Rand A Technology Corporation

Rand A Technology Corporation

March 18, 2005 05:00 ET

Rand Worldwide Announces Fiscal 2004 Net Income of $23.8 Million, Including Gain on the Sale of Subsidiaries of $56.2 Million


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: RAND A TECHNOLOGY CORPORATION

TSX SYMBOL: RND

MARCH 18, 2005 - 05:00 ET

Rand Worldwide Announces Fiscal 2004 Net Income of
$23.8 Million, Including Gain on the Sale of
Subsidiaries of $56.2 Million

MISSISSAUGA, ONTARIO--(CCNMatthews - March 18, 2005) - Rand A Technology
Corporation (TSX:RND), operating as RAND Worldwide® ("the Company"),
one of the world's leading providers of professional services and
software to the engineering community and manufacturers seeking to
optimize their Product Lifecycle Management (PLM) processes, today
announced its financial results for the fourth quarter and year ended
December 31, 2004.

As previously announced, in late 2004, the Company sold five of its
European subsidiaries to Dassault Systemes ("Dassault"), as well as 10%
of the shares of Rand North America, Inc. for total proceeds of $51.2
million. Additionally, the Company has taken steps to finalize its
restructuring in Europe and exit unprofitable operations in France,
Italy and Poland. These subsidiaries are being accounted for as
discontinued operations held for other than sale.

The Company's net earnings for the 2004 fourth quarter were $39.4
million, including the gain on sale of subsidiaries sold to Dassault,
compared with a net loss of ($7.5 million) for the fourth quarter of
2003. For the year ended December 31, 2004, net earnings were $23.8
million, compared with a net loss of ($50.2 million) for 2003. Net
earnings were $2.37 per Common Share for the quarter ended December 31,
2004, including earnings of $2.70 per share related to the gain on
dispositions and discontinued operations. This is compared with a net
loss of ($0.44) per Common Share for the fourth quarter of 2003,
including a net loss of ($0.33) per share related to discontinued
operations. Net earnings per Common Share for 2004 were $1.44 per share,
including earnings of $2.61 per share related to the gain on disposition
of subsidiaries and discontinued operations. For 2003, the net loss was
($3.02) per Common Share, including a loss of ($1.48) per share related
to discontinued operations.

RAND Worldwide's gross profit margin for the fourth quarter was 55.7%,
compared with 51.6% for the fourth quarter ended December 31, 2003. This
was a result of focusing on higher margin professional services and
reducing low margin hardware sales. For the 2004 year, the gross profit
margin was 52.6%, compared with 47.6% for 2003. Salaries, commissions,
and other operating expenses were reduced in 2004 to $52.2 million, down
21.4% from $66.4 million in 2003.

The Company recorded an operating loss during the fourth quarter of
2004, before interest, taxes, depreciation and amortization,
restructuring and asset writedowns and equity losses net of dilution
gains and losses and the results of discontinued operations (EBITDA
loss(1)), of ($0.9 million), consistent with an EBITDA loss of ($0.9
million) in the fourth quarter of 2003. EBITDA loss for the twelve month
period ended December 31, 2004 was ($4.7 million), compared to an EBITDA
loss of ($13.5 million) for the same period last year.

The Company had cash and short-term investments totaling $8.4 million as
at December 31, 2004, compared with $5.6 million at September 30, 2004
and $13.4 million at December 31, 2003, as restated for discontinued
operations.

The recent transaction with Dassault has eliminated existing long and
short-term debt, including approximately $40.0 million owed to Dassault
under convertible loan agreements that were entered into on June 18,
2002.

"Re-engineering RAND Worldwide over the past two years has given us a
unique opportunity to once again have a solid financial position to
rebuild a world class company for our shareholders," said Frank
Baldesarra, President and Chief Executive Officer of RAND Worldwide.
"Many thanks to our technology partner, Dassault Systemes, for their
support and we look forward to growing a strong business primarily
centered around solutions from Dassault and Autodesk."

"RAND Worldwide has made significant progress this year restructuring
our balance sheet to be debt free and improving the Company's
productivity and performance by reducing our cost base through focused
execution and implementing global best practices," said Kriss Bush,
Chief Financial Officer of RAND Worldwide. "RAND is positioning itself
for future growth, both internally and through acquisitions."

