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Absolute Software Reports Fiscal 2010 Year-End Results

^{Published on 2010-08-23 13:15:18 - Market Wire}
 

 Key Financial Metrics (in millions, except Q4 Q4 % % per share amounts) F2010 F2009 change F2010 F2009 change ------------------------------------------------------------------------- Cash from Operating Activities(1.a) $0.3 $2.1 -88% $6.4 $17.4 -63% Operating cash per share(1.a) Basic $0.01 $0.05 -80% $0.14 $0.37 -62% Diluted $0.01 $0.05 -80% $0.13 $0.36 -64% ------------------------------------------------------------------------- Sales Contracts reported(1.a) $19.3 $20.2 -4% $69.7 $71.9 -3% Sales Contracts in constant currency(1.b) $21.7 $20.2 +7% $76.7 $71.9 +7% ------------------------------------------------------------------------- Revenue $16.6 $14.3 +16% $64.1 $53.2 +20% ------------------------------------------------------------------------- Net Income (loss) $(3.8) $16.5 nmf $(8.2) $(2.3) -261% (Loss) income per share (diluted) $(0.08) $0.35 nmf $(0.18) $(0.05) -260% Subscriptions under contract 5.9 4.1 F2010 Highlights: - Closed the year with a subscription base of 5.9 million computers, up 43% from 4.1 million at June 30, 2009. - Generated Sales Contracts of $51.0 million from existing commercial customers, or $56.2 million in constant currency, up 7% in constant currency from $52.5 million last year. - Deferred revenue was $102.8 million at June 30, 2010, up 7% from $95.9 million at June 30, 2009. - Cash, cash equivalents & investments (including long-term) were $58.0 million at June 30, 2010, compared to $68.9 million at June 30, 2009, reflecting cash used for the acquisition of LANrev, FailSafe(R) and Freeze(TM) and the Company's share buyback program. - Acquired LANrev, a comprehensive computer lifecycle management product (subsequently re-branded as Absolute Manage), and purchased the technology assets of FailSafe and Freeze from Phoenix(R) Technologies. - Announced the University of Texas' selection of Absolute Manage for deployment on all of their Mac(R) computers in December 2009, and a $1.0 million new Absolute Manage customer sale in April 2010. - Expanded international operations, growing international sales 41% to $4.3 million in fiscal 2010, and opened a regional office in Japan. - Expanded availability of Computrace(R) solutions for HP Care Pack Services, and introduced Lenovo Lost & Found for ThinkPad laptops, both of which were instrumental in generating growth at these OEM partners. - Added Intel(R) Anti-Theft Technology, geolocation, device freeze and self-serve remote data delete functionality to Computrace LoJack for Laptops for the consumer market. - Purchased 400,300 common shares to date under the Company's current normal course issuer bid (covering the period November 4, 2009 to November 4, 2010), at a total cost of $1.7 million. - Completed the prior normal course issuer bid which ended November 3, 2009, with a total of 3,257,000 shares purchased, at a total cost of $10.7 million. 

 (1.a) "Sales Contracts" (invoiced sales) is used as a Non-GAAP measure of sales performance and an indicator for future cash flow and revenue, "Cash from Operating Activities" as a profitability measure, and "Basic and Diluted Operating Cash per Share" (Cash from Operating Activities divided by the average shares outstanding for the period; diluted calculated using the treasury stock method) as an earnings per share measure. With the exception of Cash from Operating Activities, these are non-standard measures under Canadian Generally Accepted Accounting Principles. Absolute considers these measures to be key performance metrics as substantially all Sales Contracts in each quarter are deferred on the balance sheet, while the related costs are expensed in that same quarter. Refer to the Business Model section in our Management Discussion and Analysis for more details. (1.b) Sales Contracts in constant currency refers to the Canadian dollar sales that would have been reported had the U.S. dollar exchange rate been unchanged from the rate in the prior year. With approximately 95% of Sales Contracts in U.S. dollars management believes this to be a more meaningful evaluation of the underlying sales performance of the business. 

