March Networks Announces Record Q4 and Annual Revenue in Fiscal 2011 Financial Results

*   Non-GAAP measure: earnings (loss) before stock based compensation, amortization of acquired intangibles, special charges, interest and income taxes. This measure may not be comparable to similar measures used by other companies.

OTTAWA, June 8, 2011 /PRNewswire/ - March Networks^®  (TSX:MN), a global provider of intelligent IP video solutions, today announced financial results for the fiscal quarter and fiscal year ended April 30, 2011. All figures are in Canadian dollars and in accordance with Canadian GAAP unless otherwise specified.

The Company's fourth quarter fiscal 2011 revenue of $27.5 million represented a record fourth quarter for the Company as revenues increased by 30% as compared to revenue of $21.2 million in the fourth quarter of fiscal 2010. Revenue for the fiscal year ended April 30, 2011 of $102.8 million was also a record for the Company and increased by 19% as compared to revenue of $86.6 million in the fiscal year ended April 30, 2010.

The Company recorded non-GAAP operating earnings of $139,000 in the fourth quarter of fiscal 2011 representing an improvement of $4.8 million relative to a non-GAAP loss of $4.6 million in the fourth quarter of fiscal 2010. Non-GAAP operating earnings improved by $7.5 million to $227,000 in the fiscal year ended April 30, 2011 relative to a non-GAAP loss of $7.3 million recorded in the fiscal year ended April 30, 2010.

Net GAAP loss for the fourth quarter of fiscal 2011 declined to $392,000 or $0.02 per common share relative to a net loss of $27.5 million or $1.58 per common share in the fourth quarter of fiscal 2010. The Company's net GAAP loss of $3.8 million, or $0.21 per share, in the fiscal year ended April 30, 2011 decreased by $28.7 million relative to a net GAAP loss of $32.5 million, or $1.88 per share, in the fiscal year ended April 30, 2010.

The Company's cash and short-term investment position increased by $5 million during the fourth quarter of fiscal 2011 to $43.5 million at April 30, 2011 but declined by $4.4 million relative to April 30, 2010. The Company's working capital ratio at April 30, 2011 was 3.4:1 as compared to 3.3:1 at April 30, 2010.

"The Company's achievement of record revenue in fiscal 2011 is even more impressive given the strength of the Canadian dollar which negatively impacted revenue by approximately $12 million relative to the Company's previous record of $101.2 million in fiscal 2009 ", said Ken Taylor, CFO of March Networks. "The Company plans to drive profitability in fiscal 2012 with expectations of continued double-digit revenue growth and maintaining gross margin as a percentage of revenue in the 47% to 50% range throughout fiscal 2012."

"The Company enters fiscal 2012 from a position of strength with strong revenue growth and expanding gross margins", said Peter Strom, CEO of March Networks. "The Company participates in a growing and consolidating industry and the Company believes that its next stage of growth may be enhanced by pursuing strategic alternatives. The Company's Board of Directors has initiated a process to review a range of potential strategic alternatives available to the Company and has retained Morgan Keegan as its independent financial advisor."

The Company will discuss the results on a conference call and webcast on Thursday, June 9, 2011 at 8:30 a.m. EDT (12:30 p.m. UTC). The conference call may be accessed by dialing 1 (800) 814-4860 (North America) or +1 (416) 644-3414.

The conference call webcast can be accessed at:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3536720

A replay of the conference call will be available from June 9, 2011 at 10:30 a.m. EST until June 16, 2011 at 11:59 p.m. EST. The replay can be accessed at 1(877) 289-8525 or +1 (416) 640-1917. The passcode for the replay is 4442346#.

About March Networks
March Networks^® (TSX:MN) is a leading provider of intelligent IP video solutions. For more than a decade, the company has helped some of the world's largest commercial and government organizations transition from traditional CCTV to advanced surveillance technologies used for security, loss prevention, risk mitigation and operational efficiency. Its highly scalable and easy to use Command^™ video management platform incorporates a web-based client interface to enable rapid system deployment and complete system control. It is complemented by the company's portfolio of high-definition IP cameras, encoders, video analytics and hybrid recorders, as well as outstanding professional and managed services. March Networks systems are delivered through an extensive distribution and partner network in more than 50 countries. For more information, please visit www.marchnetworks.com.

*MARCH NETWORKS, March Networks Command and the MARCH NETWORKS logo are trademarks of March Networks Corporation. All other trademarks are the property of their respective owners.

Certain statements included in this release constitute forward-looking statements, including those identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend" and similar expressions to the extent they relate to the Company or its management. The forward-looking statements are not historical facts but reflect the Company's current assumptions and expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current assumptions and expectations. Assumptions made in preparing the forward-looking statements contained in this release include, but are not limited to, the following:

• The addressable market for the Company's products will grow by at least 10% annually.
• The Company will successfully reduce product costs to improve the Company's gross margin and/or avoid any margin erosion associated with competitive pricing pressure.
• The Company will develop and deliver new products on time in order to satisfy the demands of current and potential customers.
• The Company's new products will address the needs of new and existing customers and contribute to near term profitability.
• The average exchange rates for Canadian dollars and Euros to US dollars will be US$1.00=CDN$1.00 and Euro 1=US$1.40.
• The Company will have adequate component supply to meet customer demand.
  
  

Factors that could cause actual results to differ materially from expected results include, but are not limited to, the following:

• The Company's quarterly revenue is generally dependent upon conversion of opportunities in the sales pipeline during the quarter and, as a result, revenue and operating results can be difficult to predict and can fluctuate substantially. The Company's success in realizing customer opportunities may be negatively impacted by depressed economic conditions, changes in sales cycles, and/or weaker than expected success versus competitors.
• Delays in product development programs for new products and new product features which lead to cost overruns and /or missed customer opportunities.
• The Company's gross margin and operating results may be adversely affected by pricing models required to compete successfully and/or a failure by the Company to achieve its product cost targets.
• The Company plans to become increasingly dependent upon third parties for product design and supply.  Higher than expected costs and delayed or lost revenue may result if these activities are not transitioned and managed effectively.
• Weaker than expected market acceptance of new products to be introduced by the Company.
• Product issues that result in increased costs to the Company and/or lost revenue opportunities.
• Longer than expected lead times from component suppliers could result in production delays resulting in delayed or lost revenue.
• Shifts in value of the US dollar relative to the Canadian Dollar may cause the Company's operating costs to fluctuate significantly.
  
  

Additional risks are discussed under "Risk Factors" in the Company's Annual Information Form available online at www.sedar.com.

SOURCE MARCH NETWORKS CORPORATION