ACD Systems International Inc.

ACD Systems International Inc.

August 04, 2006 17:02 ET

ACD Systems Announces Fiscal 2007 First Quarter Results

VICTORIA, BRITISH COLUMBIA--(CCNMatthews - Aug. 4, 2006) - ACD Systems International Inc. (TSX:ASA), makers of ACDSee™ photo management software and Canvas™ technical illustration software, today reported its Q1 2007 results. The financial figures in this release are reported in Canadian dollars in accordance with Canadian generally accepted accounting principles.

Summary of Financial Results

(millions of Canadian dollars except per share data)

Three months ended
June 30
2006 2005
Sales $ 3.7 $ 4.1

Net loss $ (1.5) $ (0.9)

Number of shares- basic and diluted (millions) 21.1 23.6

Loss per share, basic and diluted $ (0.07) $ (0.04)

"The first quarter of the 2007 fiscal year resulted in a further reduction of sales but at a far lower rate of decline than recent quarters," says Doug Vandekerkhove, Chairman, Chief Executive Officer and President of ACD Systems. "This trend should modify further with the release of our photo editing product in early September 2006. Our costs were more closely controlled as evidenced by our raw operating costs being approximately $400,000 less than in the same period of the prior year. We expect to see further reduction in operating expenses in the second quarter as a result of our recent restructuring in July 2006. We also expect to see increased investment in research and development related to our online photo services initiative."

Financial Highlights

Sales for the quarter ended June 30, 2006 were $3.7 million, a 10% decrease over the prior year quarter ended June 30, 2005.

Digital imaging software sales increased from $2.9 million at June 30, 2005 to $3.0 million for the current year first quarter. This increase is a result of the Company's efforts to rebuild its sales results for ACDSee™ products across all regions and channels. The Company's digital imaging software segment derives the majority of its revenues in US dollars and Euros. Both the US dollar and Euro weakened compared to the prior year first quarter resulting in an approximate decrease in sales of $0.3 million compared to the prior year. Excluding foreign currency fluctuations, digital imaging software sales increased by 14% compared to the quarter ended June 30, 2005.

Technical illustration software sales decreased in the first quarter ended June 30, 2006 to $0.7 million from $1.2 million in the prior year first quarter. This decrease is because Canvas™ X was released in the first quarter of the prior year on a two year development cycle. The weakening US dollar resulted in a $0.1 million reduction in revenue quarter over quarter.

Operating expenses, excluding amortization, restructuring costs and foreign currency losses, decreased by $0.4 million from $4.6 million for the quarter ended June 30, 2005 to $4.2 million for the first quarter of the current year. The decrease in expenses for the current quarter was primarily due to lower wages, rent and advertising expenses related to the technical illustration segment and lower wages, subcontractors, advertising, legal and professional fees in the digital imaging segment. These decreases were offset by increased wages and subcontract expenses in the corporate segment as the company increases its investment in R&D related to online photo-services.

Restructuring costs in the current year quarter result from an accrual of $0.14 million in severance payments related to the restructure of operations to be carried out during the second quarter of fiscal 2007.

Net loss for the three months ended June 30, 2006 was $1.5 million compared to a net loss of $0.9 million for the three months ended June 30, 2005.

Total assets decreased by $1.5 million from $24.9 million at March 31, 2006 to $23.4 million at June 30, 2006. The Company's cash and cash equivalents decreased by $0.9 million from March 31, 2006 to $11.8 million at June 30, 2006. Working capital at June 30, 2006 decreased to $11.6 million compared to $13.9 million at March 31, 2006 due to reduced cash and accounts receivable balances.

ACD Systems will conduct a teleconference on August 8, 2006 at 10:30 a.m. Eastern Standard Time. To participate in the conference call, please use the phone numbers listed below.

Date: August 8, 2006
Time: 10:30 am EST (7:30 am PST)
Dial In Numbers:
Toll Free (North America): 1-866-585-6398
International: (416) 849-9626

Members of the news media, investors and the general public are invited to access a live broadcast of the conference call via the Investor Relations page of ACD Systems Web site at:

The event will be archived and available for replay through 08/09/2007.

Further details with respect to ACD Systems' year-end results, including the complete financial statements, will be available for download at

About ACD Systems

Headquartered in British Columbia since 1993, ACD Systems International Inc. (TSX:ASA) is one of the world's leading developers and marketers of digital imaging software, including the renowned ACDSee image management tool and Canvas, an advanced cross-platform technical illustration and graphics program. ACD has delivered value to a global marketplace through Internet distribution and through partnerships with manufacturers and developers. ACD has millions of consumer and business users, and over 33,000 corporate customers including many Fortune 500 companies. For further details, please visit us at our corporate web site:

Certain statements contained in this press release including words such as "looks forward", "anticipate", "could", "should", "expect", believe", "will" and similar expressions and statements relating to matters that are not historical facts are forward-looking statements. Such forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

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