CIMdata PLM Industry Summary Online Archive

18 April 2008

Financial News

SofTech Announces Third Quarter Financial Results for FY 2008

SofTech, Inc. announced Q3 results. Revenue for Q3 FY 2008 was $2.4 million as compared to $2.9 million for the same period in fiscal 2007. The net loss for the current quarter was $(133,000) or $(.01) per share as compared to the net loss of ($116,000) or ($.01) per share for the same period in the prior fiscal year.

Revenue for the nine months ended February 29, 2008 was about $7.7 million as compared to about $8.4 million for the same period in the prior fiscal year. The net loss for the nine months ended February 29, 2008 was ($350,000) or ($.03) per share as compared to a net loss of ($1,077,000) or ($.09) per share for the same period in the prior fiscal year.

Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”), a non-GAAP financial measure, was $560,000 for the current quarter, as compared to $623,000 in the comparable prior period. EBITDA for the nine months ended February 29, 2008 was $1,790,000, as compared to $1,099,000 in the comparable prior period. A reconciliation of EBITDA to Net Loss is provided on the attached Financial Summary.

The Company’s revenue is derived almost entirely from technology acquisitions completed between 1997 and 2002, and the Company’s operations are not capital intensive. As of February 29, 2008 approximately 61% of the Company’s assets represent intangible assets related to these historical acquisitions. The Company does not anticipate making further acquisitions in the foreseeable future. For the current quarter, the amortization of these intangible assets was approximately 14% of total expenses and 14% of total revenue. Further, the periods over which these intangible costs are expensed are highly judgmental.

The Company believes that EBITDA is useful supplemental information for investors, when considered along with net income and other income statement data The Company believes that EBITDA is useful because it provides investors with information concerning the potential longer term profitability of the Company’s technology assets (subsequent to full amortization of costs), as amortization of acquisition costs has been added back to net income in arriving at EBITDA. Further, management believes that EBITDA provides a useful financial metric by which the Company can be compared with other companies that have different capital structures (interest (a cost of capital) has been added back to net income in arriving at EBITDA). It is also management’s belief that this non-GAAP measure of performance continues to be used in the investment community as a financial metric for business valuation purposes.

However, the Company believes that EBITDA is not a substitute for cash flow from operations, which is disclosed in the Company’s financial statements. Investors should carefully review the financial statements of the Company in their entirety in order to obtain a complete understanding of the Company’s financial condition and results of operations.

SOFTECH, INC.

FINANCIAL SUMMARY

(in thousands, except per share data)

Statements of Operations:

For the Three Month Period Ended

February 29,

2008

February 28,

2007

Revenue

$

2,445

$

2,851

Income from operations

191

256

Net loss

(133

)

(116

)

Loss per share

(.01

)

(.01

)

For the Nine Month Period Ended

February 29,

2008

February 28,

2007

Revenue

$

7,654

$

8,353

Income from operations

678

2

Net loss

(350

)

(1,077

)

Loss per share

(.03

)

(.09

)

Reconciliation of EBITDA:

To arrive at EBITDA, net loss, calculated in accordance with GAAP, is adjusted below by adding back interest expense and non-cash expenses related to amortization of intangible assets resulting from acquisitions and depreciation expense.

For the Three Month Period Ended

February 29,

2008

February 28,

2007

Net loss

$

(133

)

$

(116

)

Plus: Interest Expense

324

372

Plus: Depreciation Expense

15

13

Plus: Amortization Expense

354

354

EBITDA

560

623

For the Nine Month Period Ended

February 29,

2008

February 28,

2007

Net loss

$

(350

)

$

(1,077

)

Plus: Interest Expense

1,028

1,079

Plus: Depreciation Expense

50

35

Plus: Amortization Expense

1,062

1,062

EBITDA

1,790

1,099

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