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Press release from CNW Group

Softchoice Announces Record Fourth Quarter Earnings, Increases Quarterly Dividend

Tuesday, February 19, 2013

Softchoice Announces Record Fourth Quarter Earnings, Increases Quarterly Dividend19:18 EST Tuesday, February 19, 2013Fourth Quarter HighlightsReported revenue grows 15 percentGross profit increases 14 percentEBITDA up 30 percentNet income increases 29 percent.  Adjusted net earnings per diluted share grows 50 percent2012 Full Year HighlightsNet income increases 25 percent.  Adjusted net earnings per diluted share increases 14 percent to $1.37 per diluted shareGross profit up 10 percentTORONTO, Feb. 19, 2013 /CNW/ - Softchoice Corporation (TSX: SO), a North American provider of technology solutions and services, today reported earnings for the fourth quarter and fiscal year 2012.For the three-month period ended December 31, 2012, Softchoice reported net income of US$8.4 million compared to US$6.5 million for the same period in the prior year. Eliminating the impact of certain non-cash foreign exchange gains and losses, and an adjustment resulting from the retroactive change to Canadian tax legislation, adjusted net income grew 50 percent in the period, increasing to US$9.5 million, or US$0.48 per diluted share, compared to adjusted net income of US$6.3 million, or US$0.32 per diluted share recorded in the fourth quarter of 2011.Fourth quarter revenue grew 15 percent to US$308.7 million. The Company's Services business grew 65 percent compared to the same quarter in the prior year, bolstered by the additive impact of the acquisition of Unis Lumin. Sales of Enterprise Software, Servers, Storage and Networking solutions also made steady gains in the period, increasing 33 percent for the quarter while sales of Microsoft grew by 10 percent. Fourth quarter earnings before interest, taxes, depreciation and amortization ("EBITDA") margin increased 63 basis points to 5.4 percent."Our focus on delivering high-value solutions and services to our clients and expanding our reach within the small and medium-size business segment resulted in strong net income growth in the quarter," said David MacDonald, President and CEO of Softchoice.  "Moreover, the solid growth in EBITDA reflects the leverage our operating model is delivering to our business as we benefit from the integration of UNIS LUMIN, major upgrades to our internal CRM system and strong execution on the part of our field sales organization."On a full year basis, Softchoice reported net income of US$27.7 million or US$1.37 per diluted share. On an adjusted basis, earnings amounted to US$27.5 million or US$1.37 per diluted share, representing an earnings increase of 15 percent compared to the US$23.9 million or US$1.20 per diluted share reported for fiscal year 2011."The fourth quarter was a strong close to a transformational year for Softchoice," added Mr. MacDonald.  "In 2012 we largely completed the integration of UNIS LUMIN, built new recurring revenue streams with the launch of Softchoice Cloud and Keystone, our first North American-wide managed services offering, and strengthened our Services organization with the appointment of new regional leadership.  With solid momentum and alignment around our services strategy, we are well-positioned to continue outgrowing the market."In August 2012, the Company reinstated its quarterly dividend in the amount of CAD$0.07 per common share. The quarter will see a dividend increase to CAD$0.09 per common share.  This dividend will be payable on March 15, 2013 to shareholders of record as of March 1, 2013.At the end of the quarter, Softchoice had cash on hand of US$67.9 million compared to $33.0 million ending the fourth quarter of 2011 and total debt of nil. Cash flow generated from operations for the year was $44.1 million, which increased by $5.5 million or 14 percent.Quarterly Operating HighlightsIn the fourth quarter, total revenue, including imputed revenue, increased 9 percent to $589.4 million.   Microsoft Canada recognized Softchoice with awards for marketing innovation and collaboration at the recent 2012 IMPACT awards ceremony in Toronto.During the quarter, Softchoice was honored with the Cisco Customer Satisfaction Excellence award for both the U.S. and Canada, the highest distinction a partner can achieve for customer satisfaction within the Cisco Channel Partner Community.Softchoice has once again been named to the CRN Tech Elite 250 list, a definitive list of solution providers with deep technical expertise and premier certifications in the data center market.The Management's Discussion & Analysis and Audited Consolidated Financial Statements can be found on the company's website at http://www.softchoice.com/about/ir/financials.aspxSoftchoice Fourth Quarter Earnings Call DetailsSoftchoice Corporation will host its fourth quarter earnings call on February 20, 2013 at 8:00 am 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 Information:Local Dial in number: 416 800 1066Toll Free Dial in number: 1 866 212 4491Webcast URL: http://www.snwebcastcenter.com/custom_events/softchoice-20130220/site/To ensure participation, please dial in at least 10 minutes prior to the start of the conference at 8:00 am 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 February 21, 2013.