MINNEAPOLIS, Dec. 20 /PRNewswire-FirstCall/ -- SoftBrands, Inc. , a global supplier of enterprise application software, today announced its financial results for the fourth quarter and fiscal year ended September 30, 2006.
Revenues for the fourth quarter fiscal 2006 were $19.0 million, compared with revenues of $17.1 million in the fourth quarter fiscal 2005. Maintenance revenue accounted for 65 percent of total revenues in the current quarter, an increase from 61 percent of revenues in the fourth quarter fiscal 2005.
The company reported an operating loss of $12.3 million in the fourth quarter fiscal 2006, which included purchased in-process research and development expense of $11.4 million related to the HIS acquisition, restructuring charges of $0.2 million, non-cash amortization of intangibles expense of $0.8 million and non-cash stock compensation expense of $0.3 million. This compares to operating income of $0.1 million in the fourth quarter fiscal 2005, which included non-cash amortization of intangibles expense of $1.0 million. The company reported a net loss available to common shareholders of $17.0 million, or a loss of $0.42 cents per diluted share, for the fourth quarter fiscal 2006, compared with a loss of $3.3 million, or a loss of $0.08 per diluted share, for the fourth quarter fiscal 2005.
Randy Tofteland, SoftBrands' president and chief executive officer, said, "Our fourth quarter was a transition quarter, during which we restructured the operations of our hospitality business to position it for improved profitability, at the same time we announced and began integrating our highly strategic acquisition of HIS. We are very excited by the progress made to date and the long-term growth opportunity that we are well positioned to capitalize on in the hospitality sector."
Tofteland continued, "In addition to the significant activity in our hospitality business, we continued our transition to more of an indirect sales model in our manufacturing business. This is a long-term process, but we continue to make progress in building a foundation to support future growth, which we believe will come as a result of our domain expertise, broad and deep manufacturing solution and overall commitment to our partnership with SAP."
"As we look to fiscal 2007, we are optimistic about the company's outlook. We believe SoftBrands is well positioned to restore top line growth and profitability and generate solid cash from operations," Tofteland concluded.
Other highlights of the fourth quarter and other recent developments include:
-- Signing of a global, multi-year agreement with a multinational food
company to supply the Fourth Shift Edition for SAP Business One
solution to plants within its many operating divisions.
-- Closed the largest Medallion deal in the company's history, passing the
1,000th installation of Medallion.
-- Successfully launched Karyon Software as a Service offering in
November.
-- Launched Fourth Shift Edition for SAP Business One in China; and signed
the first customer.
-- Partnered with Wincor Nixdorf to bring Medallion to Polish Hospitality
market.
-- Partnered with CP CIM-POOL, a Swiss software developer, to further
reach into the discrete manufacturing mid-market.
In the company's manufacturing business, fourth quarter fiscal 2006 revenues were $12.4 million, compared with $13.1 million in the fiscal 2005 period. Fourth quarter fiscal 2006 operating income in manufacturing was $0.6 million, a decline from $1.2 million in the prior year's fourth quarter due to increased investment in sales and marketing resources for Fourth Shift Edition for SAP Business One and the continued transition toward a primarily indirect sales model.
In the company's hospitality business, fourth quarter fiscal 2006 revenues were $6.6 million, a significant increase from $4.0 million in the prior year's quarter due to the acquisition of HIS. In the fourth quarter fiscal 2006, SoftBrands' hospitality business generated an operating loss, excluding the purchased in-process research and development expense of $11.4 million, of $1.5 million compared to an operating loss of $1.1 million from the fourth quarter fiscal 2005.
From a geographic perspective, 60 percent of our revenues were generated in the Americas in the quarter; 28 percent in the EMEA region; and 12 percent in the Asia Pacific region. This compares to a respective mix of 54 percent, 32 percent and 14 percent in the prior year's quarter.
Full Year Results
Revenues for the full fiscal year 2006 were $69.3 million, compared with $70.8 million in fiscal 2005.
