Triple Digit Growth With Higher Margins in Houseplans(TM) Business
On a sequential basis, net revenues for the quarter increased by $0.5 million and operating results improved by approximately $1.6 million as we improved our overall gross margin from 58% to 63% and as we reduced our overall operating expenses by approximately $1.1 million.
The following are highlights for the first quarter of fiscal 2006:
-- Sales from the direct marketing channel accounted for 70% of total revenues for the first quarter of fiscal year 2006 as compared to 52% in the same period of the previous fiscal year.
-- Gross margin in the Internet Content segment improved to 61% from 53% during the fiscal quarter ended September 30, 2005, as compared to the same period from the previous fiscal year.
-- Sequentially, operating loss narrowed from $2.5 million to $0.9 million as we improved our gross margins and reduced our operating expenses.
-- Consolidated non-cash depreciation and amortization expense for the September 2005 quarter was $360,000.
-- Our operating results were negatively impacted by approximately $200,000 of severance charges during the quarter ended September 30, 2005.
-- We have yet to benefit from gains on sale of securities we received as part of the total consideration relating to the Allume sale. As of September 30, 2005, we had $478,000 of unrealized gains on restricted securities. This item was accounted for as comprehensive income during the first quarter of fiscal 2006 and was not included in our net earnings because the underlying securities were restricted as of the quarter end. Our subsequent sale of these securities in the December quarter generated a gain of approximately $0.9 million over our basis in the stock.
"The Houseplans(TM) business continues to lead our growth and with our internal efforts and the addition of Weinmaster Homes we have the largest and, we believe, the best collection of house plans on the web," said Martin Wade, Chief Executive Officer. "This is a great consumer benefit and our customers continue to respond to the choices we provide," continued Mr. Wade. "We are looking forward to the seasonal pickup as customers plan for the coming season. We had $9.9 million in cash or cash equivalents and $1.5 million of available for sale securities as of September 30, 2005. Our cash balance provides an opportunity for business development. Our software business is adapting to the current environment after the July divestiture and we expect it to resume a stronger growth track going forward."
Selected Financial Data
(In thousands)
FY 2005 FY 2006
Q1 Q2 Q3 Q4 Q1
Net revenues $3,135 $3,478 $3,799 $3,462 $3,965
Gross profit 2,114 2,356 2,512 2,010 2,510
As % of net revenues 67% 68% 66% 58% 63%
Operating loss -564 -526 -462 -2,472 -881
As % of net revenues -18% -15% -12% -71% -22%
Net (loss) income -275 129 -386 -1,222 -1,951
As % of net revenues -9% 4% -10% -35% -49%
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)
September 30, June 30,
2005 2005
Unaudited
ASSETS
Current assets:
Cash and cash equivalents $9,887 $4,347
Available-for-sale securities 1,524 --
Trading securities -- 714
Receivables, less allowances
for doubtful accounts,
discounts and returns of $437
as of September 30, 2005 and
$626 as of June 30, 2005. 1,554 773
Inventories, net 834 758
Receivables, other (related to
discontinued operations) -- 2,000
Receivables, other -- 30
Other current assets 989 530
Assets related to discontinued
operations -- 12,231
Total current assets 14,788 21,383
Fixed assets, net 373 377
Intangible Assets
Capitalized software, net 434 494
Domain names and brands, net 2,101 1,574
Distribution rights and
proprietary plans, net 789 170
Capitalized customer lists,
agreements and relationships 1,424 326
Goodwill 3,665 2,090
Trademarks 21 1
Total intangible assets 8,434 4,655
Other long term assets 8 --
Total assets 23,603 26,415
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short term debt 1,713 2,764
Trade accounts payable 1,600 2,245
Accrued and other liabilities 1,907 1,871
Liabilities related to
discontinued operations -- 1,037
Deferred revenues 62 38
Total current liabilities 5,282 7,955
Long-term debt and other obligations 200 230
Total liabilities 5,482 8,185
Shareholders' equity
Common stock, no par value;
300,000,000 authorized;
29,713,760 issued and
outstanding as of September
30, 2005 and 28,796,886
issued and outstanding as of
June 30, 2005. 44,839 43,663
Accumulated deficit (27,282) (25,331)
Accumulated other
comprehensive income (loss) 564 (102)
Total shareholders' equity 18,121 18,230
Total liabilities and
shareholders' equity $23,603 $26,415
