SAN DIEGO, June 02, 2016 (GLOBE NEWSWIRE) -- Mad Catz Interactive, Inc. (“Mad Catz” or the “Company”) (NYSE MKT:MCZ), today announced financial results for the fiscal 2016 fourth quarter and full year ended March 31, 2016.

Key Highlights of Fiscal 2016 Fourth Quarter and Subsequent:

• Fiscal 2016 fourth quarter net sales increased 4%  over the prior year fourth quarter to $17.1 million, driven by a 57% increase in net sales to the Americas and a 7% increase in net sales to APAC, partially offset by a 30% decrease in net sales to EMEA;
• Gross margin declined to (5.1%) from 23.4% in the prior year quarter, driven by $6.8 million of charges related to Rock Band 4 for inventory write-downs, material authorizations and price reductions with retailers;
• Total operating expenses increased 36% from the prior year period to $8.4 million, including $3.0 million for severance and restructuring costs;
• Operating loss was ($9.3 million), compared to ($2.3 million) in the prior year;
• Diluted net loss per share was ($0.10), compared to diluted net income per share of $0.09 in the prior year;
• Net position of bank loans, less cash and restricted cash, was $13.0 million at March 31, 2016, compared to $17.7 million at December 31, 2015 and $2.8 million at March 31, 2015;
• Sold no shares under the “At-the-Market” (“ATM”) equity offering program;
• Announced “Designed for Samsung” versions of the Micro C.T.R.L.^R™ Mobile Gamepad and S.U.R.F.^R™ Wireless Media and Game Controller;
• Voluntarily delisted common shares from the Toronto Stock Exchange as part of ongoing measures aimed at lowering operating costs;
• Shipped new range of Street Fighter™ V licensed controllers, including fightsticks, Tournament Edition fightsticks and fightpad controllers;
• Announced the X-56 Rhino H.O.T.A.S. Advanced Flight Control System™, the Company’s newest addition to its Saitek Pro Flight Range of PC-based simulation accessories;
• Completed restructuring plan focused on lowering operating costs, increasing efficiencies and better aligning the Company’s resources with its needs and goals, with the expectation of generating annualized net savings of $6 million to $7 million starting in the first quarter of Fiscal 2017; and,
• Agreement with Harmonix for Rock Band 4 was terminated resulting in a 120-day wind-down period, ending September 6, 2016, to sell remaining $8.3 million of Rock Band 4 inventory.

Key Financial Highlights of Fiscal 2016:

• Fiscal 2016 net sales increased 55% over the prior year to $134.1 million, driven by a 215% increase in net sales to the Americas, partially offset by a 17% decrease in net sales to EMEA and 35% decrease in net sales in APAC;
• Gross margin was 16.7%, compared to 27.7% in Fiscal 2015;
• Total operating expenses in Fiscal 2016 increased 25% year-over-year to $31.8 million;
• Operating loss for Fiscal 2016 was ($9.4 million), compared to an operating loss of ($1.6 million) for the prior year; and,
• Diluted net loss per share in Fiscal 2016 was ($0.16), compared to diluted net income per share of $0.07 in the prior year.

(1) Definitions, disclosures and reconciliations regarding non-GAAP financial information are included on page 8.

Commenting on the Company’s Fiscal 2016 fourth quarter and full year results, David McKeon, Chief Financial Officer of Mad Catz, said, “The fourth quarter of Fiscal 2016 wrapped up a mixed year for Mad Catz.  While we saw strong top-line results in the quarter and full year driven by sales of Rock Band 4 products, weaker than expected consumer demand for Rock Band 4 led to lower gross profit margins, higher expenses and a loss of $0.16 per share for the full year.”

“Despite the Rock Band 4-related challenges, Mad Catz did make some notable progress in the Fiscal 2016 fourth quarter.  We saw improved sales of our audio and fightstick products for next generation consoles and continued development work which will allow us to further refresh our core product lines.  In addition, we completed a significant restructuring program that will save the Company approximately $6 to $7 million on an annualized basis beginning in the first quarter of Fiscal 2017.  While there is much work to be done and we continue to have working capital constraints, we are confident that Fiscal 2017 will benefit from the Company’s recent efforts.”

Karen McGinnis, President and Chief Executive Officer of Mad Catz, commented, “The past few months have been an incredibly busy time at Mad Catz, a time of great change that we are confident will result in improvements across key operational and financial metrics.  Each of our initial objectives has been executed with incredible speed, many of them already showing a positive impact on the Company’s operations and financial results.”