The operating loss for the fiscal year 2006 was $16.4 million, which included purchased in-process research and development of $11.4 million related to the HIS acquisition, $0.2 million in restructuring costs, $3.6 million in non-cash amortization of intangibles expense and $1.9 million in non-cash stock compensation expense. In fiscal 2005, the company generated operating income of $1.3 million, which included the benefit of approximately $0.3 million related to the reversal of restructuring related costs and $4.3 million in non-cash amortization of intangibles expense.
SoftBrands reported a net loss available to common shareholders of $21.1 million, or a loss of $0.52 cents per diluted share for full year ended September 30, 2006, compared with net income of $7.2 million, or $0.18 cents per diluted share, for the full year ended September 30, 2005. Net income in the 2006 fiscal year includes $0.4 million from discontinued operations and in the 2005 fiscal year period includes income from discontinued operations of $10.3 million from a distribution from the AremisSoft Corporation Liquidating Trust, net of tax.
Cash and Liquidity
As of September 30, 2006, SoftBrands had $14.5 million in total cash and cash equivalents, an increase of $1.8 million from $12.7 million at June 30, 2006.
Conference Call
SoftBrands will hold its fourth quarter earnings conference call at 10:00 am Eastern Time tomorrow, December 21, 2006. Interested parties may also listen to the call by dialing 866-700-6293 or international 617-213-8835 (passcode: 99716763). A live webcast will also be available at SoftBrands' website at http://www.softbrands.com/ . Interested parties should dial into the conference call or access the webcast approximately 10-15 minutes before the scheduled start time. A replay will be available approximately one hour after the conference call concludes and will remain available through December 28, 2006. The replay number is 888-286-8010 and international 617-801-6888 (passcode: 26243741). The webcast will be archived on SoftBrands' website for approximately one year.
We anticipate filing our Form 10K Thursday December 21, 2006.
Forward-Looking Statements
All statements other than historical facts included in this release regarding future operations are subject to the risks inherent in predictions and "forward looking statements." These statements are based on the beliefs and assumptions of management of SoftBrands and on information currently available to us. Nevertheless, these forward-looking statements should not be construed as guarantees of future performance. They involve risks, uncertainties, and assumptions identified in filings by SoftBrands with the SEC, including:
-- Changes in the economy, natural disasters, disease or other events that
affect the manufacturing and hospitality segments or the geographies we
serve;
-- Our increasing dependence upon our relationship with SAP;
-- Our ability to effectively integrate the HIS business;
-- Our ability to timely complete and introduce, and the market acceptance
of our new products;
-- Our ability to properly document our sales consistent with the manner
in which we recognize revenue;
-- Our ability to manage international operations;
-- Our ability to maintain and expand our base of clients on software
maintenance programs;
-- The effects of and our ability to rapidly adapt to changes in standards
for operating systems, databases and other technologies; and
-- Our ability to successfully upgrade our financial systems
About SoftBrands
SoftBrands, Inc. is a leader in providing software solutions for businesses in the manufacturing and hospitality industries worldwide. The company has established a global infrastructure for distribution, development and support of enterprise software, and has approximately 5,000 customers in more than 100 countries actively using its manufacturing and hospitality products. SoftBrands, which has approximately 875 employees, is headquartered in Minneapolis, Minn., with branch offices in Europe, India, Asia, Australia and Africa. Additional information can be found at http://www.softbrands.com/ .
SoftBrands, Inc.
