EXHIBIT 99.1
FOR IMMEDIATE RELEASE
SOFTECH REPORTS Q1 FY 2006 RESULTS
TOTAL REVENUE UP MORE THAN 10%, PRODUCT REVENUE DOUBLES
FROM PRIOR YEAR; RESULTS EXCEED PRIOR GUIDANCE
TEWKSBURY, Mass.--(BUSINESS WIRE)--OCTOBER 17, 2005--SofTech, Inc. (OTCBB:SOFT -
NEWS), a proven provider of product lifecycle management (PLM) solutions,
announced results for its first quarter of fiscal year 2006. Revenue for the
first quarter of fiscal 2006 was about $3.07 million as compared to about $2.78
million for the same period in the prior year, an increase of about 10.5%. The
net loss for Q1 2006 was $(334,000) or $(.03) per share as compared to a net
loss of $(459,000) or $(.04) per share for the prior year, an improvement of
approximately 27%. The net loss adjusted for non-cash expenses related to
amortization of intangible assets resulting from acquisitions, a Non-GAAP
financial measure, was $276,000 in the first quarter of fiscal 2006 as compared
to $152,000 in the same period in fiscal 2005, an increase of about 82%. A
reconciliation of GAAP results to this non-GAAP financial measure for each of
the periods is presented in a table below.
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.
Approximately 79% of its assets are composed of intangible assets related to
these acquisitions. The amortization of these intangible assets was
approximately 18% of its total expenses and 20% 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 2006 is off to a fast start and we are optimistic that we can continue
this performance over the course of the year" said Joe Mullaney, President and
COO. "Product revenue in Q1 was especially strong with all three product lines
experiencing growth. Our ProductCenter PLM technology was responsible for 65% of
the product revenue increase. With Q1's double digit revenue growth and
controlled expense increases, we were able to reduce our GAAP loss by 27% and
improve our Non-GAAP financial measure of performance (net loss plus non-cash
expenses related to acquisitions) by 82% as compared to the same period in
fiscal 2005."
"Revenue generated in North America increased by about 12%, Europe by 6% and
Asia by 4% in the current quarter as compared to the same quarter in fiscal
2005. There were many averaged sized product revenue orders with no individual
order larger than $70,000 of product revenue. This was by far our best overall
Q1 performance in five years."
"We reaffirm our outlook for full year 2006 revenue growth of between 4% and 7%,
increased spending of between 3% and 4.5%, and a 40% increase in our Non-GAAP
financial measure," Mullaney added.
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
- ------------------------------------- ----------------------------------- -----------------------------------
AUGUST 31, AUGUST 31,
(in thousands) 2005 2004
---- ----
- ------------------------------------- ----------------------------------- -----------------------------------
Revenue $ 3,068 $ 2,777
- ------------------------------------- ----------------------------------- -----------------------------------
Loss from operations (91) (209)
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Net loss (334) (459)
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Loss per share (.03) (.04)
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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
- ------------------------------------- ----------------------------------- -----------------------------------
AUGUST 31, AUGUST 31,
(in thousands) 2005 2004
---- ----
- ------------------------------------- ----------------------------------- -----------------------------------
Net loss $ (334) $ (459)
- ------------------------------------- ----------------------------------- -----------------------------------
Plus: Non-cash amortization 610 611
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Non-GAAP financial measure
276 152
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