 ABSOLUTE SOFTWARE CORPORATION Consolidated Balance Sheets June 30, 2010 and 2009 (Expressed in Canadian dollars) ------------------------------------------------------------------------- June 30, June 30, 2010 2009 ----------------------------- ASSETS CURRENT Cash and cash equivalents $ 28,078,851 $ 56,078,004 Short-term investments 6,420,210 8,743,861 Accounts receivable, net of allowance for doubtful accounts of $1,935,000 (2009 - $2,387,000) 13,888,239 15,570,780 Prepaid expenses and other 1,149,428 974,564 Current portion of deferred contract costs 4,038,159 3,609,944 Current portion of future income tax assets 9,904,709 10,646,521 ----------------------------- 63,479,596 95,623,674 INVESTMENTS 23,527,677 4,076,211 DEFERRED CONTRACT COSTS 3,744,051 3,765,717 PROPERTY AND EQUIPMENT 2,754,271 2,644,275 FUTURE INCOME TAX ASSETS 10,308,983 11,081,073 INTANGIBLE ASSETS 20,477,801 127,775 ----------------------------- $124,292,379 $117,318,725 ----------------------------- ----------------------------- LIABILITIES CURRENT Accounts payable and accrued liabilities $ 8,183,219 $ 6,775,466 Income tax payable 1,575,000 1,575,000 Current portion of acquisition payable 1,728,607 - Current portion of accrued warranty 4,702,888 5,288,520 Current portion of deferred revenue, net 52,411,595 46,577,880 ----------------------------- 68,601,309 60,216,866 ACQUISITION PAYABLE 3,457,214 - ACCRUED WARRANTY 4,518,461 5,963,650 DEFERRED REVENUE, NET 50,346,988 49,278,726 ----------------------------- 126,923,972 115,459,242 SHAREHOLDERS' (DEFICIENCY) EQUITY Share Capital 44,888,407 41,988,977 Contributed Surplus 28,393,491 26,822,975 Deficit (75,913,491) (66,952,469) ----------------------------- (2,631,593) 1,859,483 ----------------------------- ----------------------------- $124,292,379 $117,318,725 ----------------------------- ----------------------------- ABSOLUTE SOFTWARE CORPORATION Consolidated Statements of Operations and Comprehensive Loss Three and twelve months ended June 30, 2010 and 2009 (Expressed in Canadian dollars) ------------------------------------------------------------------------- Three months ended Twelve months ended June 30, June 30, -------------------------------------------------------- 2010 2009 2010 2009 -------------------------------------------------------- REVENUE $ 16,599,880 $ 14,330,961 $ 64,075,789 $ 53,218,894 COST OF REVENUE 4,629,530 1,278,594 15,709,686 11,733,139 -------------------------------------------------------- GROSS MARGIN 11,970,350 13,052,367 48,366,103 41,485,755 OPERATING EXPENSES Sales and marketing 10,877,604 7,479,674 36,205,179 29,039,585 Research and development 2,276,465 2,014,294 8,032,503 7,259,803 General and administration 1,608,982 3,457,514 7,707,016 8,951,743 Investment tax credits (505,000) (2,225,000) (1,255,000) (3,000,000) Stock-based compensation 422,552 642,213 2,085,977 15,792,738 -------------------------------------------------------- 14,680,603 11,368,695 52,775,675 58,043,869 -------------------------------------------------------- -------------------------------------------------------- OPERATING (LOSS) INCOME (2,710,253) 1,683,672 (4,409,572) (16,558,114) OTHER (EXPENSE) INCOME Interest income, net 174,294 151,317 699,239 1,384,195 Foreign exchange (loss) gain 598,084 (888,443) (1,772,780) 1,407,946 Loss on foreign exchange contracts - 663,000 - (849,500) Restructuring charges - - - (989,132) Gain (loss) on investments 257,397 (197,569) 98,134 (952,023) -------------------------------------------------------- 1,029,775 (271,695) (975,407) 1,486 -------------------------------------------------------- -------------------------------------------------------- NET (LOSS) INCOME BEFORE INCOME TAXES (1,680,478) 1,411,977 (5,384,979) (16,556,628) INCOME TAX (EXPENSE) RECOVERY (2,128,902) 15,072,933 (2,768,902) 14,297,933 -------------------------------------------------------- NET (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME $ (3,809,380) $ 16,484,910 $ (8,153,881) $ (2,258,695) -------------------------------------------------------- -------------------------------------------------------- BASIC AND DILUTED (LOSS) EARNINGS PER SHARE $ (0.08) $ 0.36 $ (0.18) $ (0.05) -------------------------------------------------------- -------------------------------------------------------- WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED 46,714,398 45,477,754 46,346,964 47,057,386 -------------------------------------------------------- -------------------------------------------------------- ABSOLUTE SOFTWARE CORPORATION Consolidated Statements of Changes in Shareholders' Deficiency Years ended June 30, 2010 and 2009 (Expressed in Canadian dollars) ------------------------------------------------------------------------- Share Capital ------------------------- Number