ACD Systems International Inc.
TSX : ASA

ACD Systems International Inc.

November 09, 2005 17:00 ET

ACD Systems Reports Fiscal 2006 Second Quarter Results

VICTORIA, BRITISH COLUMBIA--(CCNMatthews - Nov. 9, 2005) - ACD Systems International Inc. (TSX:ASA), makers of ACDSee™ photo management software and Canvas™ technical illustration software, today reported its Q2 2006 results. The financial figures in this release are reported in Canadian dollars in accordance with Canadian generally accepted accounting principles.



Summary of Financial Results (unaudited)
(millions of Canadian dollars
except per share data)

Three months ended
September 30
2005 2004
---------------------
Sales $ 4.5 $ 4.7

Net earnings (loss) (1.9) (1.4)

Number of shares- basic (millions) 22.8 23.8

Number of shares- diluted (millions) 22.8 23.9

Earning (loss) per share, basic and diluted $ (0.08) $ (0.06)

Six months ended
September 30
2005 2004
---------------------
Sales $ 8.6 $ 10.3

Net earnings (loss) (2.8) (1.0)

Number of shares- basic (millions) 23.1 23.8

Number of shares- diluted (millions) 23.1 23.9

Earning (loss) per share, basic and diluted $ (0.12) $ (0.04)


"ACD Systems continues to invest in opportunities created by the rapid growth of the digital media market," says Doug Vandekerkhove, chairman, chief executive officer and president of ACD Systems. "We are leveraging our digital imaging expertise, the ACDSee brand, our large global user base and our strong balance sheet to build a solid foundation for profitability and shareholder value."

Summary of Q2 FY2006 Accomplishments

- ACD launched ACDSee™ 8.0 Photo Manager.

Financial Highlights

Sales for the quarter ended September 30, 2005 were $4.5 million compared to $4.7 million in same quarter in the prior year. Year-to-date sales were $8.6 million compared to $10.3 million in the six-month period ended September 30, 2005.

Digital imaging software sales during the second quarter, ended September 30, 2005 were $3.3 million versus $3.8 million in the same quarter of the prior year. In the six month period ended September 30, 2005 digital imaging sales were $6.3 million, a decrease from $8.2 million in the same period in the prior year. These decreases were the result of delayed email communications to customers related to the release of ACDSee™ 8.0 Photo Manager, the restructuring of an OEM contract, the timing of German and Japanese product launches. The Company's digital imaging software segment derives the majority of its revenues in U.S. dollars and Euros. Both the U.S. dollar and the Euro have weakened compared to the prior year, which resulted in a $0.3 million decrease in sales for the six months ended September 30, 2005 compared to the prior and a decrease of $0.08 million in sales for the quarter ended September 30, 2005 compared to the prior year.

Technical drawing software sales increased from $0.9 million in the quarter ended September 30, 2004 to $1.2 million for the three months ended September 30, 2005. In the six month period ended September 30, 2005, technical drawing software sales increased from $2.1 million in the prior year period to $2.3 million in the current six month period. These increases were the result of sales of Canvas™ X. The Company derives the majority of its technical illustration software revenue in U.S. dollars. The weakening U.S. dollar resulted in a $0.08 million reduction in revenue quarter over quarter and a $0.17 million reduction in revenue year over year to date.

Operating expenses were $5.8 million for the three months ended September 30, 2005 compared to $5.7 million for the same quarter in the prior year. Operating expenses were $11.2 million for the six months ended September 30, 2005 compared to $10.2 million for the same six month period in the prior year. The increase in operating expenses is primarily due to higher sales, marketing and customer service expenses. While consolidated operating expenses increased quarter over quarter and year over year to date, operating expenses in the technical illustration segment decreased by 22% as a result of the April 2005 restructuring.

Net loss for the current quarter was $1.9 million compared to a net loss of $1.4 million in the second quarter of the previous fiscal year. Net loss for the six months ended September 30, 2005 was $2.8 million compared to a net loss of $1.0 million for the six months ended September 30, 2004.

Total assets at September 30, 2005 were $33.7 million, a decrease of $4.4 million, compared to $38.1 million at March 31, 2005. The Company's cash position was $15.5 million at September 30, 2005 compared to $19.1 million at March 31, 2005. Working capital at September 30, 2005 decreased by $4.2 million from March 31, 2005 due to reduced cash and future income tax assets.

ACD Systems will conduct a teleconference on November 10, 2005 at 10:30 a.m. Eastern Standard Time. To participate in the conference call, please use the phone numbers listed below.



Date: November 10, 2005
Time: 10:30 am EST (7:30 am PST)
Dial In Numbers:
Toll Free (North America): 877-407-9205
International: 201-689-8054


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: http://www.acdcorporate.com/english/Investors/financial.

The event will be archived and available for replay through 2/10/2006.

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

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: www.ACDSYSTEMS.com.

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