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE (LOSS) INCOME
(In thousands, except per share amounts)
Three months ended
September 30,
2005 2004
Net revenues $3,965 $3,135
Product costs 1,455 1,021
Gross margin 2,510 2,114
Costs and expenses
Sales and marketing 1,531 1,350
General and administrative 1,425 859
Research and development 435 469
Total operating expenses 3,391 2,678
Operating loss (881) (564)
Other income and (expense)
Interest and other, net (69) 6
Realized / unrealized loss on
marketable securities (158) (50)
Loss before income tax (1,108) (608)
Income tax provision -- (5)
Loss from continuing operations (1,108) (613)
Income from discontinued operations,
net of income tax -- 285
Gain (loss) from the sale of
discontinued operations, net of
income tax (843) 53
Net loss ($1,951) ($275)
Other comprehensive income (loss)
Unrealized gain on
restricted securities 478 --
Foreign currency translation
adjustments 188 (10)
Comprehensive loss ($1,285) ($285)
Basic earnings (loss) per share
Loss from continuing operations ($0.04) ($0.02)
Income from discontinued operations,
net of income tax $0.00 $0.01
Income (loss) from the sale of
discontinued operations, net of
income tax ($0.03) $0.00
Net loss ($0.07) ($0.01)
Diluted earnings (loss) per share
Loss from continuing operations ($0.04) ($0.02)
Income from discontinued operations,
net of income tax $0.00 $0.01
Income (loss) from the sale of
discontinued operations, net of
income tax ($0.03) $0.00
Net loss ($0.07) ($0.01)
Shares used in computing basic
earnings (loss) per share 29,689 26,462
Shares used in computing diluted
earnings (loss) per share 29,689 26,462
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three months ended September 30,
2005 2004
Cash flows from operating
activities:
Net cash provided by (used in)
operating activities ($394) $1,643
Cash flows from investing
activities:
Proceeds from sale of discontinued
operations 9,304 --
Proceeds from sale of product line -- 250
Acquisition of subsidiaries (1,807) (30)
Acquisition of software development
and trademarks -- (92)
Purchases of equipment and software (20) (27)
Transfer cash to escrow for
Jupitermedia -- (499)
Other (8) --
Cash used in discontinued operations
in investing activities -- (46)
Net cash provided by (used in)
investing activities 7,469 (444)
Cash flows from financing
activities:
Proceeds from borrowings 850 400
Repayments of notes (2,935) (1,040)
Proceeds from warrants and options
exercised 63 65
Cash used in discontinued operations
in financing activities -- (20)
Net cash used in financing
activities (2,022) (595)
Effect of exchange rate change on
cash and cash equivalents 9 (10)
Unrealized gain on available-for-
sale securities 478 --
Net increase in cash and cash
equivalents 5,540 594
Cash and cash equivalents at
beginning of period 4,347 3,212
Cash and cash equivalents at end of
the period $9,887 $3,806
Three months ended
September 30,
2005 2004
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Interest paid 55 57
SUPPLEMENTAL DISCLOSURE OF NON-CASH
FINANCING ACTIVITIES
Notes payable incurred in
conjunction with acquisitions 1,000 440
Capital stock issued in conjunction
with settlement of debt -- 1,034
Capital stock issued in conjunction
with acquisitions 1,046 503
Warrants issued in conjunction with
short-term debt 68 --
About IMSI
Founded in 1982, IMSI has established a tradition of providing the professional and home user with innovative technology and easy-to-use, high- quality software products at affordable prices. Anchored by IMSI's flagship product, TurboCAD(R) ( www.turbocad.com), the company continues to be a leading developer and distributor of precision design and consumer software solutions. IMSI also owns and operates Houseplans(TM) ( www.Houseplans.com), focused on expanding its network of Web properties to serve the rapidly growing market for the sale of stock house plans on-line and related home building services. More information about the company can be found at www.imsisoft.com.
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements as a result of various factors including the ability of the company to successfully commercialize its new technologies as well as risk factors set forth from time to time in the Form 10-KSB for the period ended June 30, 2005 and other company's reports filed with the Securities and Exchange Commission. The company undertakes no obligation to publicly release the result of any revisions to these forward-
looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
CONTACT: Robert O'Callahan, Chief Financial Officer of International
Microcomputer Software, Inc., +1-415-878-4020, or
Email Contact
Web site: http://www.imsisoft.com/