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Press release from Marketwire

Enghouse Releases First Quarter Results and Announces 30% Increase in its Dividend

Tuesday, March 06, 2012

Enghouse Releases First Quarter Results and Announces 30% Increase in its Dividend17:00 EST Tuesday, March 06, 2012MARKHAM, ONTARIO--(Marketwire - March 6, 2012) -Enghouse Systems Limited (TSX:ESL) today announced its unaudited first quarter financial results for the period ended January 31, 2012.First quarter revenue was $30.5 million, compared to $28.6 million in the first quarter last year. Results from operating activities for the quarter were $7.6 million compared to $6.6 million in the prior year's first quarter, an increase of 15%. Net income for the first quarter increased by 33% to $4.1 million or $0.16 per share on a diluted basis compared to the prior year's first quarter net income of $3.1 million or $0.12 per share. The increase in revenue was primarily a result of incremental revenue contributions from acquisitions. Revenue reflects hosted and maintenance services contributions of $16.0 million in the quarter, an increase of 19% over last year.Operating expenses increased to $14.9 million from $13.5 million in the prior year's first quarter and include incremental operating costs related to the acquisition of CosmoCom Inc. on April 1, 2011. Non-cash amortization charges were $2.4 million and include amortization charges for acquired software and customer relationships from acquired operations. Enghouse closed the quarter with $101.5 million in cash, cash equivalents and short-term investments. The Company continues to have no long-term debt and did not repurchase any shares in the quarter. The Company's first quarter financial statements reflect the adoption of International Financial Reporting Standards. The Board of Directors also announced today a 30% increase in its eligible quarterly dividend to $0.065 per common share, payable on May 31, 2012 to shareholders of record at the close of business on May 17, 2012. Enghouse has increased its dividend in each of the past four years.On March 1, 2012, the Company acquired CustomCall Data Systems, Inc., a provider of billing, provisioning and workflow solutions to telecommunications service providers for a cash purchase price of approximately U.S. $7.3 million. CustomCall's solutions expand the end-to-end product suite provided to the telecommunications market by the Company's Networks division. The acquisition underscores Enghouse's commitment to diversify its revenue stream and accelerate its expansion into new markets. The Company continues to seek further acquisitions to grow its market share.About Enghouse Enghouse Systems Limited is a leading global provider of enterprise software solutions serving a variety of distinct vertical markets. Its strategy is to build a larger and more diverse software company through strategic acquisitions and managed growth. Enghouse shares are listed on the Toronto Stock Exchange under the symbol "ESL". Further information about Enghouse may be obtained from the Company's web site at Non-IFRS Measures The Company uses non-IFRS measures to assess its operating performance. Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than IFRS do not have standardized meanings and are unlikely to be comparable to similar measures used by other companies. Accordingly, they should not be considered in isolation. The Company uses results from operating activities as a measure of operating performance. Therefore, results from operating activities may not be comparable to similar measures presented by other issuers. Results from operating activities are calculated as net income before amortization of acquired software and customer relationships, finance income, finance expenses, other income, and the provision for income taxes. Management uses results from operating activities to evaluate operating performance as it excludes amortization of software and intangibles which is an accounting allocation of the cost of software and intangible assets arising on acquisition, and does not represent the allocation of the cost of an asset that must be replaced as is the case with depreciation of property and equipment.Enghouse Systems LimitedConsolidated Interim Statements of Financial Position(in thousands of Canadian dollars)(Unaudited)January 31, 2012October 31, 2011November 1, 2010AssetsCurrent assets:Cash and cash equivalents$66,971$65,624$46,640Short-term investments34,52033,96731,627Accounts receivable, net26,39023,00624,500Income tax receivable--591Prepaid expenses and other assets3,4543,4793,360131,335126,076106,718Non-current assets:Property and equipment1,7401,5431,588Acquired software and customer relationships27,13229,70934,330Goodwill43,85543,73435,137Deferred income taxes11,73511,1383,478Total assets$215,797$212,200$181,251LiabilitiesCurrent liabilities:Trade payables$19,184$22,686$18,808Income taxes payable3,3742,878-Dividends payable1,2751,2671,007Accrued provisions2,2782,4421,307Deferred revenue32,55828,93326,04058,66958,20647,162Non-current liabilities:Deferred income tax liabilities11,35510,74312,571Long-term income taxes payable248420522Deferred revenue1,2081,404790Total liabilities71,48070,77361,045Shareholders' EquityShare