Consolidated Balance Sheets
in thousands, except share and per share data
(Unaudited)
September 30, September 30,
2006 2005
Assets
Current assets:
Cash and cash equivalents $14,520 $16,034
Accounts receivable, net 7,555 5,363
Prepaid expenses and other current assets 3,542 1,134
Total current assets 25,617 22,531
Furniture, fixtures and equipment, net 2,787 1,986
Restricted cash 73 648
Goodwill 35,021 22,947
Intangible assets, net 10,844 3,783
Other long-term assets 705 6
Total assets $75,047 $51,901
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term obligations
and capital leases $2,618 $260
Accounts payable 2,110 2,240
Accrued expenses 6,870 5,707
Accrued restructuring costs 936 203
Deferred revenue 22,560 15,355
Other current liabilities 1,288 1,352
Total current liabilities 36,382 25,117
Long-term obligations and capital leases 19,302 -
Other long-term liabilities 835 292
Total liabilities 56,519 25,409
Stockholders' equity:
Series A Convertible Preferred Stock, $0.01
par value; 300,000 shares authorized; no shares
issued or outstanding - -
Series B Convertible Preferred Stock, $0.01
par value; 4,331,540 shares authorized, issued
and outstanding; liquidation value of $4,591 5,068 5,068
Series C-1 and Series C Convertible Preferred
Stock, $0.01 par value, 18,000 shares authorized,
18,000 shares issued and outstanding liquidation
value of $18,000 plus unpaid dividends 18,000 15,065
Series D Convertible Preferred Stock, $0.01
par value, 6,673 shares authorized, 6,000
shares issued and outstanding liquidation value
of $6,000 plus unpaid dividends 5,051 -
Common Stock, $0.01 par value; 110,000,000 shares
authorized; 41,024,960 and 40,030,000 shares
issued and outstanding; respectively 410 400
Additional paid-in capital 173,791 173,756
Accumulated other comprehensive loss (1,670) (1,893)
Accumulated deficit (182,122) (165,904)
Total stockholders' equity 18,528 26,492
Total liabilities and stockholders' equity $75,047 $51,901
SoftBrands, Inc.
Consolidated Statements of Operations
in thousands, except per share data
(Unaudited)
Three Months Ended Fiscal Year Ended
September 30, September 30,
2006 2005 2006 2005
Revenues:
Software license $2,136 $2,556 $8,707 $10,452
Maintenance and support 12,376 10,486 43,823 43,537
Professional services 4,036 3,254 14,619 13,309
Third-party software
and hardware 496 827 2,140 3,483
Total revenues 19,044 17,123 69,289 70,781
Cost of revenues:
Software licenses 629 919 3,130 4,503
Maintenance and support 3,484 3,509 13,375 14,094
Professional services 3,626 2,459 13,007 10,421
Third-party software
and hardware 474 532 1,600 2,519
Total cost of
revenues 8,213 7,419 31,112 31,537
Gross profit 10,831 9,704 38,177 39,244
Operating expenses:
Selling and marketing 3,987 3,078 13,343 11,026
Research and product
development 3,300 2,183 10,962 8,425
General and
administrative 4,281 4,310 18,673 18,744
Purchased in-process
research and
development 11,400 - 11,400 -
Restructuring related 196 - 196 (261)
Total operating
expenses 23,164 9,571 54,574 37,934
Operating income
(loss) (12,333) 133 (16,397) 1,310
Interest expense (229) (4,016) (238) (7,062)
Other income
(expense), net (228) 304 134 602
Loss from continuing
operations before
provision for
(benefit from)
income taxes (12,790) (3,579) (16,501) (5,150)
Provision for (benefit
from) income taxes 97 (2,190) 110 (2,151)
Loss from
continuing
operations (12,887) (1,389) (16,611) (2,999)
Discontinued operations
Income (loss) from
discontinued
operations, net of tax - (1,740) 393 10,343
Net income (loss) (12,887) (3,129) (16,218) 7,344
Preferred stock
beneficial conversion
feature charge 756 - 756 -
Deemed dividend on
exchange of preferred
stock 2,935 - 2,935 -
Preferred stock
dividends 382 132 1,201 132
Net income (loss)
available to common
shareholders $(16,960) $(3,261) $(21,110) $7,212
Basic and diluted
earnings (loss) per
common share:
Continuing operations $(0.42) $(0.04) $(0.53) $(0.08)
Discontinued operations $ - $(0.04) $ 0.01 $ 0.26
Net income (loss) $(0.42) $(0.08) $(0.52) $ 0.18
Weighted average basic
and diluted shares
outstanding 40,590 40,030 40,242 40,030
SoftBrands, Inc.
