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Softchoice Reports Strong Q2 Results

• Revenue increases 11 percent
• Operating income grows 10 percent
• Cash flow from operations of US$14.7 million

August 10th, 2010 – Toronto – Softchoice Corporation (TSX: SO), a leading North American provider of IT solutions and services, today reported financial results for the second quarter of 2010. For the three-month period ended June 30th, Softchoice reported revenues of US$311.2 million, representing an increase of 11.4 percent compared to the same period last year.

During the quarter, Softchoice generated net income of US$6.4 million, or US$0.32 per basic and fully diluted share versus net income of $12.6 million, or US$0.72 per basic and fully diluted share, recorded for the same time last year. The change in net income was significantly driven by a foreign exchange loss in the second quarter of this year of US$2.6 million compared to a foreign exchange gain in the second quarter of 2009 of US$6.1 million. 

 Adjusting for the foreign exchange loss, earnings in the quarter amounted to US$8.5 million compared to US$8.1 million for the same period in 2009. On an adjusted EPS basis, the Company generated US$0.43 per basic and fully diluted share versus US$0.46 per basic and fully diluted share reported for the same period last year.

“Softchoice continues to benefit as the rebound in IT spending gains momentum,” said David MacDonald, President and CEO of Softchoice. “We are coming into this technology spending cycle armed with a strategically focused services capability which positions us to add value to our customers, protect our gross margins and the fees we receive from the sale of Microsoft Enterprise Agreements and accelerate the expansion of our infrastructure solutions business.”

Revenue from hardware infrastructure solution sales grew by 21 percent; sales of Microsoft licensing grew 8 percent; and sales of other software solutions increased by 6 percent compared to the second quarter of the year prior.

Gross profit for the quarter was $47.1 million, reflecting year-over-year increase of 14 percent. Margins continued to improve, increasing by 36 basis points over the same period last year.  

“Major releases like Windows 7 and Office 2010, along with paradigm shifts in computing represented by desktop, storage and server virtualization are serving as a tailwind for our industry,” added Mr. MacDonald. “We believe these innovations will amplify and extend the current growth cycle for the IT sector. As these technologies move to the fore, our investments in solution design and implementation services will continue to enhance our value as we help organizations navigate from the client environment to new models of computing offered by ‘the cloud’.”  

In the quarter, cash flow from operations was $14.7 million, leaving the Company in a net cash position at the end of the quarter of $31 million.

“Our second quarter solidifies a very successful first half of the year for Softchoice,” said David Long, Senior Vice President  Finance and Chief Financial Officer of Softchoice.  “Our revenue increased 19 percent over the first half of 2009, operating income grew by more than 50 percent and adjusted net earnings were up by 60 percent.”

Second Quarter Business Highlights

• In recognition for delivering market-leading operational excellence in support of Microsoft technology, Softchoice received the Operational Excellence Award at Microsoft’s 2010 Worldwide Partner Conference.
• The number of customers who took advantage of Softchoice’s IT assessment services offerings increased by 33 percent in the first six months of 2010 compared to the same period last year.
• The number of organizations subscribing to Axis – Softchoice’s online IT Asset Management-as-a-Service offering – increased by 16 percent compared to the first half of 2009.

Second-Quarter Earnings Call Details

Softchoice Corporation will host its 2010 second-quarter earnings call today 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: 416-800-1066
Toll Free Dial in number: 1 866 212 4491

Webcast URL: http://events.snwebcastcenter.com/softchoice/20100810/

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 August 11th, 2010.

About Softchoice

As one of North America’s leading providers of technology solutions and services, Softchoice helps businesses and organizations of all sizes to select, acquire and manage their software and hardware technology resources. Softchoice offers a full range of capabilities, including face-to-face consultations and IT asset management services designed to help customers save time, money and risk in IT procurement. Softchoice currently has 872 employees operating from more than 40 branch offices located in major cities across the U.S. 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.

Media Contact

Eric Gardiner
Manager of Communications
Eric.gardiner@softchoice.com

416.588.9002 Ext. 2358