capital53,56952,13450,705Contributed surplus2,8282,9702,653Retained earnings88,07385,28866,546Accumulated other comprehensive (loss) gain(153)1,035302Total equity144,317141,427120,206Total liabilities and equity$215,797$212,200$181,251Enghouse Systems LimitedConsolidated Interim Statements of Operations and Comprehensive Income(in thousands of Canadian dollars, except per share amounts)(Unaudited)Quarter ended January 31,20122011RevenueSoftware licenses$10,518$10,711Hosted and maintenance services15,97913,380Professional services3,7403,756Hardware29672230,53328,569Direct costsSoftware licenses9091,557Services6,8966,315Hardware2065608,0118,432Revenue, net of direct costs22,52220,137Operating expensesSelling, general and administrative9,8619,404Research and development4,8033,866Depreciation of property and equipment27827514,94213,545Results from operating activities7,5806,592Amortization of acquired software and customer relationships(2,438)(2,440)Finance income243138Finance expenses(41)(53)Other income (expense)(2)(5)Income before income taxes5,3424,232Provision for income taxes1,2821,180Net income for the period$4,060$3,052Foreign currency translation differences from foreign operations(582)(650)Transfer to net income of realized gains on available for sale investments, net of tax of ($-); Q1/2011 - ($1) - (2)Unrealized (loss) gain on available for sale investments, net of tax of ($194); Q1/2011 - $4 (614) 20Unrealized foreign currency translation gain (loss) on available for sale investments, net of tax of $3; Q1/2011 - ($4) 8 (21)Other comprehensive loss(1,188)(653)Comprehensive income$2,872$2,399Earnings per shareBasic$0.16$0.12Diluted$0.16$0.12Enghouse Systems LimitedConsolidated Interim Statements of Changes in Equity (in thousands of Canadian dollars)(Unaudited)Share Capital -numberShare capital $Contributed surplus $Accumulated other comprehensive income $Retained earnings $Total $Balance - November 1, 201125,337,26252,1342,9701,03585,288141,427Net income----4,0604,060Other Comprehensive Income (net of tax):Cumulative Translation Adjustment---(582)-(582)Transfer to net income of realized gains on available-for-sale investments, net of tax------Unrealized gain (loss) on available-for-sale investments, net of tax---(614)-(614)Unrealized foreign currency translation gain (loss) on available-for-sale investments, net of tax---8-8Comprehensive income (loss) for the period---(1,188)4,0602,872Employee share options:Value of services recognized--166--166Proceeds on issuing shares163,3001,435(308)--1,127Purchase and cancellation of commons shares------Dividends----(1,275)(1,275)Balance - January 31, 201225,500,56253,5692,828(153)88,073144,317Balance - November 1, 201025,171,66250,7052,65330266,546120,206Net income----3,0523,052Other Comprehensive Income (net of tax):Cumulative Translation Adjustment---(650)-(650)Transfer to net income of realized gains on available-for-sale investments, net of tax---(2)-(2)Unrealized gain (loss) on available-for-sale investments, net of tax---20-20Unrealized foreign currency translation gain (loss) on available-for-sale investments, net of tax---(21)-(21)Comprehensive income (loss) for the period---(653)3,0522,399Employee share options:Value of services recognized--171--171Proceeds on issuing shares-----Purchase and cancellation of commons shares------Dividends----(1,007)(1,007)Balance - January 31, 201125,171,66250,7052,824(351)68,591121,769Enghouse Systems LimitedConsolidated Interim Statements of Cash Flows(in thousands of Canadian dollars)(Unaudited)Quarter ended January 3120122011Cash flows from operating activitiesNet income$4,060$3,052Adjustments for:Depreciation of property and equipment278275Amortization of acquired software and customer relationships2,4382,440Stock-based compensation expense166171Deferred income tax expense203(125)Finance expenses and other income4358Income tax paid(533)(326)Changes in non-cash operating working capital(3,873)4,127Net cash flows from operating activities2,7829,672Cash flows from investing activitiesPurchase of property and equipment, net(491)(176)Finance income(243)(138)Acquisitions, net of cash acquired-(2,450)Net (purchase) proceeds from sale of short-term investments(976)12,443Net cash flows from investing activities(1,710)9,679Cash flows from financing activitiesIssuance of share capital1,127-Payment of cash dividend(1,267)(1,007)Net cash flows used in financing activities(140)(1,007)Effect of currency translation adjustments on cash and cash equivalents 415 (737)Net increase in cash and cash equivalents during the period1,34717,607Cash and cash equivalents- beginning of period65,62446,640Cash and cash equivalents - end of period$66,971$64,247Enghouse Systems LimitedSelected Segment Reporting Information(in thousands of Canadian dollars)(Unaudited)For the three months ended January 3120122011Revenue:Asset Management Group$3,071$3,069Interactive Management Group27,46225,500Total$30,533$28,569Segment Profit (EBIT):Asset Management Group$709$582Interactive Management Group5,2794,462Corporate expenses(846)(892)Finance income243138Finance expenses(41)(53)Other income (expense)(2)(5)Total$5,342$4,232FOR FURTHER INFORMATION PLEASE CONTACT: Stephen SadlerEnghouse Systems LimitedChief Executive Officer(905)