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Press release from Marketwire

Softchoice Announces Earnings Growth for the Fourth Quarter and Fiscal Year 2010

- Revenues Increase 16 Percent in the Fourth Quarter of 2010 - Gross Profit Grows 14 Percent in the Fourth Quarter of 2010 - Annual Operating Income Up By 31 Percent - Annual Adjusted Earnings Per Share Increases 26%

Tuesday, February 15, 2011

Softchoice Announces Earnings Growth for the Fourth Quarter and Fiscal Year 201016:02 EST Tuesday, February 15, 2011TORONTO, ONTARIO--(Marketwire - Feb. 15, 2011) - Softchoice Corporation (TSX:SO), a leading North American provider of technology solutions and services, today reported its financial results for the fourth quarter and fiscal year of 2010. The audited annual financial statements are available on the Softchoice website at www.softchoice.com.For the three-month period ended December 31, 2010, Softchoice reported net income of US$7.2 million, or US$0.36 per share (basic and fully diluted). Net income was affected by a non-cash foreign exchange gain in the quarter of US$1.9 million. On an adjusted basis, earnings in the quarter amounted to US$5.9 million, or US$0.30 per share (basic and fully diluted), compared to earnings of US$5.4 million, or US$0.30 per share (basic and fully diluted) for the fourth quarter of 2009.On a full-year basis, Softchoice reported net income of US$20.2 million, or US$1.02 per share (basic and fully diluted). Adjusting for the impact of non-cash foreign exchange gains and losses, earnings for the year grew by 41 percent to US$18.0 million while earnings per share (basic and fully diluted) increased 26 percent to US$0.91. The Company ended the year with a cash position of $35.8 million."Our performance reflects strong demand across all the major segments of our business – from Microsoft and client computing, to server, storage and networking solutions," said David MacDonald, President and CEO of Softchoice. "Moreover, we expect continued momentum as we leverage our investments in solution design and professional services to help customers implement private cloud architecture, desktop virtualization, mobility and unified communications solutions throughout 2011 and beyond." "The strength of our Microsoft business in the quarter, and the rapid adoption of Windows 7, Office 2010, Exchange 2010 and SharePoint 2010 bode well for the continued growth and diversification of our business," added Mr. MacDonald. "Beyond increasing our share of the annuity licensing market, new software adoption typically drives corresponding investments in hardware platforms, networking and storage infrastructure. Our Microsoft business gives us a natural entry point with which to provide our customers with value-added solution design and implementation services."During the quarter ended December 31, 2010, the Company changed its revenue accounting policy from gross revenue reporting to net revenue reporting for certain arrangements where the hardware and software support services are performed primarily by third parties. The change to a more relevant accounting policy had no impact on the gross profit, income from operations or net income amounts previously reported for any period. Based on the Company's current interpretation of the relative merits of the various accounting criteria for gross vs. net recognition, the Company determined that this change better reflects the substance of these transactions between the Company and its clients. The Company consulted with its auditors and other members of its industry as part of this change.The impact of our change in accounting policy to revenue is as follows:Quarter ended December 31,Year ended December 31,20102009Growth20102009GrowthNet sales (under previous accounting policy)339,135283,88919%1,188,2601,000,24819%Net sales (under new accounting policy)253,643218,29216%884,014754,14417%During the fourth quarter, Softchoice reported net salesof US$253.6 million compared to US$218.3 million, representing an increase of 16 percent over the same period of the year prior. Hardware net sales showed strong growth, increasing by 13 percent in the quarter while net revenue of Microsoft and other software grew in the fourth quarter of 2010 by 24 percent and 13 percent, respectively, over the fourth quarter of 2009.Quarterly Highlights Softchoice was named 'Software Asset Management Partner of the Year' at Microsoft Canada's annual IMPACT Awards, in recognition of the support and innovative services the Company has provided to more than 1600 organizations, CDN magazine named Softchoice's Sustainability Programs Manager, Melissa Alvares, a'Top Newsmaker' for 2010 in honor of the Company's efforts to promote sustainable IT practices across the North American business community. Fourth Quarter Earnings Call Details Softchoice Corporation will host its fourth-quarter earnings call on February 15, 2011 at 5:00 pm EDT. The call will be moderated by David MacDonald, Softchoice's President and CEO and Chief Financial Officer, David Long. The conference call will begin with a brief web presentation followed by a question-and-answer session.Participant Information Local Dial in number: 416 800 1066Toll Free Dial in number: 1 866 212 4491Webcast URL: http://www.snwebcastcenter.com/custom_events/softchoice-20110215/site/To ensure participation, please dial in at least 10 minutes prior to the start of the conference at 5:00 pm EDT. For those unable to attend the call, a link will be made available on the Softchoice website to an archived web and audio version on February 16, 2011.About Softchoice As a leading North