leading GameShark video game enhancements. Mad Catz has distribution through most leading retailers offering interactive entertainment products. Mad Catz has its operating headquarters in San Diego, California and offices in Canada, Europe and Asia. For additional information go to

Safe Harbor for Forward Looking Statements:

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 except as may be required by law. You can identify these statements by the fact that they use words such as "anticipate," "estimate," "expect," "project," "intend," "should," "plan," "goal," "believe," the negative of such expressions, 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; 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.

EBITDA represents net income (loss) plus interest, taxes, depreciation and amortization. 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, 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 performance measures found in our financial statements, EBITDA is a useful financial performance measurement for assessing our Company's operating performance. Our management uses 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 some of our assets.
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Publication:Business Wire
Date:Nov 14, 2007
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