MCZ » Topics » Liquidity and Capital Resources

This excerpt taken from the MCZ 10-Q filed Aug 14, 2007.

Liquidity and Capital Resources

Sources of Liquidity

 

     As of and for the
Three months ended June 30,
       

(in thousands)

   2007     2006     Change  

Cash

   $ 1,939     $ 1,721     $ 218  
                        

Percentage of total assets

     3.6 %     3.1 %  

Cash used in operating activities

   $ (1,446 )   $ (4,274 )   $ 2,828  

Cash used in investing activities

     (219 )     (55 )     (164 )

Cash provided by financing activities

     1,249       4,230       (2,981 )

Effect of foreign exchange on cash

     5       213       (208 )
                  

Net increase (decrease) in cash

   $ (411 )   $ 114    
                  

At June 30, 2007, available cash was approximately $1.9 million compared to cash of approximately $2.4 million at March 31, 2007 and $1.7 million at June 30, 2006. Our primary sources of liquidity include a revolving line of credit (as discussed below under Cash Flows from Financing Activities), cash on hand at the beginning of the year and cash flows generated from operations.

Cash Flows from Operating Activities

Our cash flows from operating activities have typically included the collection of customer receivables generated by the sale of our products, offset by payments to vendors for materials and manufacture of our products. For the three months ended June 30, 2007, cash used in operating activities was $1.4 million compared to cash used of $4.3 million for the three months ended June 30, 2006. Cash was primarily used for the payment of accounts payable and purchases of inventories.

Cash Flows from Investing Activities

Cash used in investing activities was $219,000 during the three months ended June 30, 2007 and $55,000 during the three months ended June 30, 2006. Investing activities consist of capital expenditures to support our operations and were made up primarily of production molds and leasehold improvements.

Cash Flows from Financing Activities

Cash provided by financing activities during the three months ended June 30, 2007 was a result of increased borrowings under our line of credit and proceeds from the exercise of stock options. For the three months ended June 30, 2007, cash provided by financing activities was $1.2 million compared to cash provided of $4.2 million in the three months ended June 30, 2006. We are focused on effectively managing our overall liquidity position by continuously monitoring expenses and managing our accounts receivable collection efforts.

We maintain a Credit Facility with Wachovia Capital Finance Corporation (Central) (“Wachovia”) to borrow up to $35 million under a revolving line of credit subject to the availability of eligible collateral (accounts receivable and inventories), which changes throughout the year. The line of credit accrues interest on the daily outstanding balance at the U.S. prime rate plus 0.25% per annum. At June 30, 2007 the interest rate was 8.25%. We are also required to pay a monthly service fee of $1,000 and an unused line fee equal to 0.25% of the unused portion of the loan. Borrowings under the Credit Facility are secured by a first priority interest in the inventories, equipment, accounts receivable and investment properties of Mad Catz, Inc. and by a pledge of all of the capital stock of the Company’s subsidiaries and is guaranteed by the Company. We are required to meet a quarterly covenant based on the Company’s net income before interest, taxes, depreciation and amortization (EBITDA). We were in compliance with this covenant as of June 30, 2007.

We believe that our available cash balances, anticipated cash flows from operations and available line of credit will be sufficient to satisfy our operating needs for at least the next twelve months. However, we operate in a rapidly evolving and often unpredictable business environment that may change the timing or amount of expected future cash receipts and expenditures. Accordingly, there can be no assurance that we may not be required to raise additional funds through the sale of equity or debt securities or from additional credit facilities. Additional capital, if needed, may not be available on satisfactory terms, if at all. Furthermore, additional debt financing may contain more restrictive covenants than our existing debt.

 

16


Table of Contents
This excerpt taken from the MCZ 10-K filed Jun 29, 2007.

Liquidity and Capital Resources

Sources of Liquidity

Historically we have funded our operations primarily from cash generated from operations, a revolving line of credit (as discussed below) and proceeds from employee stock option exercises. At March 31, 2007, available cash was approximately $2.4 million compared to cash of approximately $1.6 million at March 31, 2006 and $1.1 million at March 31, 2005.

