Triple Digit Growth With Higher Margins in Houseplans(TM) Business
NOVATO, Calif., Nov. 15 /PRNewswire-FirstCall/ -- IMSI(R)
(OTC:IMSI.OB) (BULLETIN BOARD: IMSI.OB) , a leading provider of
house plans online and a leading developer and publisher of
precision design, and consumer and business software solutions,
announced its financial results for the first quarter of fiscal
year 2006. For the quarter ended September 30, 2005, IMSI reported
a net loss of $2.0 million or ($0.07) per share on net revenues of
$4.0 million. The net loss was derived from an operating loss of
$881,000, a loss from the sale of discontinued operations of
$843,000 and other non operating expenses of $227,000. This
compares to a net loss of $275,000 or ($0.01) per share on net
revenues of $3.1 million for the quarter ended September 30, 2004.
Net revenues increased by one hundred and eighty three percent
(183%) in our Houseplans(TM) business, as compared to the
comparable period from the previous fiscal year, reflecting the
acquisition of Weinmaster Homes, Ltd. that we completed in July
2005 and the continued organic growth in the underlying
Houseplans(TM) business. On a sequential basis, net revenues for
the quarter increased by $0.5 million and operating results
improved by approximately $1.6 million as we improved our overall
gross margin from 58% to 63% and as we reduced our overall
operating expenses by approximately $1.1 million. The following are
highlights for the first quarter of fiscal 2006: -- Sales from the
direct marketing channel accounted for 70% of total revenues for
the first quarter of fiscal year 2006 as compared to 52% in the
same period of the previous fiscal year. -- Gross margin in the
Internet Content segment improved to 61% from 53% during the fiscal
quarter ended September 30, 2005, as compared to the same period
from the previous fiscal year. -- Sequentially, operating loss
narrowed from $2.5 million to $0.9 million as we improved our gross
margins and reduced our operating expenses. -- Consolidated
non-cash depreciation and amortization expense for the September
2005 quarter was $360,000. -- Our operating results were negatively
impacted by approximately $200,000 of severance charges during the
quarter ended September 30, 2005. -- We have yet to benefit from
gains on sale of securities we received as part of the total
consideration relating to the Allume sale. As of September 30,
2005, we had $478,000 of unrealized gains on restricted securities.
This item was accounted for as comprehensive income during the
first quarter of fiscal 2006 and was not included in our net
earnings because the underlying securities were restricted as of
the quarter end. Our subsequent sale of these securities in the
December quarter generated a gain of approximately $0.9 million
over our basis in the stock. "The Houseplans(TM) business continues
to lead our growth and with our internal efforts and the addition
of Weinmaster Homes we have the largest and, we believe, the best
collection of house plans on the web," said Martin Wade, Chief
Executive Officer. "This is a great consumer benefit and our
customers continue to respond to the choices we provide," continued
Mr. Wade. "We are looking forward to the seasonal pickup as
customers plan for the coming season. We had $9.9 million in cash
or cash equivalents and $1.5 million of available for sale
securities as of September 30, 2005. Our cash balance provides an
opportunity for business development. Our software business is
adapting to the current environment after the July divestiture and
we expect it to resume a stronger growth track going forward."
Selected Financial Data (In thousands) FY 2005 FY 2006 Q1 Q2 Q3 Q4
Q1 Net revenues $3,135 $3,478 $3,799 $3,462 $3,965 Gross profit
2,114 2,356 2,512 2,010 2,510 As % of net revenues 67% 68% 66% 58%
63% Operating loss -564 -526 -462 -2,472 -881 As % of net revenues
-18% -15% -12% -71% -22% Net (loss) income -275 129 -386 -1,222
-1,951 As % of net revenues -9% 4% -10% -35% -49% INTERNATIONAL
MICROCOMPUTER SOFTWARE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEET (In thousands, except share amounts) September 30, June 30,
2005 2005 Unaudited ASSETS Current assets: Cash and cash
equivalents $9,887 $4,347 Available-for-sale securities 1,524 --
Trading securities -- 714 Receivables, less allowances for doubtful
accounts, discounts and returns of $437 as of September 30, 2005
and $626 as of June 30, 2005. 1,554 773 Inventories, net 834 758
Receivables, other (related to discontinued operations) -- 2,000
Receivables, other -- 30 Other current assets 989 530 Assets
related to discontinued operations -- 12,231 Total current assets
14,788 21,383 Fixed assets, net 373 377 Intangible Assets
Capitalized software, net 434 494 Domain names and brands, net
2,101 1,574 Distribution rights and proprietary plans, net 789 170
Capitalized customer lists, agreements and relationships 1,424 326
Goodwill 3,665 2,090 Trademarks 21 1 Total intangible assets 8,434
4,655 Other long term assets 8 -- Total assets 23,603 26,415
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short
term debt 1,713 2,764 Trade accounts payable 1,600 2,245 Accrued
and other liabilities 1,907 1,871 Liabilities related to
discontinued operations -- 1,037 Deferred revenues 62 38 Total
current liabilities 5,282 7,955 Long-term debt and other
obligations 200 230 Total liabilities 5,482 8,185 Shareholders'
equity Common stock, no par value; 300,000,000 authorized;
