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Press release from Marketwire

Softchoice Announces Annual and Fourth Quarter Earnings

- Annual gross profit up 15 percent - Annual net earnings increases 10 percent to $22 million - Annual adjusted earnings increases 34 percent - Fourth quarter gross profit grows 8 percent - Company posts record sales for the fourth quarter

Wednesday, February 29, 2012

Softchoice Announces Annual and Fourth Quarter Earnings17:03 EST Wednesday, February 29, 2012TORONTO, ONTARIO--(Marketwire - Feb. 29, 2012) - Softchoice Corporation (TSX:SO), a North American provider of technology solutions and services, today reported earnings for the fourth quarter and fiscal year 2011. For the three-month period ended December 31st, 2011, Softchoice reported revenues of US$269.4 million compared to US$253.6 million for the fourth quarter of 2010, representing an increase of 6.2 percent. Net earnings for the period amounted to US$6.5 million compared to net earnings of $7.4 million for the same period the year prior. Eliminating the impact of foreign exchange gains and losses and one-time costs associated with the acquisition of UNIS LUMIN Inc., adjusted earningsi for the quarter amounted to US$6.3 million, or US$0.32 per share (basic and fully diluted) compared to US$6.0 million, or US$0.31 per share (basic and fully diluted) recorded for the same period the year prior. Softchoice's fourth quarter results include one month's contribution from the operations of UNIS LUMIN Inc. As previously announced, during the year-end reporting process management identified certain errors in the amounts recorded for rebate and marketing development funds in 2011. An adjustment was made to cost of sales in the current period to correct for the errors, reducing net earnings by US$1.1 million. Management has considered the adequacy of internal controls in this area, and has introduced remedial measures that are more fully described in Softchoice's MD&A which was filed today. "Overall, we are pleased to report a strong finish in the quarter, rounding off a year of tremendous growth in revenue, gross profit and earnings," said David Long, CFO for Softchoice. On a full year basis, Softchoice reported net earnings of US$22.1 million or US$1.11 (fully diluted) per share. On an adjusted basisi, earnings were US$23.9 million or US$1.20 per share (basic and fully diluted), up 34 percent from the US$17.8 million or US$0.90 per share reported for 2010. "Overall we have made great progress executing our strategy, and are entering 2012 with a strong balance sheet, significantly greater coverage of the small and mid-size business segment and the most complete portfolio of solutions and services in North America," added Mr. MacDonald. "In the year ahead we will remain focused on high growth technologies like data center virtualization and cloud computing while continuing to increase our value by offering deep expertise in pre-sales, services and consulting to help more organizations leverage technology to achieve better outcomes for their business." Softchoice's professional services business realized strong gains in the quarter with revenues increasing 30 percent year-over-year while sales of Microsoft licensing increased 28.3 percent compared to the same period the year prior.During the fourth quarter, Softchoice strengthened its balance sheet by repaying its term debt and re-negotiating its asset-backed loan agreement. After the acquisition of UNIS LUMIN Inc., which was paid for in cash, as of December 31, 2011, the Company had $33.0 million of cash on hand, and total debt of nil.HighlightsOn December 1, 2011, Softchoice announced the completion of the acquisition of substantially all of the assets of UNIS LUMIN Inc, one of Canada's most highly regarded Cisco networking and managed services companies. On January 13, 2012 Softchoice reported that several institutions acquired 5,093,700 Softchoice common shares from the Company's largest shareholder, the Ontario Teachers' Pension Plan Board. Softchoice was named to CRN magazines Tech Elite 250, a definitive North American listing of solution providers with deep technical expertise and premier certifications in the data center market. Softchoice was named Software Asset Management, Volume Licensing and Sales Management Partner of the Year at Microsoft Canada's annual Impact Awards in Toronto on November 30, 2011. Fourth Quarter Earnings Call DetailsSoftchoice will host its fourth-quarter earnings call on February 29, 2012 at 6:00 p.m. ET. 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 InformationLocal Dial in number: 416 800 1066Toll Free Dial in number: 1 866 212 4491Webcast URL: To ensure participation, please dial in at least 10 minutes prior to the start of the conference at 6:00pm ET. 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 March 1, 2012.Investor DaySoftchoice Corporation will be holding a site visit and presentation for analysts and institutional investors on Thursday March 8, 2012. Please take a moment to register for the event by sending your name, company and phone number to ana.stephenson@softchoice.comAbout 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 access to one of the most comprehensive and cost-effective technology distribution networks in North America. With over 1,100 employees located in more than 40 branch offices, Softchoice manages the technology needs of thousands of 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 StatementsThis 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.