We maintain a Credit Facility (the “Credit Facility”) with Wachovia Capital Finance Corporation (Central) (“Wachovia”) which allows us to borrow up to $35 million under a revolving line of credit subject to the availability of eligible collateral (accounts receivable and inventories), which changes throughout the year. On October 30, 2006, the Company and Wachovia extended the term of the Credit Facility until October 30, 2009. The line of credit accrues interest on the daily outstanding balance at the U.S. prime rate plus 0.25% per annum, and must be repaid in United States dollars. At March 31, 2007 the interest rate was 8.5%. The Company is also required to pay a monthly service fee of $1,000 and an unused line fee equal to 0.25% of the unused portion of the loan. Borrowings under the Credit Facility are secured by a first priority interest in the inventories, equipment, accounts receivable and investment properties of Mad Catz, Inc. (“MCI”) and by a pledge of all of the capital stock of the Company’s subsidiaries and is guaranteed by the Company. See Note 6 to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, elsewhere in this Form 10-K.

Net cash provided by operating activities was approximately $8.4 million, $6.6 million and $3.8 million for the years ended March 31, 2007, 2006 and 2005, respectively. Net cash provided by operating activities in 2007 reflects net income for the year and a reduction in inventories and income taxes receivable, offset by a decrease in accounts payable and an increase in accounts receivable. Net cash provided by operating activities in 2006 reflects net loss for the year, a decrease in accounts receivable, other receivables and inventories, and increases in accounts payable and accrued liabilities, partially offset by an increase in income taxes receivable. Net cash provided by operating activities in 2005 reflects net income for the year and an increase in accounts payable, offset by an increase in inventories, other receivables and deferred tax assets.

Net cash used in investing activities was approximately $0.4 million, $1.7 million and $1.4 million for the years ended March 31, 2007, 2006 and 2005, respectively. Net cash used in investing activities in each of these years consisted of capital expenditures to support our operations.

 

40


Table of Contents

Net cash used in financing activities was approximately $7.3 million, $3.5 million and $2.5 million for the years ended March 31, 2007, 2006 and 2005, respectively. Net cash used in financing activities in each of these years consisted of net repayments under our line of credit, offset in part by proceeds from the issuance of our common stock upon the exercise of stock options in fiscal 2005. For the year ended March 31, 2007, cash used in financing activities was in fiscal 2005. We are focused on effectively managing our overall liquidity position by continuously monitoring expenses and managing our accounts receivable collection efforts.

At March 31, 2007 the outstanding balance on our line of credit was $1.3 million and our weighted average annual interest rate during fiscal 2007 was 8.4%. We are required to meet a quarterly covenant based on the Company’s net income before interest, taxes, depreciation and amortization (EBITDA). The Company was in compliance with this covenant as of March 31, 2007.

We believe that our available cash balances, anticipated cash flows from operations and available line of credit will be sufficient to satisfy our operating needs for at least the next twelve months. However, we operate in a rapidly evolving and often unpredictable business environment that may change the timing or amount of expected future cash receipts and expenditures. Accordingly, there can be no assurance that we may not be required to raise additional funds through the sale of equity or debt securities or from additional credit facilities. Additional capital, if needed, may not be available on satisfactory terms, if at all. Furthermore, additional debt financing may contain more restrictive covenants than our existing debt.

This excerpt taken from the MCZ 10-Q filed Feb 14, 2007.

Liquidity and Capital Resources

Sources of Liquidity

 

    

As of and for the
nine months ended

December 31,

    Change  
(in thousands)    2006     2005    

Cash

   $ 3,133     $ 3,455     $ (321 )
                        

Percentage of total assets

     4.1 %     3.9 %  

Cash used in operating activities

   $ (3,279 )   $ (9,071 )   $ 5,792  

Cash used in investing activities

     (270 )     (1,258 )     988  

Cash provided by financing activities

     5,127       13,323       (8,196 )

Effects of foreign exchange on cash

     (52 )     (624 )     572  
                  

Net increase in cash

   $ 1,526     $ 2,370    
                  


Table of Contents

At December 31, 2006, available cash was approximately $3.1 million compared to cash of approximately $1.6 million at March 31, 2006 and $3.5 million at December 31, 2005. Our primary sources of liquidity include a revolving line of credit (as discussed below under Cash Flows from Financing Activities), cash on hand at the beginning of the year and cash flows generated from operations.

