20-20 Technologies Inc.
TSX : TWT

20-20 Technologies Inc.

January 26, 2006 11:48 ET

20-20 Technologies Reports Results For Fourth Quarter and Full Year 2005

LAVAL, QUEBEC--(CCNMatthews - Jan. 26, 2006) - 20-20 Technologies Inc. (TSX:TWT) -

- Fiscal 2005 revenues of $40.5 million, a 10.4% increase over 2004

- Fourth quarter revenues of $10.9 million, an 8.8 % increase over the same quarter in 2004

- Net Earnings for the year grow 155% to $4.3 million

20-20 Technologies Inc. (TSX:TWT), the world leader in 3D interior design software, today announced its quarterly and fiscal year-end results for the period ending October 31, 2005. All amounts are in US dollars unless otherwise indicated.

Revenues for the 12 months ended October 31, 2005 were $40.5 million, a 10.4% increase over the previous year.

License sales revenues for the year were $18.3 million, an increase of 8.5% over last year's $16.9 million. Maintenance and other recurring revenues grew to $15.8 million, an increase of 12.8% over last year's $14.0 million and professional services increased by 10.3% to $6.4 million from $5.8 million in 2004.

Operating income for the 12 months ended October 31, 2005 amounted to $5.9 million or 14.7% of revenue compared to $5.5 million or 15.1% of revenue last year.

Net earnings for the 12 months ended October 31, 2005 were $4.3 million, an increase of 155% compared to $1.7 million 2004. Net earnings available to common shareholders for the 12 months ended October 31, 2005 were $4.2 million, or $0.24 per share, compared to $1.5 million or $0.18 per share for 2004.

Revenues for the fourth quarter of 2005 were $10.9 million, an increase of 8.8% from fourth quarter 2004 revenues of $10.0 million.

License revenues for the fourth quarter 2005 were $4.8 million, an increase of 7.6% over $4.5 million last year. Maintenance and other recurring revenues grew by 9.3% to $4.2 million over last year's $3.8 million and professional services increased by 10.7% to $1.9 million from $1.7 million in the fourth quarter of fiscal 2004.

Operating income for the fourth quarter stood at $1.6 million or 15.2% of revenues compared to $1.8 million or 18.3% of revenue for the corresponding period last year. Net earnings for the fourth quarter 2005 were $1.4 million, compared to $403,000 for the fourth quarter 2004. Net earnings available to common shareholders for the quarter ended October 31, 2005 were $1.4 million or $0.08 per share, compared to $362,000 or $0.04 per share for the fourth quarter in 2004.

"All our markets and geographical regions contributed to 20-20's growth in 2005, driven by sustained demand in the interior design industry," said Jean-Francois Grou, President and COO. Jean Mignault, CEO, added: "We are pleased to report solid growth to our shareholders for our first full year as a public company. We remained focused on our sales and profit objectives while we carried out significant developments and an overall reinforcement of our organization, from which we should reap benefits in 2006."

During the fourth quarter of fiscal 2005, the Company's capitalized development costs included an adjustment of $590,000, representing costs incurred for new product development in the first nine months of the year. This amount breaks down into $137,000, $225,000 and $228,000 respectively for the first to third quarters of the 2005 fiscal year. The after-tax effect of this adjustment is as follows:



(in thousands of US dollars,
except per share amounts) First Second Third Fourth
Quarter Quarter Quarter Quarter Year
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As reported:
Net Earnings $238 $1,217 $1,392 $1,415 $4,262
Basic Earnings per share $0.02 $0.07 $0.07 $0.08 $0.24
Diluted Earnings per share $0.02 $0.06 $0.07 $0.07 $0.24


As adjusted:
Net Earnings $327 $1,366 $1,539 $1,030 $4,262
Basic Earnings per share $0.02 $0.07 $0.08 $0.05 $0.24
Diluted Earnings per share $0.02 $0.07 $0.08 $0.05 $0.24


Conference Call Information

The Company will host a conference call to discuss its results at 14:00 today, January 26, 2006. The conference call will be available by telephone at 1-514-940-2795 and 1-800-814-4853. A replay will be available until midnight on March 26, 2006, following the conference call and can be accessed by dialing 1-416-640-1917 or 1-877-289-8525, passcode 21173285#.

About 20-20 Technologies Inc.

20-20 Technologies is the world's leading provider of computer-aided design, sales software and manufacturing solutions tailored for the interior design industry. 20-20 offers a proprietary end-to-end solution, integrating the entire design, sales, supply chain and manufacturing processes. The Company offers dealers and retailers state-of-the-art design, specification, photo-realistic 3D rendering and management software for configurable and standalone products in the residential and commercial interior design markets. 20-20's solutions include an integration platform between sales and manufacturing and its enterprise resource planning systems, as well as computer-aided engineering and shop floor automation software. 20-20's software is sold in more than 100 countries and used at close to 30,000 points-of-sale worldwide. 20-20 now has catalog data for close to 1,000 manufacturers throughout the world. 20-20 is a publicly traded company (TWT) on the Toronto Stock Exchange (TSX). For more information, visit www.2020technologies.com.

Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking information within the meaning of securities laws.

Implicit in this information, particularly in respect of future operating results and economic performance of the Company, are assumptions regarding projected revenue and expenses. These assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. Readers are cautioned that actual future operating results and economic performance of the Company are subject to a number of risks and uncertainties, including general economic, market and business conditions and could differ materially from what is currently expected.

For more exhaustive information on these risks and uncertainties you should refer to our most recently filed annual information form which is available at www.sedar.com. Forward-looking information contained in this report is based on management's current estimates, expectations and projections, which management believes are reasonable as of the current date. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do not undertake to update this information at any particular time.

The selected consolidated financial information set out below for the fiscal years ended October 31, 2005 and 2004 has been derived from our audited consolidated financial statements. The following information should be read in conjunction with our audited consolidated financial statements and notes related thereto.



(In thousands of U.S. dollars, Fourth Quarters Years
except share and per share data) ended ended,
Consolidated Statement of October 31 October 31
Earnings Data: 2005 2004(a) 2005 2004(a)
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Revenues
License sales $4,799 $4,461 $18,334 $16,903
Maintenance and other
recurring revenues 4,175 3,819 15,767 13,973
Professional services 1,876 1,695 6,374 5,778
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10,850 9,975 40,475 36,654
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Cost of revenues
License sales 373 353 1,183 1,609
Maintenance and services 1,797 1,529 6,581 5,889
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2,170 1,882 7,764 7,498
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Gross margin 8,680 8,093 32,711 29,156
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Gross margin (%) 80.0% 81.1% 80.8% 79.5%

Operating expenses
Sales and marketing 3,609 2,933 13,315 10,377
Research and development 546 1,260 4,538 5,131
General and
administrative 2,773 2,074 8,587 8,117
Stock-based compensation
expense 107 - 334 -
---------------------------------------------------------------------
7,035 6,267 26,774 23,625
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Operating income 1,645 1,826 5,937 5,531
Operating margin (%) 15.2% 18.3% 14.7% 15.1%

Financial expenses (income) (115) 1,112 (140) 2,811

Income taxes 345 311 1,815 1,114
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Earnings before non-
controlling interest 1,415 403 4,262 1,606
Non-controlling interest - - - (66)
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Net earnings $1,415 $ 403 $4.262 $1,672
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Earnings per share

Net earnings available to
common shareholders $1,415 $ 362 $4,245 $1,536
---------------------------------------------------------------------
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Basic weighted average
number of common shares
outstanding 18,743,048 8,564,460 17,580,899 8,535,140
---------------------------------------------------------------------
---------------------------------------------------------------------
Basic earnings per share $0.08 $0.04 $0.24 $0.18
---------------------------------------------------------------------
---------------------------------------------------------------------

Diluted weighted average
number of common shares
outstanding 19,078,219 9,083,960 17,996,569 9,054,640
---------------------------------------------------------------------
---------------------------------------------------------------------
Diluted earnings per
share $0.07 $0.04 $0.24 $0.17
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(In thousands of U.S. dollars) October 31, October 31,
2005 2004(a)
---------------------------------------------------------------------
Consolidated Balance Sheet Data:
Cash and cash equivalents 5,534 3,869
Short term investments 35,967 3,667
Working capital 33,568 (6,763)
Total assets 78,964 37,530
Deferred revenue 8,715 8,064
Long-term debt (including current portion) 1,404 1,375
Total shareholders' equity 58,729 13,374


(a) Restated: the 2004 consolidated financial statements have been restated to reflect the retroactive adoption effective November 1, 2004 of the Canadian Institute of Chartered Accountants' ("CICA") Handbook Section - 3860, Financial Instruments, Disclosure and Presentation which requires that the principal equity component and associated cumulative translation adjustment of the convertible debentures be reclassified from the shareholders' equity to liabilities and as a result also reclassify for applicable periods, the increase of the equity component of convertible debentures to the consolidated earnings as a financial expense (refer to Note 2 to the audited consolidated financial statements for further details relating to the change in accounting policy). The retroactive impact of the standard to earnings is of $410,000, $444,000, $486,000, $560,000 for the interim periods from the first through the fourth quarter of 2004, respectively. For the fourth quarter of fiscal 2004, restated net earnings amount to $403,000. The change in standard has no impact on earnings per share for these periods as the adjustments on the consolidated earnings were already considered in each period's earnings per share calculations. On December 8, 2004, all outstanding convertible debentures were converted into common shares.

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