“During Q4, we also began the important process of extending our credit facilitywith Wachovia and restructuring our Saitek note. The Company was in compliance with all facility covenants at March31, 2009. * Extended the maturity to March 31, 2019 of the $14.5 million convertible noteissued as partial consideration for the 2007 acquisition of Saitek. * Reported net position of bank loan less cash at March 31, 2009 of $10.4million compared to $19.5 million as of December 31, 2008 and $6.2 million atMarch 31, 2008.

Richardson added, “While the addition of our PC accessories business was aprincipal driver behind our sales growth in most geographies during fiscal 2009,we also benefited from our strategy of diversifying our product offerings. Thelaunch of products for Wii Fit and Wii charging products, helped drive Wii salesas a percentage of our overall gross sales to 15.4% as compared to 5.6% infiscal 2008. Reflecting the continued strength of core console videogameproducts such as our Xbox 360 control pad and the contribution from a variety ofnew products, we also grew our console videogame business, leading to Mad Catz`overall sales reaching record levels. “During the fiscal 2009 fourth quarter, the launch of our range of Fight Sticksand Fight Pads for the Street Fighter IV contributed to organic net revenuegrowth of 3.9% and record net sales of $22.8 million for the quarter.Furthermore, Mad Catz strengthened its presence on the current generation ofconsoles throughout fiscal 2009, with fiscal fourth quarter overall gross salesfor current consoles rising approximately 51.6% over prior year levels and nineof our top ten best selling products focused on next-gen consoles. We believethat current generation console sales will continue to drive growth in sales ofaccessories heading into fiscal 2010 and expect our upcoming product launchportfolio to position us to benefit from this trend. “While Mad Catz generated solid organic net sales growth, our quarterly grossmargin declined to 24.0% from a record level a year ago. The decline was largelyrelated to the recent strengthening of the US dollar versus the Euro and BritishPound.

This led to reduction in the translated value of European-based sales,while our production costs are denominated in Chinese Yuan – a currency whichhas not meaningfully fluctuated in relation to the dollar – resulting in anegative impact to gross margins. As a result, gross margins were below ourexpectations as we targeted margins that would approximate the 25.5% recorded inthe fiscal 2009 third quarter. “Though gross margins were impacted by currency fluctuations, price protectionand by on-going channel inventory reductions imposed by our retail partners,gains in operating efficiency across all expense line items along with costmanagement initiatives implemented earlier in the fiscal year allowed us toapproach operating profitability excluding the benefit of the non-cash goodwillimpairment charge reversal taken during the quarter and a $1.5 million positiveswing in operating income from the fourth quarter of fiscal 2008. Bottom lineresults in the final quarter of fiscal 2009 were impacted by foreign exchangelosses of $1.3 million, while year-ago results benefited from a $1.1 millionforeign exchange gain.