Cash Flows from Operating Activities

Our cash flows from operating activities have typically included the collection of customer receivables generated by the sale of our products, offset by payments to vendors for materials and manufacture of our products. For the nine months ended December 31, 2006, cash used in operating activities was $3.3 million compared to cash used of $9.1 million for the nine months ended December 31, 2005. Cash used in operating activities was primarily the result of an increase in accounts receivable, offset by smaller inventory purchases resulting in a reduction in inventories.

Cash Flows from Investing Activities

Cash used in investing activities was $0.3 million during the nine months ended December 31, 2006 and $1.3 million during the nine months ended December 31, 2005. Investing activities consist of capital expenditures to support our operations.

Cash Flows from Financing Activities

Cash provided by financing activities during the nine months ended December 31, 2006 was a result of increased borrowings under our line of credit. For the nine months ended December 31, 2006, cash provided by financing activities was $5.1 million compared to cash provided of $13.3 million in the nine months ended December 31, 2005. We are focused on effectively managing our overall liquidity position by continuously monitoring expenses and managing our accounts receivable collection efforts.

We maintain a Credit Facility (the “Credit Facility”) with Wachovia Capital Finance Corporation (Central) (“Wachovia”) which allows us to borrow up to $35 million under a revolving line of credit, subject to the availability of eligible collateral (accounts receivable and inventories), which changes throughout the year. On October 30, 2006, we agreed with Wachovia to extend the term of the Credit Facility until October 30, 2009. The line of credit accrues interest on the daily outstanding balance at the U.S. prime rate plus 0.25% per annum, and must be repaid in United States dollars. In addition, we are required to pay a monthly service fee of $1,000 and an unused line fee equal to 0.25% of the unused portion of the loan. Borrowings under the Credit Facility are secured by a first priority security interest in the inventories, equipment, accounts receivable and investment properties of Mad Catz, Inc., our primary operating subsidiary (“MCI”), and a pledge in favor of Wachovia of all of the shares of capital stock of our subsidiaries. The Credit Facility is guaranteed by us and requires us to adhere to specified financial operating guidelines. See Note 5 to the consolidated financial statements included in Item 1. Financial Statements, elsewhere in this Form 10-Q.

At December 31, 2006 the outstanding balance on our line of credit was $13.7 million and our weighted average annualized interest rate during the nine-month period ended December 31, 2006 was 8.4%. We are required to meet a covenant based on our net income before interest, taxes, depreciation and amortization (EBITDA) to access the line of credit. As of December 31, 2006 we were in compliance with this loan covenant.

We believe that our available cash balances, anticipated cash flows from operations and available line of credit will be sufficient to satisfy our operating needs for at least the next twelve months. However, we operate in a rapidly evolving and often unpredictable business environment that may change the timing or amount of expected future cash receipts and expenditures. Accordingly, there can be no assurance that we may not be required to raise additional funds through the sale of equity or debt securities or from additional credit facilities. Additional capital, if needed, may not be available on satisfactory terms, if at all. Furthermore, additional debt financing may contain more restrictive covenants than our existing debt.


Table of Contents
This excerpt taken from the MCZ 10-Q filed Nov 14, 2006.

