SofTech Announces Q1 & Q2 FY2011 Results
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SofTech Announces Q1 & Q2 FY2011 Results

Sets FY2010 Annual Meeting Date, Board Recommends: 1 for 20 Reverse Stock Split and New Equity Incentive Plan

LOWELL, Mass. — (BUSINESS WIRE) — April 27, 2011 — SofTech, Inc., a proven provider of Product Lifecycle Management (PLM) solutions, today 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 www.softech.com/company/investors.php.

About SofTech

SofTech, Inc. (OTC.PK: SOFT) is a proven provider of product lifecycle management (PLM) solutions, including its flagship ProductCenter® PLM solution, and its computer-aided design and manufacturing (CAD/CAM) products, including CADRA® and Prospector™.

SofTech's solutions accelerate products and profitability by fostering innovation, extended enterprise collaboration, product quality improvements, and compressed time-to-market cycles. SofTech excels in its sensible approach to delivering enterprise PLM solutions, with comprehensive out-of-the-box capabilities, to meet the needs of manufacturers of all sizes quickly and cost-effectively.

Over 100,000 users benefit from SofTech software solutions, including General Electric Company, Goodrich, Honeywell, Siemens, Sikorsky Aircraft and the U.S. Army. Headquartered in Lowell, Massachusetts, SofTech ( www.softech.com) has locations and distribution partners throughout North America, Europe, and Asia.

SofTech, CADRA, ProductCenter and Prospector are registered trademarks or trademarks of SofTech, Inc. All other products or company references are the property of their respective holders.

Forward Looking Statements

Any statements made herein with respect to our outlook for fiscal year 2011 and beyond represent “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934 and are subject to a number of risks and uncertainties, including but not limited to our ability to:

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions intended to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this press release. Except as otherwise required by law, SofTech expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations or any change in events, conditions or circumstances on which any of our forward-looking statements are based. SofTech qualifies all forward-looking statements by these cautionary statements.



Contact:

SofTech, Inc.
Joseph P. Mullaney, 978-513-2700
President & Chief Executive Officer