Press Releases
Intrinsyc Reports Transition Period Financial Results
Vancouver, BC – March 20, 2008 – Intrinsyc Software International, Inc. (TSX: ICS), a global wireless software solutions provider, today announced its financial results for the four-month transition period ended December 31, 2007, reported in Canadian dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP). As previously reported, Intrinsyc has changed its fiscal year-end from August 31 to December 31. Accordingly, the Company is required to report financial results for the four-month transition period ended December 31, 2007. The comparative periods are the three months ended August 31, 2007 and November 30, 2006.
Total revenue for the four-month transition period was $5.2 million compared to $4.5 million in the three months ended August 31, 2007 and $5.0 million in the three months ended November 30, 2006. Gross margin for the transition period was 36 percent compared to 49 percent in the three months ended August 31, 2007 and 46 percent in the three months ended November 30, 2006. The slower rate of revenue growth and commensurate gross margin decline compared to the prior quarter was due primarily to the weakening of the U.S. dollar versus the Canadian dollar as well as a delay in signing an engineering services agreement. The impact of the weakening U.S. dollar in the period had a negative impact on revenue and gross margin of approximately $425,000 from what the revenue and gross margin would have been had the exchange rates remained consistent with the three month period ended August 31, 2007. The gross margin decline caused by the depreciation of the U.S. dollar equated to an approximate 5 percent decline compared to what the gross margin would have been had the exchange rates remained consistent with the quarter ended August 31, 2007.
“During the transition period, services revenues were relatively consistent with the prior period when factoring in currency impact and the effect of a services engagement with a major OEM which was underway but due to a delay in contract signing limited our ability to recognize the revenue. Our priority remained the ramp of our Soleus™ business and our progress included securing two additional design wins and signing our first silicon vendor distribution agreement. We also launched support services with three Soleus customers which, while billed at lower rates than our non-Soleus engineering rates, helped our customers accelerate their product development,” commented Glenda Dorchak, Chairman and Chief Executive Officer of Intrinsyc Software. “In early 2008, we continued to build upon our momentum by securing a win for Soleus with Samsung Semiconductor System LSI Division. We believe this relationship has the potential to expand over time and accelerate the deployment of Soleus internationally. Additionally, we announced the launch of the first consumer product based on our Soleus software platform, which was developed by Micro-Star International Co., Ltd., and were able to demonstrate that product, along with several other customer prototypes, at our booth at Mobile World Congress in Barcelona.”
Ms. Dorchak continued, “While we expect growth in our services revenues in the coming quarter, as compared to the transition period on a time comparable basis, the slower growth of that business was the reason we made the decision to invest in Soleus. During calendar 2007, we aligned our operations in support of our wireless software solutions business by closing our United Kingdom engineering operation which was completed by December, ramping our Asia Pacific operations by opening an office in Taipei, and deploying a sales and business development operation that over the course of the year closed five Soleus wins as well as a strategic development alliance with a leading Japanese OEM to develop new user interface technologies. Our confidence in Soleus remains unchanged, and we look forward to the release of a number of Soleus-based products and the commencement of royalty revenues in the second quarter of 2008.”
The EBITDA loss for the transition period was $6.9 million, compared to $3.9 million in the three months ended August 31, 2007 and $2.9 million in the three months ended November 30, 2006. The EBITDA loss in the transition period includes a restructuring charge of approximately $650,000 related to the previously announced closure of the Company’s United Kingdom engineering services operation which was completed during the transition period. EBITDA loss for the transition period also includes Soleus-related research and development expenditures of $3.3 million compared to $2.7 million in the three months ended August 31, 2007 and $2.9 million in the three months ended November 30, 2006. Expenditures for sales and marketing were $2.4 million in the transition period compared to $1.8 million in the three months ended August 31, 2007 and $1.3 million in the three months ended November 30, 2006. The calculation of EBITDA excludes stock-based compensation expense. See further discussion on EBITDA under the heading “Supplemental Information” later in this press release.
Cash on hand at the end of the transition period was $12.0 million, compared to $19.6 million as of August 31, 2007. Subsequent to December 31, 2007, the Company closed a bought deal offering of 28,600,000 new common shares at an offering price of $1.05 per share, resulting in gross proceeds of approximately $30.0 million.
Accounting Changes
As of the first quarter of 2008, Intrinsyc intends to report its financial results in U.S. currency, which is more reflective of its status as a global company and is the currency in which Intrinsyc receives the majority of its revenue. Intrinsyc will continue to report in accordance with Canadian GAAP.
Supplemental Information
In addition to results disclosed in accordance with Canadian GAAP, Intrinsyc discloses a non-GAAP measure of EBITDA as a method to evaluate the Company’s operating performance. This non-GAAP measure should not be considered a substitute for measurements required by accounting principles generally accepted in Canada such as loss and loss per share. Management believes that this non-GAAP metric provides additional information allowing comparability regarding the Company’s ongoing operating performance and the items excluded are considered to be non-operational and/or non-recurring. EBITDA is defined as earnings before interest, tax, depreciation and amortization. This non-GAAP measure is not necessarily comparable to non-GAAP information provided by other issuers. A reconciliation of the Company’s EBITDA loss to the loss under Canadian GAAP is provided in the table attached. .
Conference Call
Consolidated unaudited financial statements are attached and a conference call to discuss these results will be held at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time), today.
To listen to the conference call live by telephone, dial +1-866-400-2280 toll free for participants in North America, and +1-416-850-9143 for Toronto area and international participants, approximately 10 minutes before the start time. A telephone playback will be available for three business days, beginning approximately two hours after the call. To listen to the telephone replay please dial +1-866-245-6755 toll free, and for international callers, dial +1-416-915-1035. Enter access code 462845.
The Audit Committee of the Company has reviewed the contents of this news release.
Transition Period Consolidated Financial Statements (PDF)
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About Intrinsyc Software International, Inc.
Intrinsyc provides wireless software solutions that enable next-generation handheld products, including mobile handsets, smart phones and converged devices. The company’s software products, engineering services, and years of expertise help device makers, service providers, and silicon providers deliver compelling wireless products with faster time-to-market and improved development cost. Intrinsyc is the licensor of the Soleus™ software platform based on Windows® Embedded CE for consumer handset development. Intrinsyc is a Microsoft® Windows Embedded Gold Partner, the 2007 Windows Embedded Excellence Award winner for Systems Integrator, a Symbian Competence Center and Platinum Partner. Intrinsyc is publicly traded on the Toronto Stock Exchange (symbol: ICS) and headquartered in Vancouver, Canada with offices in the United States, United Kingdom, Taiwan and Barbados.
www.Intrinsyc.com
Intrinsyc and Intrinsyc logo are registered trademarks, and Soleus and Soleus logo are trademarks in Canada, the European Community and the U.S.A. of Intrinsyc Software International, Inc. All other marks are the trademarks of the respective owners and are hereby acknowledged.
Forward Looking Statements
This press release contains statements, which to the extent that they are not recitations of historical fact, may constitute forward-looking information. Such forward-looking statements may include financial and other projections as well as statements regarding the Company's future plans, objectives, performance, revenues, growth, profits, operating expenses or the Company’s underlying assumptions. Forward-looking statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,” “estimates,” “predicts,” “potential,” “targeted,” “plans,” “possible” and similar expressions, or statements that events, conditions or results “will,” “may,” “could” or “should” occur or be achieved. These forward-looking statements include, without limitation, statements about the Company’s market opportunities, strategies, competition, expected activities and expenditures as the Company pursues its business plan, the adequacy of the Company’s available cash resources and other statements about events, conditions or results that may occur in the future. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, such as business and economic risks and uncertainties, including the risks and uncertainties set out in the Company’s Annual Information Form. The Company’s forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made, and the Company does not assume any obligation to update forward-looking statements if circumstances or management’s beliefs, expectations or opinions should change, except as required by law. For the reasons set forth above, persons reading this press release should not place undue reliance on forward-looking statements.
For more information, please contact:
David Fischer
Senior Director of Finance and Acting Chief Financial Officer
Intrinsyc Software International, Inc.
Phone: +1-604-648-4012
Email: dfischer@intrinsyc.com
For more information, please contact:
Brad Zaytsoff
Intrinsyc Software International, Inc.
Email: bzaytsoff@intrinsyc.com
Phone: (604) 648-4038
Investor Relations:
Tracy Rawa
Intrinsyc Software International, Inc.
Email: trawa@intrinsyc.com
Phone: (604) 678-3311
Murray Duncan
Intrinsyc Software International, Inc.
Email: mduncan@intrinsyc.com
Phone: (604) 646-7971