Liquidity and Capital Resources

Sources of Liquidity

 

    

As of and for the
six months ended

September 30,

    Change  
(in thousands)    2006     2005    

Cash

   $ 1,628     $ 1,478     $ 150  
                        

Percentage of total assets

     2.2 %     1.8 %  

Cash used in operating activities

   $ (6,146 )   $ (7,289 )   $ 1,143  

Cash used in investing activities

     (156 )     (986 )     830  

Cash provided by financing activities

     6,241       8,453       (2,212 )

Effects of foreign exchange on cash

     82       215       (133 )
                  

Net increase in cash

   $ 21     $ 393    
                  

 

21


Table of Contents

At September 30, 2006, available cash was approximately $1.6 million compared to cash of approximately $1.6 million at March 31, 2006 and $1.5 million at September 30, 2005. Our primary sources of liquidity include a revolving line of credit (as discussed below under Cash Flows from Financing Activities), cash on hand at the beginning of the year and cash flows generated from operations.

Cash Flows from Operating Activities

Our cash flows from operating activities have typically included the collection of customer receivables generated by the sale of our products, offset by payments to vendors for materials and manufacture of our products. For the six months ended September 30, 2006, cash used in operating activities was $6.1 million compared to cash used of $7.3 million for the six months ended September 30, 2005. Cash was primarily used for the payment of accounts payable, offset by smaller inventory purchases resulting in a reduction in inventories. The largest use of cash for the six months ended September 30, 2006 resulted from the increase in accounts receivable which is attributable to the increase in sales during the period.

Cash Flows from Investing Activities

Cash used in investing activities was $0.2 million during the six months ended September 30, 2006 and $1.0 million during the six months ended September 30, 2005. Investing activities consist of capital expenditures to support our operations.

Cash Flows from Financing Activities

Cash provided by financing activities during the six months ended September 30, 2006 was a result of increased borrowings under our line of credit. For the six months ended September 30, 2006, cash provided by financing activities was $6.2 million compared to cash provided of $8.5 million in the six months ended September 30, 2005. We are focused on effectively managing our overall liquidity position by continuously monitoring expenses and managing our accounts receivable collection efforts.

We maintain a Credit Facility (the “Credit Facility”) with Wachovia Capital Finance Corporation (Central) (“Wachovia”), formerly Congress Financial Corporation (Central), which allows us to borrow up to $35 million under a revolving line of credit, subject to the availability of eligible collateral (accounts receivable and inventories), which changes throughout the year. On October 30, 2006, the Company and Wachovia entered into a Second Amended and Restated Credit Agreement that extended the term until October 30, 2009. The line of credit accrues interest on the daily outstanding balance at the U.S. prime rate plus 0.25% per annum, and must be repaid in United States dollars. In addition, the Company is required to pay a monthly service fee of $1,000 as of October 30, 2006 ($2,000 prior to the renewal on October 30, 2006) and an unused line fee equal to 0.25%. The Credit Facility is secured by a first priority security interest in the inventories, equipment, accounts receivable and investment properties of Mad Catz, Inc., our primary operating subsidiary (“MCI”), and a pledge in favor of Wachovia of all of the shares of capital stock of our subsidiaries. The Credit Facility is guaranteed by the Company and requires us to adhere to specified financial operating guidelines. See Note 5 to the consolidated financial statements included in Item 1. Financial Statements, elsewhere in this Form 10-Q.

At September 30, 2006 the outstanding balance on our line of credit was $14.8 million and our weighted average annualized interest rate during the six-month period ended September 30, 2006 was 8.2%. Prior to the renewal on October 30, 2006, we were required to meet an adjusted tangible net worth covenant to access the line of credit. At September 30, 2006 and March 31, 2006, we were in compliance with this loan covenant. As of October 30, 2006, the adjusted tangible net worth covenant is replaced with a covenant based on our net income before interest, taxes, depreciation and amortization (EBITDA) to access the line of credit.

We believe that our available cash balances, anticipated cash flows from operations and available line of credit will be sufficient to satisfy our operating needs for at least the next twelve months. However, we operate in a rapidly evolving and often unpredictable business environment that may change the timing or amount of expected future cash receipts and expenditures. Accordingly, there can be no assurance that we may not be required to raise additional funds through the sale of equity or debt securities or from additional credit facilities. Additional capital, if needed, may not be available on satisfactory terms, if at all. Furthermore, additional debt financing may contain more restrictive covenants than our existing debt.

