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%
Toronto – February 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$7.2million, 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,|
|Net sales (under previous accounting policy)
|Net sales (under new accounting policy)
During the fourth quarter, Softchoice reported net sales of 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.
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.
Local Dial in number: 416 800 1066
Toll Free Dial in number: 1 866 212 4491
Webcast 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.
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.
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.
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