29,713,760 issued and outstanding as of September 30, 2005 and
28,796,886 issued and outstanding as of June 30, 2005. 44,839
43,663 Accumulated deficit (27,282) (25,331) Accumulated other
comprehensive income (loss) 564 (102) Total shareholders' equity
18,121 18,230 Total liabilities and shareholders' equity $23,603
$26,415 INTERNATIONAL MICROCOMPUTER SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE (LOSS)
INCOME (In thousands, except per share amounts) Three months ended
September 30, 2005 2004 Net revenues $3,965 $3,135 Product costs
1,455 1,021 Gross margin 2,510 2,114 Costs and expenses Sales and
marketing 1,531 1,350 General and administrative 1,425 859 Research
and development 435 469 Total operating expenses 3,391 2,678
Operating loss (881) (564) Other income and (expense) Interest and
other, net (69) 6 Realized / unrealized loss on marketable
securities (158) (50) Loss before income tax (1,108) (608) Income
tax provision -- (5) Loss from continuing operations (1,108) (613)
Income from discontinued operations, net of income tax -- 285 Gain
(loss) from the sale of discontinued operations, net of income tax
(843) 53 Net loss ($1,951) ($275) Other comprehensive income (loss)
Unrealized gain on restricted securities 478 -- Foreign currency
translation adjustments 188 (10) Comprehensive loss ($1,285) ($285)
Basic earnings (loss) per share Loss from continuing operations
($0.04) ($0.02) Income from discontinued operations, net of income
tax $0.00 $0.01 Income (loss) from the sale of discontinued
operations, net of income tax ($0.03) $0.00 Net loss ($0.07)
($0.01) Diluted earnings (loss) per share Loss from continuing
operations ($0.04) ($0.02) Income from discontinued operations, net
of income tax $0.00 $0.01 Income (loss) from the sale of
discontinued operations, net of income tax ($0.03) $0.00 Net loss
($0.07) ($0.01) Shares used in computing basic earnings (loss) per
share 29,689 26,462 Shares used in computing diluted earnings
(loss) per share 29,689 26,462 INTERNATIONAL MICROCOMPUTER
SOFTWARE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (In thousands) Three months ended September 30, 2005 2004
Cash flows from operating activities: Net cash provided by (used
in) operating activities ($394) $1,643 Cash flows from investing
activities: Proceeds from sale of discontinued operations 9,304 --
Proceeds from sale of product line -- 250 Acquisition of
subsidiaries (1,807) (30) Acquisition of software development and
trademarks -- (92) Purchases of equipment and software (20) (27)
Transfer cash to escrow for Jupitermedia -- (499) Other (8) -- Cash
used in discontinued operations in investing activities -- (46) Net
cash provided by (used in) investing activities 7,469 (444) Cash
flows from financing activities: Proceeds from borrowings 850 400
Repayments of notes (2,935) (1,040) Proceeds from warrants and
options exercised 63 65 Cash used in discontinued operations in
financing activities -- (20) Net cash used in financing activities
(2,022) (595) Effect of exchange rate change on cash and cash
equivalents 9 (10) Unrealized gain on available-for- sale
securities 478 -- Net increase in cash and cash equivalents 5,540
594 Cash and cash equivalents at beginning of period 4,347 3,212
Cash and cash equivalents at end of the period $9,887 $3,806 Three
months ended September 30, 2005 2004 SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION Interest paid 55 57 SUPPLEMENTAL DISCLOSURE
OF NON-CASH FINANCING ACTIVITIES Notes payable incurred in
conjunction with acquisitions 1,000 440 Capital stock issued in
conjunction with settlement of debt -- 1,034 Capital stock issued
in conjunction with acquisitions 1,046 503 Warrants issued in
conjunction with short-term debt 68 -- About IMSI Founded in 1982,
IMSI has established a tradition of providing the professional and
home user with innovative technology and easy-to-use, high- quality
software products at affordable prices. Anchored by IMSI's flagship
product, TurboCAD(R) (http://www.turbocad.com/), the company
continues to be a leading developer and distributor of precision
design and consumer software solutions. IMSI also owns and operates
Houseplans(TM) (http://www.houseplans.com/), focused on expanding
its network of Web properties to serve the rapidly growing market
for the sale of stock house plans on-line and related home building
services. More information about the company can be found at
http://www.imsisoft.com/. Safe Harbor Statement This announcement
contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, Section 21E of the Securities
Exchange Act of 1934, and within the meaning of the Private
Securities Litigation Reform Act of 1995. Actual results could
differ materially from those projected in the forward-looking
statements as a result of various factors including the ability of
the company to successfully commercialize its new technologies as
well as risk factors set forth from time to time in the Form 10-KSB
for the period ended June 30, 2005 and other company's reports
filed with the Securities and Exchange Commission. The company
undertakes no obligation to publicly release the result of any
revisions to these forward- looking statements, which may be made
to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events. DATASOURCE:
International Microcomputer Software, Inc. CONTACT: Robert
O'Callahan, Chief Financial Officer of International Microcomputer
Software, Inc., +1-415-878-4020, or Web site:
http://www.imsisoft.com/
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