CIMdata PLM Industry Summary Online Archive
7 August 2009
Financial News
SofTech Announces Improved Profitability for Fiscal Year 2009
SofTech, Inc. announced financial results for Fiscal Year 2009. Revenue was approximately $9.5 million for fiscal year 2009, as compared to $10.1 million for fiscal year 2008.
Despite the decline in revenue, the Company’s profitability improved substantially, with net income increasing by approximately $1.6 million, from a loss of $306,000 ($.03 per share) in fiscal year 2008, to net income of approximately $1.3 million ($.11 per share) in fiscal year 2009.
Net cash flows from operating activities also improved considerably during fiscal year 2009, increasing approximately $700,000 from $974,000 for fiscal year 2008 to $1.7 million for fiscal year 2009 (a 71% increase). The Consolidated Statement of Cash Flows for the fiscal year ended May 31, 2009 and 2008 is included in the Financial Summary.
Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”), a non- GAAP financial measure, increased $200,000, from $2.4 Million in fiscal year 2008 to $2.6 million in fiscal year 2009, (an 8% increase). A reconciliation of EBITDA to Net Income (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 May 31, 2009, approximately 1.5% of the Company’s assets represent amortizable intangible assets related to these historical acquisitions. The Company does not anticipate making further acquisitions in the foreseeable future. For the fiscal year ended May 31, 2009, amortization expense (a non-cash expense) related to these intangible assets were approximately 5% of total expenses, 4% of total revenue and 31% of net income. 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 operating activities, which is disclosed above and 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. |
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FINANCIAL SUMMARY |
|||||||||
(In thousands, except per share data) |
|||||||||
|
|
|
|
||||||
Statements of Operations (unaudited): |
|||||||||
|
|||||||||
For the Fiscal Years Ended May 31, |
|||||||||
|
|
|
2009 |
|
|
2008 |
|
||
Revenue |
|
|
$ |
9,498 |
|
|
$ |
10,106 |
|
Income from operations |
|
|
|
2,132 |
|
|
|
928 |
|
Net income (loss) |
|
|
|
1,321 |
|
|
|
(306 |
) |
Basic and diluted income (loss) per share |
|
|
|
.11 |
|
|
|
(.03 |
) |
Reconciliation of EBITDA to Net Income (Loss) (unaudited):
To arrive at EBITDA, net income (loss), calculated in accordance with GAAP, is adjusted below by adding back interest expense, taxes, non-cash expenses related to amortization of intangible assets resulting from acquisitions, and depreciation expense.
For the Fiscal Years Ended May 31, |
|||||||||||||||||
|
|
|
2009 |
|
|
2008 |
|
|
|
Percentage of |
|
|
Percentage of |
||||
Net income (loss) |
|
|
$ |
1,321 |
|
|
$ |
(306 |
) |
|
|
|
|
|
|
||
Plus: Interest Expense |
|
|
|
760 |
|
|
|
1,292 |
|
|
|
9 |
% |
|
|
12 |
% |
Plus: Depreciation Expense |
|
|
|
127 |
|
|
|
84 |
|
|
|
2 |
% |
|
|
1 |
% |
Plus: Amortization Expense |
|
|
|
405 |
|
|
|
1,346 |
|
|
|
5 |
% |
|
|
13 |
% |
EBITDA |
|
|
|
2,613 |
|
|
|
2,416 |
|
|
|
|
|
|
|
||
SOFTECH, INC. |
||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||
For The Fiscal Year Ended May 31, |
||||||||||
(Unaudited) |
||||||||||
|
|
|
|
|||||||
|
||||||||||
2009 |
2008 |
|||||||||
(in thousands) |
||||||||||
Cash flows from operating activities: |
||||||||||
Net income (loss) |
$ |
1,321 |
$ |
(306 |
) |
|||||
Adjustments to reconcile net income to net cash |
||||||||||
Depreciation and amortization |
532 |
1,430 |
||||||||
Provision for uncollectible accounts |
25 |
52 |
||||||||
Loss on retirement of equipment |
- |
3 |
||||||||
|
||||||||||
Change in operating assets and liabilities: |
||||||||||
Accounts receivable |
108 |
39 |
||||||||
Prepaid expenses and other assets |
(96 |
) |
- |
|||||||
Accounts payable and accrued expenses |
89 |
(17 |
) |
|||||||
Deferred revenue |
(319 |
) |
(227 |
) |
||||||
Total adjustments |
339 |
1,280 |
||||||||
|
||||||||||
Net cash provided by operating activities |
1,660 |
|
974 |
|
||||||
|
||||||||||
Net cash provided by investing activities |
||||||||||
Capital expenditures |
(89 |
) |
(9 |
) |
||||||
Net cash used in investing activities |
(89 |
) |
(9 |
) |
||||||
|
||||||||||
Cash flows from financing activities: |
||||||||||
Borrowings under debt agreements |
- |
150 |
||||||||
Repayments under debt agreements |
(1,715 |
) |
(1,101 |
) |
||||||
Repayments under capital lease |
(31 |
) |
(31 |
) |
||||||
Net cash used in financing activities |
(1,746 |
) |
(982 |
) |
||||||
|
||||||||||
Effect of exchange rates on cash |
33 |
|
(131 |
) |
||||||
|
||||||||||
Net decrease in cash and cash equivalents |
(142 |
) |
(148 |
) |
||||||
Cash and cash equivalents, beginning of year |
900 |
|
1,048 |
|
||||||
Cash and cash equivalents, end of year |
$ |
758 |
|
$ |
900 |
|
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