Growth With Higher Margins in Software Lines and Houseplans(TM) Business NOVATO, Calif., Sept. 29 /PRNewswire-FirstCall/ -- IMSI(R) (OTC:IMSI) (BULLETIN BOARD: IMSI) , a leading provider of house plans online and a leading developer and publisher of precision design, and consumer and business software solutions, today announced its financial results for the fiscal year ended June 30, 2005. For the twelve months ended June 30, 2005, IMSI reported a net loss of $1.8 million, or ($0.06) per share on net revenues of $13.9 million. Pro forma revenue including discontinued operations was $23.3 million versus $12.0 million reported the prior year. Net revenues increased by thirty nine percent (39%) in our core Houseplans(TM) and software businesses, as compared to the previous fiscal year, reflecting the continued growth in the Houseplans(TM) business and in software product sales led by our flagship application TurboCAD(R). The following are highlights for the fiscal year ended June 30, 2005: -- Sales from the more profitable direct marketing channel accounted for 67% of total revenues for fiscal year 2005 as compared to 51% in fiscal year 2004. -- Gross margins improved to 65% from 64% during fiscal 2005, as compared to the previous fiscal year. -- Operating loss narrowed to 29% of net revenue as compared to an operating loss of 38% of net revenue in the prior fiscal year. Non GAAP Information -- GAAP net income (loss) when adjusted for certain non-cash activity and taxes to "EBITDA" was a negative $328,000 for the fiscal year. "The Houseplans(TM) business continued to grow both organically and with the acquisition of homeplanfinder.com, and we are extremely pleased with the business' 266% annualized growth rate. In July we acquired globalhouseplans.com and expect this business to help us achieve additional significant revenue growth during 2006 in the sale of stock house plans," said Martin Wade III, Chief Executive Officer. "Our balance sheet is newly strengthened with certain discontinued operations converting to cash as a result of a sale closed in the September quarter," continued Mr. Wade. "We had approximately $4.3 million cash or cash equivalents as of June 30, 2005. This does not include the $11 million in cash and escrow from the sale of Allume subsequent to fiscal year end, which provides us with additional cash to fund our net working capital needs and planned acquisition activity. Our resulting current cash and cash equivalents balance represents a significant opportunity to invest in high-return operations during fiscal 2006." "With the annual launch of new versions of our flagship product TurboCAD(R) and with our other award winning products, we are continuing to deliver excellent products in our software business," stated Gordon Landies, IMSI President. "We continue to utilize our strengths in acquiring, developing and distributing products and services directly to consumers and businesses to generate sales momentum. Our productivity tools and precision design products, as well as our house plans business, all had solid results during fiscal 2005. In addition, we are pleased by the growth of our Houseplans(TM) network of websites which now have an online library of over 21,000 stock house plans, the largest collection of exceptional house plans online. We plan additional investments in our Houseplans(TM) business, adding properties to our network while including more features and functionality to our existing sites to increase sales and profits." In addition to disclosing results determined in accordance with generally accepted accounting principles (GAAP), IMSI also discloses non-GAAP results of operations that exclude certain items. By disclosing this non-GAAP information, management intends to provide investors with additional information to further analyze the company's performance, core results and underlying trends. Management utilizes a measure of net income on a non-GAAP basis that excludes certain charges to better assess operating performance. Non-GAAP information is not determined using GAAP; therefore, the information is not necessarily comparable to other companies and should not be used to compare the company's performance over different periods. Non-GAAP information should not be viewed as a substitute for, or superior to, net income or other data prepared in accordance with GAAP as measures of our profitability or liquidity. Users of this financial information should consider the types of events and transactions for which adjustments have been made. See the following table for a reconciliation of this non-GAAP amount to amounts reported under GAAP. EBITDA Analysis Q1 Q2 Q3 Q4 FY 2005 Net (Loss) Income - the GAAP measure ($275) $129 ($386) ($1,222) ($1,754) Interest paid 45 55 64 61 225 Taxes 5 3 2 15 25 Depreciation & Amortization 263 303 302 308 1,176 EBITDA - non-GAAP $38 $490 ($18) ($838) ($328) Notes on components of Net (Loss) Income related to transactions Income From Discontinued Operations (Allume) (68) (199) 77 564 374 Income From Discontinued Operations (Keynomics) (5) (28) (33) Total Income From Discontinued Operations ($73) ($227) $77 $564 $341 Gain from Sale of Discontinued Operations (Keynomics & Other) 52 52 Gain from Sale of Discontinued Operations (ArtToday) 1,983 1,983 Total Gain from Sale of Discontinued Operations $52 $0 $0 $1,983 $2,035 INTERNATIONAL MICROCOMPUTER SOFTWARE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (In thousands, except share amounts) June 30, 2005 ASSETS Current assets: Cash and cash equivalents $4,347 Investment in marketable securities 714 Receivables, less allowances for doubtful accounts, discounts and returns of $626 773 Inventories 758 Receivables, other (related to discontinued operations) 2,000 Receivables, other 30 Other current assets 530 Assets related to discontinued operations 12,231 Total current assets 21,383 Fixed assets, net 377 Intangible Assets Capitalized software, net 494 Domain