CIMdata PLM Industry Summary Online Archive
17 January 2007
Financial News
SofTech Announces Second Quarter Financial Results for FY 2007
SofTech, Inc. announced Q2 fiscal 2007 results. Revenue for Q2 FY 2007 was $3.0 million as compared to $3.4 million for the same period in fiscal 2006. The net loss for the current quarter was ($223,000) or ($.02) per share as compared to ($102,000) or ($.01) per share for the same period in the prior fiscal year.
Revenue for the six months ended November 30, 2006 was about $5.5 million as compared to about $6.5 million for the same period in the prior fiscal year. The net loss for the six months ended November 30, 2006 was ($961,000) or ($.08) per share as compared to a net loss of ($436,000) or ($.04) per share for the same period in the prior fiscal year.
The net loss adjusted for non-cash expenses related to amortization of intangible assets resulting from acquisitions, a non-GAAP financial measure, was $131,000 for the current quarter as compared to $451,000 for the same period in the prior fiscal year. This same non-GAAP financial measure for the six months ended November 30, 2006 was $(253,000) as compared to $728,000 for the same period in the prior year. A reconciliation is provided on the attached Financial Summary.
The Company's revenue is derived almost entirely from technology acquisitions completed between 1997 and 2002. As a result, management believes the Company's financial profile is very unique, at least in the industry in which it operates. As of November 30, 2006 approximately 73% of its assets are composed of intangible assets related to these acquisitions. For the current quarter, the amortization of these intangible assets was approximately 11% of its total expenses and 12% of its revenue. Further, the periods over which these intangible costs are expensed are highly judgmental.
It is management's opinion that comparing results of operations from period to period and to other companies in our industry absent these non-cash expenses related to acquisitions is a more meaningful measure of our performance given the Company's unique financial profile detailed above. It is also management's belief that this non-GAAP measure of performance is one of the most critical measures of Company valuation for investors. Lastly, this measure of performance has been, and is expected to continue to be, a significant component of the incentive compensation plan for the Company's President.
"Our Q2 showing was much improved over our first quarter performance, said Jean Croteau, President of SofTech. "While our legacy technologies experienced a decline in revenue, ProductCenter revenue increased almost 5% in Q2 as compared to the same period in fiscal 2006. While the Company remains committed to improving our legacy technologies and ensuring their compatibility with current operating systems, our spending related to those product lines has been reduced to reflect the reality of the revenue trend. I am optimistic that with continued revenue momentum with ProductCenter and reduced spending on our legacy technologies we can improve on our operating results for the coming quarters," he added.
SOFTECH, INC.
FINANCIAL SUMMARY
(in thousands, except per share data)
Statements of Operations:
|
For the Three Month Periods Ended |
|
|
November 30, 2006 |
November 30, 2005 |
Revenue |
$ 3,006 |
$ 3,391 |
Income from operations |
144 |
184 |
Net loss |
(223) |
(102) |
Loss per share |
(.02) |
(.01) |
|
For the Six Month Periods Ended |
|
|
November 30, 2006 |
November 30, 2005 |
Revenue |
$ 5,502 |
$ 6,459 |
Loss from operations |
(254) |
93 |
Net loss |
(961) |
(436) |
Loss per share |
(.08) |
(.04) |
Reconciliation of Net Loss to Pro Forma Net Income:
The net loss calculated in accordance with GAAP is adjusted below by non-cash expenses related to amortization of intangible assets resulting from acquisitions. It is management's view that this non-GAAP financial measure of cash flow provides important information in understanding the Company's financial performance.
|
For the Three Month Periods Ended |
|
|
November 30, 2006 |
November 30, 2005 |
Net loss |
$ (223) |
$ (102) |
Plus: Non-cash amortization |
354 |
553 |
Pro Forma net income |
131 |
451 |
|
For the Six Month Periods Ended |
|
|
November 30, 2006 |
November 30, 2005 |
Net loss |
$ (961) |
$ (436) |
Plus: Non-cash amortization |
708 |
1,164 |
Pro Forma net income (loss) |
(253) |
728 |
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