American provider of technology solutions and services, Softchoice combines the efficiency and reliability of a national IT supplier with the personal touch and technical expertise of a local solutions provider. Softchoice's holistic approach to technology includes solution design, implementation and asset management services, as well as providing access to one of the most comprehensive and cost-effective technology distribution networks in North America. With over 850 employees located in more than 40 branch offices, Softchoice manages the technology needs of more than 15,000 corporate and public sector organizations across the United States and Canada.Softchoice stock is listed on the Toronto Stock Exchange (TSX) under the trading symbol "SO". The common shares of Softchoice are not registered under the U.S. Securities Act of 1933 and are not publicly traded in the United States. Forward-Looking Statements This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to expectations, intentions and plans contained in this press release that are not historical fact. When used in this press release, the words "anticipate", "expect", "will" and similar expressions generally identify forward-looking statements. These statements reflect our current expectations and are subject to a number of risks and uncertainties including, but not limited to, change in technology and general market conditions, many of which are set out or incorporated by reference in the Company's latest Annual Information Form. Due to the many risks and uncertainties, Softchoice cannot assure that the forward-looking statements contained in this press release will be realized.SOFTCHOICE CORPORATIONConsolidated Balance Sheets(In thousands of U.S. dollars)(Unaudited)December 31, 2010 and 200920102009AssetsCurrent assets:Cash$35,752$18,601Accounts receivable, net of allowance for doubtful accounts of $5,269 (2009 - $3,967)224,168183,674Inventories881766Deferred costs7,082385Prepaid expenses and other assets4,7065,127Future income taxes3,2282,270275,817210,823Restricted cash500500Property and equipment 5,7486,894Goodwill 11,38311,063Intangible assets39,77044,866Long-term accounts receivable2,771–Future income taxes15,78016,220$351,769$290,366Liabilities and Shareholder's EquityCurrent liabilities:Accounts payable and accrued liabilities$217,925$172,000Deferred revenue1,8991,465Current portion of deferred lease inducements19385Current portion of term debt4,1044,104Income taxes payable2,3203,288226,441180,942Deferred lease inducements217395Term debt 8,56812,671Shareholder's equity:Capital stock 26,01625,842Contributed surplus 1,894983Retained earnings84,50564,263Accumulated other comprehensive income4,1285,270116,54396,358$351,769$290,366SOFTCHOICE CORPORATIONConsolidated Statements of Earnings and Retained Earnings(In thousands of U.S. dollars, except per share information)(Unaudited)Years ended December 31, 2010 and 200920102009Net sales$884,014$754,144Cost of sales719,435611,875Gross profit164,579142,269Expenses:Salaries and benefits91,78376,399Selling, general and administrative31,63230,796Amortization of property and equipment2,7972,907Amortization of intangible assets 6,6397,949132,851118,051Income from operations31,72824,218Other expenses (income):Foreign currency exchange gain(2,987)(12,649)Interest expense2,5453,872Other expense1,3651,155923(7,622)Income before income taxes30,80531,840Income taxes (recovery):Current11,0408,117Future(477)1,46010,5639,577Net income20,24222,263Retained earnings, beginning of year64,26342,000Retained earnings, end of year$84,505$64,263Net income per share:Basic$1.02$1.26Diluted1.021.26Weighted average number of shares outstanding:Basic19,778,08917,628,735Diluted19,822,85217,708,738SOFTCHOICE CORPORATIONConsolidated Statements of Comprehensive Income(In thousands of U.S. dollars)(Unaudited)Years ended December 31, 2010 and 200920102009Net income$20,242$22,263Other comprehensive loss:Foreign currency translation adjustment, net of income tax expense of nil(1,142)(7,846)Comprehensive income$19,100$14,417Consolidated Statements of Accumulated Other Comprehensive Income(In thousands of U.S. dollars)Years ended December 31, 2010 and 200920102009Balance, beginning of year$5,270$13,116Foreign currency translation adjustment(1,142)(7,846)Balance, end of year$4,128$5,270SOFTCHOICE CORPORATIONConsolidated Statements of Cash Flows(In thousands of U.S. dollars)(Unaudited)Years ended December 31, 2010 and 200920102009Cash provided by (used in):Operating activities:Net income$20,242$22,263Items not involving cash:Amortization of property and equipment2,7972,907Stock-based compensation979(1,420)Future income taxes(477)1,460Amortization of intangible assets6,6397,949Unrealized foreign currency loss(1,913)(9,112)Amortization of debt issuance costs1,3191,157Loss on disposal of property and equipment4335Change in non-cash operating working capital(6,181)7,89223,44833,131Financing activities:Repayment of bank indebtedness–(466)Repayment of long-term debt–(55,596)Increase in term debt–17,683Repayment of term debt(4,805)(3,717)Proceeds from issuance of common shares10615,624(4,699)(26,472)Investing activities:Purchase of property and equipment(1,426)(1,800)Purchase of intangible assets(1,060)(1,163)Proceeds on disposal of property and equipment–25Restricted cash–(500)(2,486)(3,438)Effect of exchange rate changes on cash8881,282Increase in cash17,1514,503Cash, beginning of year18,60114,098Cash, end of year$35,752$18,601FOR FURTHER INFORMATION PLEASE CONTACT: Softchoice CorporationMedia ContactEric GardinerManager of Communications416.588.9002 Ext. 2358Eric.gardiner@softchoice.com