About RAND Worldwide

RAND Worldwide is one of the world's leading providers of professional
services and technology to companies looking to improve their
competitiveness and profitability by enhancing key aspects of their
Product Lifecycle Management (PLM) capabilities, including product
planning, product development, and product management. As the only
global, technology independent systems integrator in the world, RAND
Worldwide currently employs approximately 450 people in over 70 sales
and client service centers around the world. The Company's corporate
head office in Mississauga, Ontario, Canada can be reached at
905-625-2000 or through the Internet at www.rand.com.

The contents of this News Release has been reviewed and approved by the
Audit Committee and the Board of Directors. All currencies are stated in
Canadian dollars.

The condensed financial statements attached to this press release do not
include a comparative Consolidated Cash Flow Statement. The comparative
Consolidated Cash Flow Statement for the year ended December 31, 2004
will be included in the Corporation's audited consolidated financial
statements, with accompanying MD&A, to be filed with Canadian securities
regulatory authorities on or before March 31, 2005. Such audited
consolidated financial statements will also be concurrently posted to
the Company's web site at www.rand.com and will be mailed to
shareholders in connection with the Corporation's upcoming annual
general meeting.

(1) EBITDA is not a recognized measure under Canadian generally accepted
accounting principles (GAAP). Management believes that, in addition to
net income (loss), EBITDA is a useful supplemental measure as it is used
by certain investors as one measure of the Company's financial
performance. Investors should be cautioned, however, that EBITDA should
not be construed as an alternative to net income (loss) determined in
accordance with GAAP as an indicator of the Company's performance or to
cash flows from operating, investing and financing activities as a
measure of liquidity and cash flows. The Company's method of calculating
EBITDA may differ from other companies and, accordingly, EBITDA may not
be comparable to measures used by other companies.

FORWARD-LOOKING STATEMENTS

This news release may contain forward-looking statements based on
management's current projections, beliefs and opinions at the date of
this news release. Actual results could differ materially from those
anticipated in these statements, due to risks and uncertainties which
affect the Company's business and operations. Reference should be made
to the Company's Annual Information Form and other continuous disclosure
documents filed from time to time with Canadian securities regulatory
authorities, for a detailed description of such risks and uncertainties.
RAND Worldwide undertakes no responsibility to update forward-looking
statements if circumstances or management's projections, beliefs or
opinions change.



RAND A TECHNOLOGY CORPORATION
Balance Sheet
(in thousands of Cdn. $)

As at As at
12/31/04 12/31/03
---------------------------------------------------------------------
Assets
Current Assets
Cash and short-term investments, net $ 8,356 $ 13,420
Accounts receivable 16,984 32,437
Inventory 666 2,303
Prepaid expenses and deposits 2,091 9,330
Due from ENGINEERING.com -- 802
Income Taxes Receivable -- 669
Current assets held for disposal by sale -- 5,913
Current assets held for
disposal by other than sale 2,938 --
---------------------------------------------------------------------
Total Current Assets 31,035 64,874
---------------------------------------------------------------------

Property, plant and equipment, net 3,982 8,564
Other assets, net 5,643 10,276
Long-term portion due from ENGINEERING.com -- 472
Long-term assets held for disposal by sale -- 302
Long-term assets held for
disposal by other than sale 56 --
---------------------------------------------------------------------

Total Assets $ 40,716 $ 84,488
---------------------------------------------------------------------
---------------------------------------------------------------------

Liabilities and Shareholders' Equity
Current Liabilities
Short-term debt -- 8,954
Accounts payable and accrued liabilities 16,649 36,081
Deferred revenue 2,948 8,853
Income taxes payable 725 --
Current portion of capital lease 108 425
Due to ENGINEERING.com 161 --
Current liabilities held for disposal by sale -- 5,185
Current liabilities held for
disposal by other than sale 3,985 --
Current portion of long-term debt -- 3,524
---------------------------------------------------------------------
Total Current Liabilities 24,576 63,022
---------------------------------------------------------------------

Obligations under capital lease 318 113
Long-term debt -- 16,100
Future income taxes -- 538
---------------------------------------------------------------------
Total Liabilities 24,894 79,773
---------------------------------------------------------------------

Shareholders' Equity
Share capital 54,180 54,167
Contributed surplus 1,145 --
Convertible loan -- 18,496
Deficit (45,707) (68,877)
Cumulative translation adjustment 6,204 929
---------------------------------------------------------------------

Total Shareholders' Equity 15,822 4,715
---------------------------------------------------------------------

Total Liabilities & Shareholders' Equity $ 40,716 $ 84,488
---------------------------------------------------------------------
---------------------------------------------------------------------

NOTE: Certain prior year figures have been reclassified to conform to
the current year basis of presentation for discontinued
operations.