“Looking ahead, we're starting the new fiscal year with a strong management team in place and with smart and dedicated employees who have already begun executing our vision and strategy.  We believe Fiscal 2017 will be a year of hard work, steady improvement and execution.  Our future will be based on our ability to innovate, execute and make continued progress towards sustainable and profitable growth.”

Going Concern Explanatory Paragraph in Audit Opinion

Pursuant to the disclosure requirements of NYSE MKT Company Guide Section 610(b), the Company is reporting that its audited consolidated financial statements for the fiscal year ended March 31, 2016, included in the Company's Annual Report on Form 10-K which it expects to file with the Securities and Exchange Commission on or about June 2, 2016, will contain an audit opinion from its independent registered public accounting firm that includes an explanatory paragraph related to the Company’s ability to continue as a going concern.

Management Conference Call Webcast

The Company will host a conference call and simultaneous webcast on June 2, 2016, at 5:00 p.m. ET, which can be accessed by dialing (303) 223-2684. 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/Investor Relations”) or via telephone at (800) 633-8284 (reservation #21811928) or, for International callers, at (402) 977-9140.

About Mad Catz
Mad Catz Interactive, Inc. (“Mad Catz”) (NYSE MKT:MCZ) is a global provider of innovative interactive entertainment products marketed under its Mad Catz^® (gaming), Tritton^® (audio), and Saitek^® (simulation) brands.  Mad Catz products cater to gamers and simulation enthusiasts across multiple platforms including in-home gaming consoles, handheld gaming consoles, Windows^® PC and Mac^® computers, smart phones, tablets and other smart devices.  We distribute our products through many leading retailers around the globe. Headquartered in San Diego, California, Mad Catz maintains offices in Europe and Asia. For additional information about Mad Catz and its products, please visit the Company’s website at www.madcatz.com.

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Safe Harbor
Information in this press release that involves the Company's expectations business prospects, plans, intentions or strategies regarding its future are forward-looking statements that are not facts and that involve substantial risks and uncertainties. You can identify these statements by the use of words such as “seek,” "anticipate," "estimate," "expect," "believe," and “intend” and statements that an event or result “may,” “will,” “should,” “could” or “might” occur or be achieved and other similar expressions together with the negative of such expressions.. These forward-looking statements reflect management’s current beliefs and expectations and are based on information currently available to management, as well as its analysis made in light of its experience, perception of trends, current conditions, expected developments and other factors and assumptions believed to be reasonable and relevant in the circumstances. These assumptions include, but are not limited to, continuing demand by consumers for video game consoles and accessories, timely reduction of inventory of products manufactured for the Rock Band 4 video game, the continuance of open trade relations between China and the United States, the ability to maintain or extend our existing licenses, the ability to continue producing and selling our products in accordance with various intellectual property that might apply to said products, the continued financial viability of our largest customers, the continuance of timely and adequate supply from third party manufacturers and suppliers, no significant fluctuations in the value of the U.S. dollar relative to other currencies, the continued satisfaction of our obligations under our existing loan agreements and any future loan agreements we may obtain, and continued listing of our common stock on the NYSE MKT. Forward-looking statements are subject to significant risks, uncertainties, assumptions and other factors, any of which could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. A further list and description of these and other factors, risks, uncertainties and other matters can be found in the Company's most recent annual report, and any subsequent quarterly reports, filed with the U.S. Securities and Exchange Commission and the Canadian Securities Administrators. Investors should not place undue reliance on such forward-looking statements. Forward-looking statements are not guarantees of future performance or outcomes and actual results could differ materially from those expressed or implied by the forward-looking statements. We assume no obligation to update or alter such forward-looking statements whether as a result of new information, future events or otherwise except as required by law.

Adjusted EBITDA, a non-GAAP (“Generally Accepted Accounting Principles”) financial measure, represents net income (loss) before interest, taxes, depreciation and amortization, stock-based compensation and change in the fair value of warrant liabilities. Adjusted EBITDA is not intended to represent cash flows for the period, nor is it being presented as an alternative to operating or net income (loss) 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 GAAP. 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. Our management believes, however, that in addition to the 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:
David McKeon
Chief Financial Officer
Mad Catz Interactive, Inc.
dmckeon@madcatz.com or (858) 790-5045

Joseph Jaffoni, Norberto Aja, Jim Leahy 
JCIR
mcz@jcir.com or (212) 835-8500

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