EXHIBIT 99.1
FOR IMMEDIATE RELEASE
SOFTECH REPORTS Q4 & FY 2005 RESULTS
FOURTH CONSECUTIVE FISCAL YEAR OF POSITIVE CASH FLOW FROM OPERATIONS;
GAAP LOSS REDUCED BY 23%; FORECAST OF CONTINUED
POSITIVE TRENDS FOR FY 2006
TEWKSBURY, Mass.--(BUSINESS WIRE)--AUGUST 29, 2005--SofTech, Inc. (OTCBB:SOFT -
NEWS), a proven provider of product lifecycle management (PLM) solutions,
announced today results for its fourth quarter and fiscal year 2005. Revenue for
the fourth quarter of fiscal 2005 was about $3.1 million as compared to about
$3.3 million for the same period in the prior year. The net loss for Q4 2005 was
$(482,000) or $(.04) per share as compared to a net loss of $(384,000) or $(.03)
per share for the prior year. The net loss adjusted for non-cash expenses
related to amortization of intangible assets resulting from acquisitions, a
Non-GAAP financial measure, was $126,000 in the fourth quarter of fiscal 2005 as
compared to $219,000 in the same period in fiscal 2004. A reconciliation of GAAP
results to this non-GAAP financial measure for each of the periods is presented
in a table below.
Revenue for fiscal year 2005 was about $12.1 million as compared to about $12.3
million for fiscal year 2004. The net loss for fiscal 2005 was about $(1.4)
million as compared to about $(1.9) million for fiscal 2004. The net loss
adjusted for non-cash expenses related to amortization of intangible assets
resulting from acquisitions, a Non-GAAP financial measure, was $1.015 million
for fiscal 2005 as compared to $585,000 for fiscal 2004.
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.
At May 31, 2005, approximately 79% of its assets are composed of intangible
assets related to these acquisitions. For fiscal year 2005, the amortization of
these intangible assets was approximately 18% of its total expenses and 21% 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.
"Fiscal 2005 was a great year for our company," said Joe Mullaney, SofTech's
President. "We doubled our new customer wins from fiscal 2004, won a few large,
very competitive procurements and generated increasing interest in our
PLM/collaboration technology. From a financial standpoint, we generated positive
cash flow from operations for the fourth consecutive fiscal year allowing for us
to reduce our outstanding debt by more than one million dollars. Over the last
four fiscal years we have generated positive cash flow from operations of $2.6
million."
"While it continues to be difficult to forecast the exact timing of when
customers will make their final purchasing decisions from quarter to quarter, we
have demonstrated substantial, steady improvement over the last four years. The
trends in our business are absolutely positive and we expect to continue to
improve our financial performance going forward."
"For fiscal 2006, we are expecting overall revenue growth of between 4% and 7%
with double digit growth from our ProductCenter technology. We expect to
increase our cash spending by approximately 3% to 4.5% primarily related to
increasing our sales presence and our R&D expenditures. If we can accomplish
these above goals we can reduce our GAAP loss to approximately $(600,000) and
improve our Non-GAAP financial measure as defined above to about $1.4 million,
an improvement of nearly 40% from fiscal 2005. While our public goals are annual
measures we also have a goal of generating net income on a GAAP basis for at
least one quarter during fiscal 2006."
ABOUT SOFTECH
SofTech, Inc. (OTCBB: SOFT) is a proven provider of product lifecycle management
(PLM) solutions with its flagship ProductCenter(TM) PLM solution, and its
computer-aided design and manufacturing (CAD/CAM) products, including CADRA(TM)
and Prospector(TM).
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 solutions, including General Electric
Company, Goodrich, Honeywell, Siemens, Sikorsky Aircraft, U.S. Army, and
Whirlpool Corporation. Headquartered in Tewksbury, Massachusetts, SofTech
(WWW.SOFTECH.COM) has locations and distribution partners throughout North
America, Europe, and Asia.
SofTech, CADRA, ProductCenter and Prospector are trademarks of SofTech, Inc. All
other products or company references are the property of their respective
holders.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The statements made above with respect to SofTech's outlook for fiscal 2006 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. These include, among other
risks and uncertainties, general business and economic conditions, generating
sufficient cash flow from operations to fund working capital needs, potential
obsolescence of the Company's technologies, maintaining existing relationships
with the Company's lender, remaining in compliance with debt covenants,
successful introduction and market acceptance of planned new products and the
ability of the Company to attract and retain qualified personnel both in our
existing markets and in new territories.
Contact: Joseph P. Mullaney
President and COO
(781) 890-8373
SOFTECH, INC.
FINANCIAL SUMMARY
FOR THE THREE MONTH PERIODS ENDED
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MAY 31, MAY 31,
(in thousands) 2005 2004
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Revenue $ 3,112 $ 3,273
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Loss from operations (272) (126)
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Net loss (482) (384)
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Loss per share (.04) (.03)
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FOR THE FISCAL YEARS ENDED
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MAY 31, MAY 31,
(in thousands) 2005 2004
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Revenue $ 12,120 $ 12,294
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Loss from operations (533) (838)
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Net loss (1,425) (1,853)
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Loss per share (.12) (.15)
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RECONCILIATION OF NET LOSS TO NON-GAAP FINANCIAL MEASURES:
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
provides important information in understanding the Company's financial
performance.
FOR THE THREE MONTH PERIODS ENDED
- ------------------------------ ------------------------------ -----------------------------
MAY 31, MAY 31,
(in thousands) 2005 2004
---- ----
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Net loss $ (482) $ (384)
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Plus: Non-cash amortization 608 603
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Non-GAAP financial measure 126 219
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FOR THE FISCAL YEARS ENDED
- ------------------------------ ------------------------------ -----------------------------
MAY 31, MAY 31,
(in thousands) 2005 2004
---- ----
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Net loss $ (1,425) $ (1,853)
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Plus: Non-cash amortization 2,440 2,438
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Non-GAAP financial measure 1,015 585
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