ViXS Reports Fourth Quarter and Annual Fiscal 2016 Results

TORONTO, ON --(Marketwired - March 31, 2016) -ViXS Systems Inc. (TSX: VXS) a pioneer and leader in advanced media processing solutions, reported today its fourth quarter and fiscal 2016 results for the period ending January 31, 2016. All results are reported under International Financial Reporting Standards ("IFRS") and in U.S. dollars, unless otherwise specified.

Selected Financial Highlights

 For the For the For the For the For the
US$ 000s (except twelvetwelve three Monthsthree Monthsthree Months
 earnings per Months endedMonths endedended ended ended
 share)January 31, January 31, January 31, October 31, January 31,
Revenue$26,286 $38,416 $5,212$5,138$11,229
Gross Margin $10,256 $17,756 $1,266$2,254$5,521
Gross Profit
 Margin 39.0% 46.2% 24.3% 43.9% 49.2%
 Loss $(11,644) $(15,558) $(3,677)$ (3,183) $(3,764)
Earnings per
 share -- basic$(0.23) $(0.31) $(0.07) $(0.06) $(0.07)
Cash and
 Equivalents $7,272$15,289 $7,272$4,758$15,289

Q4FY16 Financial Summary

--Revenues for the fourth quarter of fiscal 2016 totalled $5.2 million, up from $5.1 million in the third quarter of fiscal 2016. This modest increase was primarily due to higher shipments of XConnex products coupled with lower pricing for these MoCA-based products and expected seasonal weakness in other product families exiting the fourth quarter. Revenues decreased by $6.0 million from $11.2 million recognized a year ago due to a decline in XCode sales for end of life legacy products such as HD TV and consumer PC video products.
--Gross margin for the fourth quarter of fiscal 2016 was 24.3%, down from the previous quarter's level of 43.9% due primarily to the higher mix of MoCA products sold at lower prices. As expected shipments of the company's XCode5000 and XC6000 products begin to ramp in the upcoming quarters, this better sales mix should generate a corresponding improvement in gross margins.
--IFRS Comprehensive loss of $(3.7) million, or $(0.07) per share,
compared to a loss of $(3.2) million or $(0.06) per share in the
previous quarter and $(3.8) million or $(0.07) in the fourth quarter of fiscal 2015. This quarterly loss change was due mainly to higher
operating expenses from the tape-out of our latest 28nm XCode 6800.

FY16 Financial Summary

--Revenue of $26.3 million, compared to $38.4 million in the prior year. This decline in revenue in fiscal 2016 was mainly due to a decline in XCode sales for end of life legacy products such as HD TV and consumer PC video products, offset by a higher than expected product mix of XConnex sales plus higher XCodePro revenue.
--Gross Margin of 39.0%, compared to 46.2% in the prior year. This
decrease is mainly due to the impact of higher product mix from lower
margin XConnex product sales.
--IFRS Comprehensive loss totalled $(11.6) million, a $4.0 million
improvement as compared to the $(15.6) million loss over the same period the previous year. Despite the lower revenue levels, the continued year-over-year decrease in net loss from operations reflects ongoing cost efficiencies to our operations that resulted in $10.7 million of lower operating expenses, in addition to less adverse impacts from realized and unrealized currency losses this year compared to fiscal 2015.

Customer, Product and Corporate Announcements

--Significant OTA (Over-the-Air) design in activity across the globe, with design wins with major North American service provider and multiple OEM/ODMs in Asia Pacific;
--Samples of XCode 6800 have been delivered to two lead customers in the Consumer segment with product launches anticipated during the upcoming Holiday season.
--Design wins with multiple video delivery and Cloud segment OEMs for the XCodePro professional transcoder/decoder products with anticipated volume shipments towards the end of Fiscal 2017. These include two existing XCodePro customers launching new designs into the Cloud segment.
--In the Capture market, a new target segment that supports consumers
managing, editing and storing their growing video content, we are
engaged with a top consumer brand to offer this capability in a new
class of product for the holiday season.
--Successful Consumer Electronics Show with strong interest from companies across the globe in our products including; VIDITY, Ultra HD Blu-Ray Player, CordCutterTV Stick and XCodePro professional transcoder/decoder;
--Closed two non-brokered private placements raising an aggregate gross proceeds of approximately $4.8 million ($CAD 6.9 million);

"This quarter we laid the groundwork for improved financial performance and growth," stated Sohail Khan, President and CEO of ViXS. "We are starting to see traction with our new strategy of focus on the Consumer, Capture and Cloud segments as demonstrated with our design win activities. Consequently, we expect to return to growth and higher normalized gross margins as the year progresses."