 

22


Table of Contents
This excerpt taken from the MCZ 10-Q filed Aug 14, 2006.

Liquidity and Capital Resources

Sources of Liquidity

 

     As of and for the
Three months ended June 30,
       

(in thousands)

   2006     2005     Change  

Cash

   $ 1,721     $ 1,565     $ 156  
                        

Percentage of total assets

     2.6 %     2.2 %  

Cash used in operating activities

   $ (4,274 )   $ (3,082 )   $ (1,192 )

Cash used in investing activities

     (55 )     (551 )     496  

Cash provided by financing activities

     4,230       4,483       (253 )

Effect of foreign exchange on cash

     213       (370 )     583  
                  

Net increase in cash

   $ 114     $ 480    
                  

At June 30, 2006, available cash was approximately $1.7 million compared to cash of approximately $1.6 million at March 31, 2006 and $1.6 million at June 30, 2005. Our primary sources of liquidity include a revolving line of credit (as discussed below under Cash Flows from Financing Activities), cash on hand at the beginning of the year and cash flows generated from operations.

Cash Flows from Operating Activities

Our cash flows from operating activities have typically included the collection of customer receivables generated by the sale of our products, offset by payments to vendors for materials and manufacture of our products. For the three months ended June 30, 2006, cash used in operating activities was $4.3 million compared to cash used of $3.1 million for the three months ended June 30, 2005. Cash was primarily used for the payment of accounts payable, offset by smaller inventory purchases resulting in a reduction in inventories.

 

19


Cash Flows from Investing Activities

Cash used in investing activities was $55,000 during the three months ended June 30, 2006 and $0.6 million during the three months ended June 30, 2005. Investing activities consist of capital expenditures to support our operations.

Cash Flows from Financing Activities

Cash provided by financing activities during the three months ended June 30, 2006 was a result of increased borrowings under our line of credit. For the three months ended June 30, 2006, cash provided by financing activities was $4.2 million compared to cash provided of $4.5 million in the three months ended June 30, 2005. We are focused on effectively managing our overall liquidity position by continuously monitoring expenses and managing our accounts receivable collection efforts.

We maintain a Credit Facility (the “Credit Facility”) with Wachovia Capital Finance Corporation (Central) (“Wachovia”), formerly Congress Financial Corporation (Central), which allows us to borrow up to $35 million under a revolving line of credit, subject to the availability of eligible collateral (accounts receivable and inventories), which changes throughout the year. The line of credit accrues interest on the daily outstanding balance at the U.S. prime rate plus 0.25% per annum, and must be repaid in United States dollars. In addition, the Company is required to pay a monthly service fee of $2,000 and an unused line fee equal to 0.25%. The Credit Facility is secured by a first priority security interest in the inventories, equipment, accounts receivable and investment properties of Mad Catz, Inc., our primary operating subsidiary (“MCI”), and a pledge in favor of Wachovia of all of the shares of capital stock of our subsidiaries. The Credit Facility is guaranteed by the Company and requires us to adhere to specified financial operating guidelines. See Note 5 to the consolidated financial statements included in Item 1. Financial Statements, elsewhere in this Form 10-Q.

The Credit Facility with Wachovia is scheduled to expire on September 25, 2006. As a result of the amendment to the Credit Facility described below under Part II Other Information – Item 5. Other Information, the Credit Facility automatically renews for an additional one-year period unless either party gives written notice to the other party seeking to terminate the Credit Facility prior to the expiration date. Although Wachovia has extended the expiration date of the Credit Facility in each of the last three fiscal years, we do not know the likelihood that Wachovia will agree to further extend the expiration of the Credit Facility following September 25, 2006. If Wachovia is unwilling to extend the expiration of the Credit Facility beyond September 25, 2006 on terms acceptable to us, or if we are unable to comply with the restrictive and financial covenants contained in the Credit Facility, Wachovia may declare the outstanding borrowings under the facility immediately due and payable. In such an event, our liquidity will be materially adversely affected, which could in turn have a material adverse impact on our future financial position and results of operations. We are reviewing our alternatives with respect to extending the term of the Credit Agreement and expect to continue to renew or obtain new financing prior to the current September 25, 2006 termination date.