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 access to one of the most comprehensive and cost-effective technology distribution networks in North America. With over 1,200 employees, 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.SOFTCHOICE CORPORATIONConsolidated Statements of Financial Position(In thousands of U.S. dollars)December 31, 2012 and 2011                  2012    2011Assets           Current assets:            Cash   $ 67,875  $ 32,993 Trade and other receivables     280,241    306,434 Inventories       3,836    8,872 Deferred costs      2,644    2,591 Prepaid expenses and other assets      7,635    6,158 Total current assets      362,231    357,048Non-current assets:            Long-term accounts receivable       207    643 Long-term prepaid expenses      1,690    1,821 Property and equipment     5,478    6,309 Goodwill       16,696    16,441 Intangible assets     40,571    46,203 Deferred tax assets     18,708    19,224 Total non-current assets      83,350    90,641Total assets    $ 445,581  $ 447,689Liabilities and Shareholders' Equity           Current liabilities:            Trade and other payables   $ 263,813  $ 290,267 Deferred lease inducements      276    243 Deferred revenue      11,321    10,627 Income taxes payable      779    2,279 Total current liabilities      276,189    303,416Non-current liabilities:            Deferred lease inducements      498    648 Deferred revenue      3,991    3,307 Total non-current liabilities      4,489    3,955Total liabilities      280,678    307,371Shareholders' equity:            Capital stock     26,728    26,548 Contributed surplus      2,907     3,274 Retained earnings      136,567    111,689 Accumulated other comprehensive loss      (1,299)    (1,193) Total shareholders' equity      164,903    140,318Total liabilities and shareholders' equity    $ 445,581  $ 447,689            SOFTCHOICE CORPORATIONConsolidated Statements of Comprehensive Income(In thousands of U.S. dollars, except per share information)Years ended December 31, 2012 and 2011                 2012    2011Net sales    $ 1,065,620  $999,400Cost of sales      858,304    810,518Gross profit      207,316    188,882Expenses:           Selling and marketing       119,543    102,434 Administrative      47,225    45,680      166,768     148,114Income from operations      40,548    40,768Finance costs       528    6,169Finance income       (1,289)    (82)Other income     (232)    (119)Other expense       96    673      (897)    6,641Income before income taxes      41,445    34,127Income tax expense     13,789    12,007Net income      27,656    22,120Other comprehensive loss:           Foreign currency translation adjustment      (106)    (51)Total comprehensive income      $ 27,550  $ 22,069Net earnings per common share:           Basic     $ 1.40  $1.12 Diluted     1.37   1.11            SOFTCHOICE CORPORATIONConsolidated Statements of Changes in Equity(In thousands of U.S. dollars)Years ended December 31, 2012 and 2011                             Accumulated                 other       Total  Number  Capital  Contributed  comprehensive   Retained   shareholders'2012  of shares   stock    surplus   loss   earnings   equityBalance, January 1, 2012  19,837,211 $26,548 $3,274 $(1,193) $111,689 $140,318Total comprehensive income (loss):                  Net income  -   -   -   -   27,656   27,656 Other comprehensive loss:                   Foreign currency translation adjustment  -   -   -   (106)   -   (106) Total comprehensive income (loss)  -   -   -   (106)   27,656   27,550Transactions with shareholders recorded directly in equity:                  Share options exercised  40,151   516   (194)   -   -   322 Share-based compensation  -   -   2,091   -   -   2,091 Repurchase of common shares   (219,600)    (336)   (2,264)   -   -   (2,600) Dividends declared    -   -   -   -  (2,778)   (2,778)  (179,449)   180   (367)   -   (2,778)   (2,965)Balance, December 31, 2012  19,657,762 $26,728 $2,907 $(1,299) $136,567 $164,903                                                 Accumulated               other       Total  Number   Capital   Contributed  comprehensive   Retained  shareholders'2011  of shares   stock   surplus  loss   earnings   equityBalance, January 1, 2011  19,780,039 $26,016 $2,054 $(1,142) $89,569 $116,497Total comprehensive income (loss):                  Net income  -   -   -   -   22,120   22,120 Other comprehensive loss:                   Foreign currency translation adjustment  -   -   -   (51)   -   (51) Total comprehensive income (loss)  -   -   -   (51)   22,120   22,069Transactions with shareholders recorded directly in equity:                  Share options exercised  8,599   108   (41)   -   -   67 Share-based compensation  -   -   1,722   -   -   1,722 Repurchase of common shares   (4,000)    (37)   -   -   -   (37) Deferred share units exercised  52,573   461   (461)   -   -   -  57,172   532   1,220   -   -   1,752Balance, December 31, 2011  19,837,211 $26,548 $3,274 $(1,193) $111,689 $140,318                  SOFTCHOICE CORPORATIONConsolidated Statements of Cash Flows(In thousands of U.S. dollars)Years ended December 31, 2012 and 2011                  2012     2011Cash provided by (used in):           Operating activities:            Net income    $ 27,656  $ 22,120 Adjustments for:             Amortization of intangible assets      8,663     5,989  Depreciation of property and equipment      3,124     3,018  Share-based compensation      2,091     1,722  Income tax expense      13,789     12,007  Unrealized foreign currency (gain) loss      (1,086)     648  Loss on disposal of intangible assets and property and equipment      167     16  Interest expense on financial liabilities      52     1,840  Amortization of deferred financing costs      -     1,844        54,456      49,204 Change in non-cash operating working capital      2,951     4,477      57,407     53,681 Interest paid      (53)     (1,832) Income taxes paid      (13,252)     (13,259) Cash provided by operating activities      44,102     38,590Financing activities:            Repayment of loans and borrowings      -     (12,784) Proceeds from issuance of common shares      322     67 Dividends paid to shareholders      (2,778)     - Repurchase of common shares      (2,600)     (37) Cash used in financing activities      (5,056)     (12,754)Investing activities:            Purchase of property and equipment      (2,346)     (2,280) Purchase of intangible assets      (2,563)     (2,620) Restricted cash      -     500 Acquisition of UNIS LUMIN Inc.     -     (23,941) Cash used in investing activities      (4,909)     (28,341)Increase (decrease) in cash      34,137     (2,505)Cash, beginning of year      32,993     35,752Effect of exchange rate fluctuations on cash held      745     (254)Cash, end of year    $ 67,875  $ 32,993SOURCE: Softchoice CorporationFor further information: Media Contact Eric Gardiner Manager of Communications 416.588.9002 Ext. 2358 eric.gardiner@softchoice.com