Following the release, management of the Company will host a conference call to discuss the financial results.


DATE: Thursday March 31, 2016

TIME: 5:00 P.M. EST

DIAL IN NUMBER: Local / International: 514-841-2157
North American Toll: Free: 1-866-215-5508 Passcode: 4210-

REPLAY NUMBER:Local / International: 630-652-3042
North American Toll: Free: 1-888-843-7419
Passcode: 4210-4129

WEBSITE:To view the press release or any additional financial
information, please visit the Investor Relations section of
the ViXS website at:


The following table sets forth selected financial information derived from the Company's audited annual consolidated financial statements for the three months and fiscal years ended January 31, 2016 and January 31, 2015, as well as the Company's unaudited interim consolidated financial statements for the three months ended October 31, 2015. The selected financial information was prepared in accordance with IAS 34 in a manner consistent with the Company's annual financial statements. The following information should be read in conjunction with the Financial Statements and MD&A.

 Three-month Period EndedFiscal years ended
Dollar amounts in U.S.31,31,31,January 31,
 dollars2016 2015 2015 20162015
Amounts in thousands,
 except loss per share

Revenue $5,212 $5,138$11,229$26,286$38,416
Cost of sales 3,9462,8845,70816,030 20,660
Gross margin 1,2662,2545,521 10,256 17,756
Operating expenses
Research and
 development3,2113,2154,02613,228 16,605
Selling, general and
 administrative 1,4501,9703,697 7,928 15,275
Total operating
 expenses 4,6615,1857,72321,156 31,880
Loss before finance
 costs and income,
 currency losses (3,395)(2,931)(2,202) (10,900) (14,124)
Other income
Finance costs (222) (89)217 (558)127
Finance income 243 1957 84
Currency losses(71)(173)(1,686) (204)(1,461)
Total other income
 (expense)(269)(259)(1,450) (705)(1,250)
Loss before taxes ($3,664) ($3,190) ($3,652) ($11,605) ($15,374)
Income tax expense (10)(4) (78)(29)(105)
Net loss for the year(3,674)(3,194)(3,730) (11,634) (15,479)
Exchange difference
 on translating
 foreign operations (3) 11 (34)(10)(79)
Comprehensive loss for
 the year ($3,677) ($3,183) ($3,764) ($11,644) ($15,558)
Loss per share
 attributed to common
 equity holders
Basic ($0.07)($0.06)($0.07)($0.23) ($0.31)
Diluted ($0.07)($0.06)($0.07)($0.23) ($0.31)
Weighted average
 number of common
 shares outstanding
Basic50,961 50,377 50,376 50,96150,370
Diluted50,961 50,377 50,376 50,96150,370

(1) Includes share-
 based transaction
 expense of:
Research and
 development100 92 55225 757
Selling, general and
 administrative 124111317 76 1,132
 $224 $203 $372 $301$1,889

 As January 31,As at OctoberAs at January
in thousands of US Dollars2016 2015 2015

Cash and cash equivalents $7,272 $4,758$15,289
Trade accounts receivable2,2913,4084,104
Total assets $26,576$24,386$35,844

Trade payables 3,3702,644 $6,465
Accrued liabilities2,3993,2246,656
Deferred revenues390 14168
Total liabilities 16,206 12,958 16,525
Total liabilities and
 shareholders' equity$26,576 24,386$35,844


In addition to disclosing results in accordance with IFRS as issued by the International Accounting Standards Board ("IASB"), the Company also provides supplementary non-IFRS financial measures as a method of evaluating the Company's performance. These non-IFRS measures are disclosed as a supplement to financial results prepared in accordance with IFRS in order to provide a further understanding of ViXS' results of operations from management's perspective. In particular, ViXS uses non-IFRS measures to provide investors with supplemental measures of its operating performance and highlight trends in its core business that may not otherwise be readily apparent solely from IFRS measures. ViXS management uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess ViXS' ability to meet its future capital expenditure and working capital requirements. ViXS believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers.

Non-IFRS net loss is defined as total comprehensive loss before share-based transaction expense, exchange difference related to translating foreign operations, unrealized currency gains/losses and non-recurring or one-time items such as: share offering costs, listing fees, convertible preferred share revaluation adjustment, fair value adjustment on warrant liability and provision for repayable government assistance. Non-IFRS net loss does not have any standardized meaning prescribed by IFRS and is not necessarily comparable to similar measures presented by other companies. Non-IFRS net loss from operations should not be considered in isolation or as a substitute for comprehensive loss prepared in accordance with IFRS.