RAND A TECHNOLOGY CORPORATION
Consolidated Statement of Income
(in thousands of Cdn. $, except per share data)

Three Months Ended Twelve Months Ended
12/31/04 12/31/03 12/31/04 12/31/03
---------------------------------------------------------------------
REVENUE(1) $ 21,167 $ 31,710 $ 94,537 $ 121,149
COST OF SALES 9,385 15,342 44,852 63,473
---------------------------------------------------------------------
GROSS PROFIT 11,782 16,368 49,685 57,676
---------------------------------------------------------------------
EXPENSES
Salaries and commissions 6,827 9,919 33,433 44,031
Operating expenses 4,633 5,210 18,789 22,394
Foreign exchange 35 723 (148) (668)
Expense recovery - Rand
North America -- -- (2,081) --
Research & development 1,139 1,392 4,421 5,439
---------------------------------------------------------------------
12,634 17,244 54,414 71,196
---------------------------------------------------------------------
Loss Before Interest, Income
Taxes, Depreciation,
Amortization and Unusual
Items (EBITDA) before: (852) (876) (4,729) (13,520)
---------------------------------------------------------------------
Depreciation of
capital assets 1,541 539 2,427 2,645
Amortization of
intangible assets 364 (404) 574 (1,504)
Amortization of
distribution rights -- 494 -- 1,994
Interest expense 89 26 490 680
---------------------------------------------------------------------
1,994 655 3,491 3,815
---------------------------------------------------------------------

Other Expenses (1,528) (194) (10,157) (7,684)
---------------------------------------------------------------------
Loss before Income Taxes
and discontinued operations (4,374) (1,725) (18,377) (25,019)
Provision for Income Taxes 1,091 155 1,060 580
---------------------------------------------------------------------
LOSS FROM CONTINUING
OPERATIONS (5,465) (1,880) (19,437) (25,599)
---------------------------------------------------------------------

Net gain (loss) on
disposition of discontinued
operations 48,141 (1,910) 56,216 (8,039)
Net loss from discontinued
operations net of income
taxes - sale (2,117) (2,445) (5,018) (10,652)
Net loss from discontinued
operations net of income
taxes - other than sale (1,126) (1,268) (7,920) (5,905)
---------------------------------------------------------------------
NET EARNINGS (LOSS) $ 39,433 $ (7,503) $ 23,841 $ (50,195)
---------------------------------------------------------------------

Net earnings (loss) per
common share - Basic
Continuing operations (0.33) (0.11) (1.17) (1.54)
Net gain on disposition of
discontinued operations 2.90 -- 3.39 --
Discontinued operations (0.20) (0.33) (0.78) (1.48)
---------------------------------------------------------------------
Net earnings (loss) per
common share - Basic 2.37 (0.44) 1.44 (3.02)
---------------------------------------------------------------------
Fully diluted earnings
per common share 2.36 -- 1.43 --
---------------------------------------------------------------------
Weighted Average Number of
common shares - Basic 16,599 16,588 16,596 16,580
---------------------------------------------------------------------
Weighted Average Number of
common shares - Fully
Diluted 16,699 16,588 16,683 16,674
---------------------------------------------------------------------
---------------------------------------------------------------------

NOTE: Certain prior year figures have been reclassified to conform to
the current year basis of presentation for discontinued
operations.


(1) Revenue is made up of
the following: Three Months Ended Twelve Months Ended
12/31/04 12/31/03 12/31/04 12/31/03
---------------------------------------------------------------------

Software $ 9,644 $ 14,835 $ 42,674 $ 45,811
Hardware 462 2,830 7,830 16,085
Services 11,061 14,045 44,033 59,253
---------------------------------------------------------------------
$ 21,167 $ 31,710 $ 94,537 $ 121,149
---------------------------------------------------------------------


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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Rand A Technology Corporation
    Kriss Bush
    Chief Financial Officer
    (905) 625-2000
    (905) 625-8535 (FAX)
    investor@rand.com