Supplemental Financial Information
in thousands
(Unaudited)
Operating Results Summary
Three Months Ended September 30,
2006 2005 % Change
Operating Operating Operating
Income Income Income
Revenue (Loss) Revenue (Loss) Revenue (Loss)
Manufacturing $12,445 $568 $13,128 $1,240 (5.2)% (54.2)%
Hospitality 6,599 (12,901) 3,995 (1,107) 65.2% NM
Total $19,044 $(12,333) $17,123 $133 11.2% NM
Fiscal Year Ended September 30,
2006 2005 % Change
Operating Operating Operating
Income Income Income
Revenue (Loss) Revenue (Loss) Revenue (Loss)
Manufacturing $51,076 $1,849 $50,597 $3,553 0.9% (48.0)%
Hospitality 18,213 (18,246) 20,184 (2,243) (9.8)% NM
Total $69,289 $(16,397) $70,781 $1,310 (2.1)% NM
Certain reclassifications were made to unallocated corporate expenses in
fiscal 2005 to conform with the 2006 presentation.
SoftBrands, Inc.
Supplemental Financial Information
in thousands
(Unaudited)
Revenue by Segment and Type
Three Months Ended September 30,
2006 2005
Manufacturing Hospitality Total Manufacturing Hospitality Total
Software
licenses $1,240 $896 $2,136 $2,070 $486 $2,556
Maintenance
and
support 8,140 4,236 12,376 7,703 2,783 10,486
Professional
services 2,846 1,190 4,036 2,732 522 3,254
Third-party
software and
hardware 219 277 496 623 204 827
$12,445 $6,599 $19,044 $13,128 $3,995 $17,123
Fiscal Year Ended September 30,
2006 2005
Manufacturing Hospitality Total Manufacturing Hospitality Total
Software
licenses $6,363 $2,344 $8,707 $7,679 $2,773 $10,452
Maintenance
and
support 31,896 11,927 43,823 30,694 12,843 43,537
Professional
services 11,576 3,043 14,619 10,603 2,706 13,309
Third-party
software and
hardware 1,241 899 2,140 1,621 1,862 3,483
$51,076 $18,213 $69,289 $50,597 $20,184 $70,781
SoftBrands, Inc.
Supplemental Financial Information
in thousands
(Unaudited)
Revenue by Segment and Geography
Three Months Ended September 30,
2006
Manufacturing Hospitality Total
Americas $7,300 $4,197 $11,497
Europe, Middle East & Africa 3,504 1,869 5,373
Asia Pacific 1,641 533 2,174
$12,445 $6,599 $19,044
Three Months Ended September 30,
2005 % Change
Manufacturing Hospitality Total Total
Americas $7,719 $1,601 $9,320 23.4%
Europe, Middle East & Africa 3,651 1,875 5,526 (2.8%)
Asia Pacific 1,758 519 2,277 (4.5%)
$13,128 $3,995 $ 17,123 11.2%
Fiscal Year Ended September 30,
2006
Manufacturing Hospitality Total
Americas $29,751 $8,713 $38,464
Europe, Middle East & Africa 14,372 7,376 21,748
Asia Pacific 6,953 2,124 9,077
$51,076 $18,213 $69,289
Fiscal Year Ended September 30,
2005 % Change
Manufacturing Hospitality Total Total
Americas $30,696 $7,402 $38,098 1.0%
Europe, Middle East & Africa 13,088 10,377 23,465 (7.3)%
Asia Pacific 6,813 2,405 9,218 (1.5)%
$50,597 $20,184 $70,781 (2.1)%
Contact Information
Tim Dolan
Investor Relations