ViXS has provided a comparison of comprehensive loss to non-IFRS net loss in the following table:

 Three Month Period Ended Fiscal Years Ended
 January October January
(in thousands of U.S.31, 31, 31, January 31,
 dollars) 201620152015 20162015
Comprehensive loss for
 the period ($3,677)($3,183)($3,764) ($11,644) ($15,559)
R&D adjustments
 compensation expense 1009255225 757
Provision for repayment
 of government(22)(47) -(901) (419)
Selling, general and
Stock based
 compensation expense 124 111 317 76 1,132
Legal fee settlement 40 (297) 40(297)
Other Income/Expense
Listing Fees 53 - - 53 -
Share offering costs- --
Fair value adjustment
 on warranty liability -
Unrealized currency
 loss (gain)70 234 1,701175 1,446
Other adjustments
Convertible preferred
 share revaluation- -
Exchange differences on
 translating foreign3(11)3410 80
Non-IFRS net loss ($3,349)($2,764)($1,954)$11,966($12,860)

ViXS' annual audited financial statements and management's discussion & analysis ("MD&A"), for the three-month and twelve-month period ended January 31, 2016, are available via ViXS' website and will be available on SEDAR at


Certain statements in this press release which are not historical facts constitute forward-looking statements or information within the meaning of applicable securities laws ("forward-looking statements"). Such statements include, but are not limited to, statements regarding ViXS' projected revenues, gross margins, earnings, growth rates, the impact of new product design wins, market penetration and product plans. The use of terms such as "may," "anticipated," "expected," "projected," "targeting," "estimate," "intend" and similar terms are intended to assist in identification of these forward-looking statements. Readers are cautioned not to place undue reliance upon any such forward-looking statements. Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause ViXS' actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. Accordingly, there can be no assurance that forward-looking statements will prove to be accurate and readers are therefore cautioned not to place undue reliance upon any such forward-looking statements.

Factors that could cause results or events to differ materially from current expectations expressed or implied by forward looking statements contained herein include, but are not limited to: our history of losses and the risks associated with not achieving or sustaining profitability; the Company's dependence on a limited number of customers for a substantial portion of revenues; fluctuating revenue and expense levels arising from changes in customer demand, sales cycles, product mix, average selling prices, manufacturing costs and timing of product introductions; risks associated with competing against larger and more established companies; competitive risks and pressures from further consoldiation amongst competitors, customers, and suppliers; market share risks and timing of revenue recognition associated with product transitions; risks associated with changing industry standards such as HEVC (High Efficiency Video Codec), HDR (High Dynamic Range) and Ultra HD resolution; risks related to intellectual property, including third party licensing or patent infringement claims; the loss of any of the Company's key personnel could seriously harm its business; risks associated with adverse economic conditions; delays in the launch of customer products; price re-negotiations by existing customers; the Company's dependence on a limited number of supply chain partners for the manufacture of its products, legal proceedings arising from the ordinary course of business; ability to raise needed capital; ongoing liquidity requirements;and other factors discussed in the "Risk Factors" section of the Company's Annual Information Form dated March 31, 2016, a copy of which is available under the Company's profile on SEDAR at All forward-looking statements are qualified in their entirety by this cautionary statement. ViXS is providing this information as of the current date and does not undertake any obligation to update any forward-looking statements contained herein as a result of new information, future events or otherwise except as may be required by applicable securities laws.

About ViXS Systems Inc.

ViXS is a pioneer and market leader in designing revolutionary media processing semiconductor solutions for video over IP streaming solutions, with over 510 patents issued and pending worldwide, numerous industry awards for innovation, and over 33 million media processor shipped to date. ViXS is driving the transition to Ultra HD 4K across the entire content value chain by providing professional and consumer grade chipsets that support the new High Efficiency Video Coding (HEVC) standard up to Main 12 Profile, reducing bandwidth consumption by 50% while providing the depth of color and image clarity needed to take advantage of higher-resolution content. ViXS' XCodePro 300 family is ideal for Ultra HD 4K infrastructure equipment, and the XCode 6000 family of system-on-chip (SoC) products achieve unprecedented levels of integration that enable manufacturers to create cost-effective consumer entertainment devices.

ViXS is headquartered in Toronto, Canada with offices in Europe, Asia and North America. VIXS™, the ViXS® logo, XCode®, XCodePro™, XConnex™ and Xtensiv™ are trademarks and/or registered trademarks of ViXS. Other trademarks are the property of their respective owners. For more information on ViXS, visit our website:


For further information, please contact:

Charlie Glavin
ViXS Systems Inc.
+1 416 646-2000

Nicole Marchand
Investor Relations, Consultant
+1 416 646-2000 ext. 3

Source: ViXS Systems Inc.