of Common Contributed shares Amount Surplus Deficit Total ---------------------------------------------------------------- BALANCE, JUNE 30, 2008 47,811,570 $41,915,225 $11,938,462 $(56,752,618) $(2,898,931) Shares issued on options exercised 762,683 1,755,488 (780,450) - 975,038 Shares issued under Employee Share Purchase Plan 177,097 784,416 - - 784,416 Shares repurchased and cancelled under the Normal Course Issuer Bid (3,257,000) (2,793,927) - (7,941,156) (10,735,083) Shares issued on warrants exercised 200,000 327,775 (127,775) - 200,000 Stock-based compensation expense recorded on Option and Purchase Plans - - 15,792,738 - 15,792,738 Net loss - - - (2,258,695) (2,258,695) ---------------------------------------------------------------- BALANCE, JUNE 30, 2009 45,694,350 $41,988,977 $26,822,975 $(66,952,469) $1,859,483 ---------------------------------------------------------------- ---------------------------------------------------------------- Shares issued on options exercised 741,552 1,659,071 (259,911) - 1,399,160 Shares issued under Employee Share Purchase Plan 231,188 786,895 - - 786,895 Shares repurchased and cancelled under the Normal Course Issuer Bid (238,000) (202,086) - (807,141) (1,009,227) Shares issued on warrants exercised 400,000 655,550 (255,550) - 400,000 Stock-based compensation expense recorded on Option and Purchase Plans - - 2,085,977 - 2,085,977 Net loss - - - (8,153,881) (8,153,881) ---------------------------------------------------------------- BALANCE, JUNE 30, 2010 46,829,090 $44,888,407 $28,393,491 $(75,913,491) $(2,631,593) ---------------------------------------------------------------- ---------------------------------------------------------------- ABSOLUTE SOFTWARE CORPORATION Consolidated Statements of Cash Flows Three and twelve months ended June 30, 2010 and 2009 (Expressed in Canadian dollars) ------------------------------------------------------------------------- Three months ended Twelve months ended June 30, June 30, -------------------------------------------------------- 2010 2009 2010 2009 -------------------------------------------------------- OPERATING ACTIVITIES Net loss $ (3,809,380) $ 16,484,910 $ (8,153,881) $ (2,258,695) Items not involving cash Amortization of property and equipment 374,170 446,333 1,366,800 1,238,642 Amortization of intangible assets 1,493,931 31,943 2,737,602 127,774 Stock-based compensation 422,552 642,213 2,085,977 15,792,738 Future income taxes 3,573,902 (16,772,933) 1,513,902 (18,872,933) (Gain) loss on investments (257,397) 197,569 (98,134) 952,023 (Gain) loss on foreign exchange contract - (38,000) - 849,500 Change in non-cash working capital Accounts receivable (2,956,756) (2,145,301) 1,682,541 2,825,951 Prepaid expenses and other 96,301 (165,111) (174,864) (67,772) Deferred contract costs (177,631) (292,675) (406,549) (1,076,001) Accounts payable and accrued liabilities 1,291,916 133,709 1,380,952 534,525 Income tax payable (1,950,000) (525,000) - 1,575,000 Accrued warranty (997,955) (2,806,810) (2,030,821) (592,423) Deferred revenue 3,151,818 6,959,134 6,521,658 16,394,273 -------------------------------------------------------- CASH FROM OPERATING ACTIVITIES 255,471 2,149,981 6,425,183 17,422,602 INVESTING ACTIVITIES Purchase of property and equipment (354,839) (670,343) (1,459,797) (1,911,915) Acquisition of LANrev (4,144) - (10,288,400) - Purchase of intangible assets (7,223,287) - (7,223,287) - Realized loss on foreign exchange contract - 38,000 - (849,500) Proceeds from maturities of short-term investments 2,615,227 5,590,000 9,926,691 15,570,571 Purchase of short-term investments - (5,646,510) (7,504,905) (14,778,288) Proceeds from maturities of investments 1,304,228 38,061 1,304,228 8,375,000 Purchase of investments (439,288) - (20,755,694) (5,435,137) -------------------------------------------------------- CASH (USED IN) FROM INVESTING ACTIVITIES (4,102,103) (650,792) (36,001,164) 970,731 FINANCING ACTIVITIES Repurchase of common shares for cancellation (900,288) - (1,009,227) (10,637,373) Issuance of common shares 520,261 355,324 2,586,055 1,861,745 -------------------------------------------------------- CASH FROM (USED IN) FINANCING ACTIVITIES (380,027) 355,324 1,576,828 (8,775,628) -------------------------------------------------------- -------------------------------------------------------- (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (4,226,659) 1,854,513 (27,999,153) 9,617,705 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 32,305,510 54,223,491 56,078,004 46,460,299 -------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF YEAR $ 28,078,851 $ 56,078,004 $ 28,078,851 $ 56,078,004 -------------------------------------------------------- --------------------------------------------------------