CIMdata PLM Industry Summary Online Archive
27 April 2011
Financial News
SofTech Announces Q1 & Q2 FY2011 Results
SofTech, Inc. announced financial results for its first and second quarters of fiscal year 2011. Since the recapitalization transaction of March 11, 2011, the new management team has been working with the Company’s registered independent accountants to complete the fiscal year 2010 audit (results released April 19, 2011) and the quarterly reviews for fiscal year 2011.
The operating results for the first two quarters of fiscal year 2011 compared to the same periods in the prior fiscal year were as follows:
Fiscal Year 2011 |
Fiscal Year 2010 |
|||||||||||||||
(000's, except per share data) |
Q1 |
Q2 |
YTD |
Q1 |
Q2 |
YTD |
||||||||||
Revenue |
$ |
1,893 |
$ |
1,933 |
$ |
3,826 |
$ |
1,981 |
$ |
1,892 |
$ |
3,873 |
||||
Income from operations |
242 |
224 |
466 |
326 |
330 |
656 |
||||||||||
Net income |
132 |
87 |
219 |
180 |
192 |
372 |
||||||||||
Earnings per share |
.01 |
.01 |
.02 |
.01 |
.02 |
.03 |
“After suffering through a difficult fiscal year 2010 with double-digit declines in revenue across all product lines, the Company’s revenue stabilized during the first six months of fiscal year 2011,” said Joe Mullaney, President and CEO. “Fiscal 2011 profitability was negatively impacted by significant legal and advisory fees related to the Company’s debt default in June 2010. With the completion of the March 2011 recapitalization transaction, the new management team is now focused on profitable growth and we are pleased with our progress,” he added.
Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”), a non- GAAP financial measure, for the first half of fiscal year 2011 as compared to the same periods in the prior fiscal year is provided below in tabular form. The reconciliation from net income is also provided.
|
|
Fiscal Year 2011 |
|
|
|
Fiscal Year 2010 |
|||||||||||||||
(000's) |
Q1 |
|
Q2 |
|
YTD |
Q1 |
|
Q2 |
|
YTD |
|||||||||||
Net income |
$ |
132 |
$ |
87 |
$ |
219 |
$ |
180 |
$ |
192 |
$ |
372 |
|||||||||
Plus: Interest expense |
121 |
151 |
272 |
151 |
148 |
299 |
|||||||||||||||
Tax expense |
- |
- |
- |
- |
- |
- |
|||||||||||||||
Depreciation expense |
9 |
9 |
18 |
19 |
18 |
37 |
|||||||||||||||
Amortization expense |
|
- |
|
|
- |
|
|
- |
|
|
|
|
37 |
|
|
26 |
|
|
63 |
||
EBITDA |
262 |
247 |
509 |
387 |
384 |
771 |
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 expense, a cost of capital, has been added back to net income in the derivation of 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 included 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.
Annual Meeting
The Board of Directors also announced that the fiscal year 2010 Annual Meeting of Shareholders will be held on May 24, 2011 at the Company’s headquarters located at 59 Lowes Way, Lowell, MA, 01851. Shareholders of record at the close of business on April 19, 2011 will be entitled to vote. The Board of Directors has recommended, among other matters, the approval of a one-for-twenty reverse stock split of the issued and outstanding common shares and the approval of an equity incentive plan. The information statement will be mailed to record holders on or about April 26, 2011.
“The stock price has responded positively to the recapitalization transaction and the new management team’s announced goal of improving the Company’s listing exchange,” continued Mullaney. “We believe the reverse stock split could increase the acceptance of the Company’s stock by the financial community and the investing public. The equity incentive plan will assist us in attracting, motivating and retaining high-performing executives, directors and employees while aligning the interests of the option holders with that of our shareholders.”
The information statement, audited financial statements for fiscal 2010 and the interim financial statements for the three and six month periods ended November 30, 2010 may also be obtained at the Company’s website at http://www.softech.com/company/investors.php.
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