We also have an additional $10 million line of credit under the Credit Facility which may be utilized, with Wachovia’s consent, for acquisition purposes under the same conditions and terms as the lines of credit described above. To date, we have not drawn against this line of credit.

At June 30, 2006 the outstanding balance on our line of credit was $12.8 million and our weighted average annualized interest rate during the three-month period ended June 30, 2006 was 8.1%. We must meet an adjusted tangible net worth covenant to access the line of credit. At June 30, 2006 and March 31, 2006, we were in compliance with this loan covenant.

We believe that our available cash balances, anticipated cash flows from operations and available line of credit will be sufficient to satisfy our operating needs for at least the next twelve months. However, we operate in a rapidly evolving and often unpredictable business environment that may change the timing or amount of expected future cash receipts and expenditures. Accordingly, there can be no assurance that we may not be required to raise additional funds through the sale of equity or debt securities or from additional credit facilities. Additional capital, if needed, may not be available on satisfactory terms, if at all. Furthermore, additional debt financing may contain more restrictive covenants than our existing debt.

 

20


This excerpt taken from the MCZ 6-K filed Feb 15, 2005.

Liquidity and Capital Resources

 

The Company’s working capital needs are provided by internally generated cash flow and an operating credit facility with an asset-based lender. The current operating credit facility has a maximum availability of $35.0 million, however access to this line of credit is based on eligible collateral (accounts receivable and inventory), which changes throughout the year. In addition, the Company must meet an Adjusted Tangible Net Worth covenant to access the line of credit. On July 27, 2004, Congress Financial agreed to extend the renewal date of the Company’s credit facility to September 25, 2005. At December 31, 2004, the outstanding balance of the credit facility was $27.3 million as compared to $15.2 million at March 31, 2004 and $22.3 million at December 31, 2003.

 

At December 31, 2004, cash balances were approximately $3.2 million, compared to $1.7 million at March 31, 2004 and $2.0 million at December 31, 2003. The Company used cash of $9.9 million in the third quarter, and $9.4 million during the nine months ended December 31, 2004 to fund operating activities as compared to the use of $3.9 million and $3.5 million to fund operating activities for the same periods, respectively, of the previous year. The current year third quarter reflects an increase in accounts receivable of $24.8 million, a decrease in inventories of $3.5 million and an increase in accounts payable and accrued liabilities of $4.4 million. The changes to working capital reflect the increased sales during the third quarter holiday period as noted previously under “seasonality”.

 

Cash used in investing activities was $0.5 million and $0.9 million for the third quarter and the nine months ended December 31, 2004, respectively, compared to cash used of $0.2 million and $0.8 million for the same periods, respectively, of the previous year. The sole investing activity for the respective periods was the purchase of capital assets.

 

Cash provided by financing activities was $12.5 million and $12.1 million for the third quarter and the nine months ended December 31, 2004, respectively, compared to cash used of $5.4 million and $5.3 million for the same periods, respectively, of the previous year. Cash provided by financing activities was due to additional borrowings under the line of credit during the third quarter of fiscal 2005. The cash from bank advances will vary depending on the timing of the Company’s inventory purchases and related payments to manufacturing facilities, which reduce the Company’s accounts payable balances.

 

Total cash generated during the third quarter of fiscal 2005 was $2.0 million, compared to cash generated of $1.3 million during the same period in fiscal 2004. Total cash generated for the nine months ended December 31, 2004 was $1.5 million, compared to cash generated of $0.8 million during the nine months ended December 31, 2003.

 

The Company believes that its available cash balance, cash flows from operations and available line of credit will require continuous close management, but will be sufficient to satisfy its operating needs for the balance of fiscal 2005. However, the Company operates in a rapidly evolving and often unpredictable business environment that may change the timing or amount of expected future cash receipts and expenditures.

 

6


 

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki