SAN DIEGO, Dec 09, 2005 (BUSINESS WIRE) -- Mad Catz Interactive, Inc., (AMEX/TSE:MCZ) ("the
Company"), a leading worldwide third party video game accessory
provider, today announced that it had entered into an agreement with
Fire International, Ltd. ("Fire") whereby the Company will pay Fire
$2.0 million to satisfy all of its remaining minimum purchase
obligations related to a five-year supply agreement that extended
through March 31, 2008. Mad Catz believes the $2.0 million payment
substantially reduces the potential cash outlay it would have been
liable for under the minimum purchase requirements of the supply
agreement.
Darren Richardson, President and CEO commented, "Fire has been
very effective in providing game enhancement technology to Mad Catz
that has been successfully marketed in our GameShark game enhancement
software products and offerings for almost three years. The GameShark
acquisition has been a strategic success for Mad Catz, providing an
important entrance into software publishing while serving to further
diversify our revenue sources. By eliminating the minimum purchase
requirements we maintain access to Fire's intellectual property and
technology development on a non-exclusive basis while eliminating the
uncertainty inherent in a currently declining market. Mad Catz remains
committed to simultaneously serving the current and next generation
console community with a full range of accessories and publishing
select video game software while also seeking new revenue streams to
leverage our existing infrastructure and further diversify our
business."
In January 2003, Mad Catz acquired the GameShark brand and its
associated intellectual property, including the GameShark related
websites for approximately $5.0 million. GameShark has been a leading
provider of video game enhancement software that enables players to
access secret codes, short cuts, hints and enhancements incorporated
by video game publishers into their game offerings. After completing
the GameShark acquisition, Mad Catz entered into a five-year supply
agreement with Fire whereby Mad Catz secured exclusive North American
rights, as well as non-exclusive rights in many other countries, to
Fire's video game enhancement technology. As previously disclosed, the
agreement specified that Mad Catz was required to purchase a minimum
of $5.0 million of Fire products each fiscal year, through March 31,
2008. If Mad Catz did not meet this sales volume during a particular
year, it was required to pay Fire an amount equal to 40% of the
unfulfilled minimum purchase amount, up to a maximum potential payment
of $2.0 million per year. Mad Catz met the minimum purchase
requirement during the fiscal year ended March 31, 2004.
During the fiscal year ended March 31, 2005, the Company did not
purchase the minimum $5.0 million of product and on February 1, 2005,
Mad Catz entered into an agreement with Fire providing that the
minimum purchase requirement for the period from April 1, 2004 until
March 31, 2005 would be waived for that year, deferred, and combined
with the minimum guarantee for the period from April 1, 2005 through
March 31, 2006 for a total purchase obligation of $10.0 million. In
addition, the minimum purchase guarantee through March 31, 2008 of
$5.0 million each year would have remained in effect. The agreement
announced today effectively eliminates any future purchase commitments
with regard to the five-year agreement with Fire.
About Mad Catz Interactive, Inc.
Mad Catz is a worldwide leader of innovative peripherals in the
interactive entertainment industry. Mad Catz designs and markets a
full range of accessories for video game systems and publishes video
game software, including the industry leading GameShark brand of 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
www.madcatz.com.
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. You can identify
these statements by the fact that they use words such as "anticipate,"
"estimate," "expect," "project," "intend," "should," "plan," "goal,"
"believe," 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.
SOURCE: Mad Catz Interactive, Inc.
Mad Catz Interactive, Inc.
Cy Talbot, 619-683-9830
or
Jaffoni & Collins Incorporated
Joseph Jaffoni / Carol Young, 212-835-8500
mcz@jcir.com