(i) The Company refers to adjusted earnings which is a non-IFRS measure. Adjusted earnings does not have a standardized meaning and therefore is unlikely to be comparable to similar measures used by other Companies. The Company uses adjusted net earnings to highlight the underlying business performance by adjusting for foreign exchange gains and losses on the cash, intercompany debt and external debt of the Company denominated in a currency other than the Company's functional currency. Adjusted earnings for the year also eliminates the after-tax impact of transactions costs associated with the UNIS LUMIN Inc. acquisition, as these would have previously been capitalized under Canadian GAAP. The following table reconciles net earnings to adjusted net earnings for the three months and twelve months ended December 31, 2011 and 2010:(in thousands of USD, except per share amounts)Three months ended December 31,Year ended December 31,20112010% Change20112010% ChangeNet earnings$6,484$7,384-12.2%$22,120$20,06510.2%Adjustments, net of income tax(145)(1,338)-89.2%1,733(2,229)-177.7%Adjusted net earnings$6,339$6,0464.9%$23,853$17,83633.7%Adjusted net earnings per share$0.32$0.313.2%$1.20$0.9033.3%SOFTCHOICE CORPORATIONConsolidated Statements of Financial Position (In thousands of U.S. dollars)December 31, 2011, December 31, 2010 and January 1, 2010(Unaudited)December 31,December 31,January 1,201120102010AssetsCurrent assets:Cash$32,993$35,752$18,601Trade and other receivables306,434224,168183,674Inventory8,407881766Work-in-progress465--Deferred costs2,5917,082385Prepaid expenses and other assets6,1582,8812,036Total current assets357,048270,764205,462Non-current assets:Restricted cash-500500Long-term accounts receivable6432,771-Long-term prepaid expenses1,821--Property and equipment6,3095,7486,894Goodwill16,44111,38311,063Intangible assets46,20341,15547,403Deferred tax assets19,22419,02318,500Total non-current assets90,64180,58084,360Total assets$447,689$351,344$289,822Liabilities and Shareholders' EquityCurrent liabilities:Trade and other payables$290,267$217,986$172,039Loans and borrowings-3,9613,968Deferred lease inducements24319385Deferred revenue10,6271,8991,465Income taxes payable2,2792,3203,288Total current liabilities303,416226,359180,845Non-current liabilities:Deferred lease inducements648217395Deferred revenue3,307--Loans and borrowings-8,27112,253Total non-current liabilities3,9558,48812,648Total liabilities307,371234,847193,493Shareholders' equity:Capital stock26,54826,01625,842Contributed surplus3,2742,054983Retained earnings111,68989,56969,504Accumulated other comprehensive loss(1,193)(1,142)-Total shareholders' equity140,318116,49796,329Total liabilities and shareholders' equity$447,689$351,344$289,822SOFTCHOICE CORPORATIONConsolidated Statements of Comprehensive Income (In thousands of U.S. dollars, except per share information)Years ended December 31, 2011 and 2010 (Unaudited)20112010Net sales$999,400$884,014Cost of sales810,518719,503Gross profit188,882164,511Expenses:Selling and marketing102,43491,825Administrative45,68041,002Other income(119)(763)Other expenses673184148,668132,248Results from operating activities40,21432,263Finance costs6,1694,652Finance income(82)(3,012)Net finance costs6,0871,640Earnings before income taxes34,12730,623Income tax expense12,00710,558Net earnings22,12020,065Other comprehensive loss:Foreign currency translation adjustment(51)(1,142)Total comprehensive income$22,069$18,923Net earnings per common share:Basic$1.12$1.01Diluted1.111.01SOFTCHOICE CORPORATIONConsolidated Statements of Cash Flows(In thousands of U.S. dollars)Years ended December 31, 2011 and 2010(Unaudited)20112010Cash provided by (used in):Operating activities:Net earnings$22,120$20,065Adjustments for:Depreciation of property and equipment3,0182,797Share-based payment transactions1,7221,139Income tax expense12,00710,558Amortization of intangible assets5,9896,639Unrealized foreign currency gain (loss)648(2,092)Amortization of deferred financing costs1,8441,374Interest expense on financial liabilities1,8402,624Loss on disposal of intangible assets andproperty and equipment164349,20443,147Change in non-cash operating working capital4,477(5,091)53,68138,056Interest paid(1,832)(2,573)Income taxes paid(13,259)(12,035)Cash provided by operating activities38,59023,448Financing activities:Repayment of loans and borrowings(12,784)(4,805)Proceeds from issuance of common shares67106Repurchase of own shares(37)-Cash used in financing activities(12,754)(4,699)Investing activities:Purchase of property and equipment(2,280)(1,426)Purchase of intangible assets(2,620)(1,060)Restricted cash500-Acquisition of UNIS LUMIN Inc.(23,941)-Cash used in investing activities(28,341)(2,486)Increase (decrease) in cash(2,505)16,263Cash, beginning of year35,75218,601Effect of exchange rate changes on cash(254)888Cash, end of year$32,993$35,752FOR FURTHER INFORMATION PLEASE CONTACT: Softchoice CorporationMedia Contact:Eric GardinerManager of Communications416.588.9002 Ext.