names, net 1,574 Distribution rights, net 170 Capitalized customer lists 326 Goodwill 2,090 Trademarks 1 Total intangible assets 4,655 Total assets $26,415 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short term debt 2,764 Trade accounts payable 2,245 Accrued and other liabilities 1,871 Liabilities related to discontinued operations 1,037 Deferred revenues 38 Total current liabilities 7,955 Long-term debt and other obligations 230 Total liabilities 8,185 Shareholders' Equity Common stock, no par value; 300,000,000 authorized; 28,796,886 issued and outstanding 43,663 Accumulated deficit (25,331) Accumulated other comprehensive loss (102) Total shareholders' equity 18,230 Total liabilities and shareholders' equity $26,415 INTERNATIONAL MICROCOMPUTER SOFTWARE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE (LOSS) INCOME (In thousands, except per share amounts) Fiscal Year ended June 30, 2005 2004 Net revenues $13,874 $10,017 Product costs 4,881 3,650 Gross margin 8,993 6,367 Costs and expenses Sales and marketing 6,465 4,428 General and administrative 4,857 3,677 Research and development 1,696 2,039 Total operating expenses 13,018 10,144 Operating loss (4,025) (3,777) Other income and (expense) Interest and other, net (91) 65 Realized / unrealized gain (loss) on marketable securities (42) 2,567 Loss on disposal of fixed assets -- (13) Gain on sale of product line 53 59 Gain on extinguishment of debt -- 76 Loss before income tax (4,105) (1,023) Income tax provision 25 38 Loss from continuing operations (4,130) (1,061) (Loss) income from discontinued operations, net of income tax 341 (293) Gain from the sale of discontinued operations, net of income tax 2,035 2,000 Net (loss) income ($1,754) $646 Other comprehensive loss Foreign currency translation adjustments (32) (8) Comprehensive (loss) income ($1,786) $638 Basic earnings (loss) per share Loss from continuing operations ($0.15) ($0.04) (Loss) income from discontinued operations, net of income tax $0.01 ($0.01) Gain from the sale of discontinued operations, net of income tax $0.08 $0.08 Net (loss) income ($0.06) $0.03 Diluted earnings (loss) per share Net (loss) income from continuing operations ($0.15) ($0.04) (Loss) income from discontinued operations, net of income tax $0.01 ($0.01) Gain from the sale of discontinued operations, net of income tax $0.08 $0.08 Net (loss) income ($0.06) $0.03 Shares used in computing basic earnings (loss) per share 27,694 23,838 Shares used in computing diluted earnings (loss) per share 27,694 23,838 INTERNATIONAL MICROCOMPUTER SOFTWARE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Fiscal Year ended June 30, 2005 2004 Cash flows from operating activities: Net (loss) income ($1,754) $646 Adjustments to reconcile net income to net cash used by operating activities: Depreciation and amortization 1,176 717 Net provision for bad debt 172 -- Net provision for returns and price discounts (390) 400 Net provision for inventory obsolescence (39) 3 Extinguishment of debt -- (76) Loss (income) from discontinued operations (341) 293 Gain on the sale of discontinued operations (2,035) (2,000) Loss on disposal of assets -- 13 Gain on sale of product line (53) -- Stock based compensation charges 30 523 Gain on the sale of Design 3D -- (59) Changes in assets and liabilities: Marketable securities 3,210 (2,925) Receivables 1,027 (1,348) Receivables Other 987 (1,000) Inventories (136) (245) Other current assets (98) (185) Long term receivables -- 650 Trade accounts payable 760 872 Accrued and other liabilities 517 (643) Deferred revenue (34) (45) Operating cash provided by (used in) discontinued operations 1, 344 (288) Net cash provided by (used in) operating activities $4,343 ($4,697) Cash flows from investing activities: Proceeds from sale of discontinued operations 258 2,000 Acquisition of product lines (43) (1,290) Acquisition of subsidiary (1,328) (1,982) Purchases of equipment (120) (419) Software development costs and in-process technologies (64) (80) Purchase of domain names (9) (2) Purchase of trademark (1) -- Note to related party 371 (350) Cash provided by (used in) by discontinued operations in investing activities 471 (539) Net cash used in investing activities ($465) ($2,662) Cash flows from financing activities: Proceeds from borrowings 400 350 Repayments of notes (2,349) (536) Proceeds from warrants and options exercised 214 253 Settlement of note payable (Imageline) -- (160) Cash used in discontinued operations in financing activities (504) (150) Net cash used in financing activities ($2,239) ($243) Effect of exchange rate change on cash and cash equivalents (32) (8) Net increase (decrease) in cash and cash equivalents 1,607 (7,610) Cash and cash equivalents at beginning of year 2,740 10,350 Cash and cash equivalents at end of the year $4,347 $2,740 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 IMSI can be found at http://www.imsisoft.com/. When will a Proxy on the proposed IMSI - AccessMedia Transaction be available? In connection with the merger of International Microcomputer Software, Inc. ("IMSI") and AccessMedia Networks, Inc. ("AccessMedia"), IMSI will file a proxy statement for IMSI's special stockholder meeting with the Securities and Exchange Commission. Investors and security holders are advised to read the proxy statement when it becomes available because it will contain important information about the proposed merger. Investors and security holders may obtain a free copy of the proxy statement (when available) and other documents filed by IMSI with the Securities and Exchange Commission at the Securities and Exchange Commission's web site at http://www.sec.gov/. Free copies of the proxy statement (when available) and other documents filed by IMSI with the Securities and Exchange Commission may also be obtained from IMSI by directing a request to Investor Relations at IMSI (telephone (415) 878-4000). IMSI and its directors and its executive officers may be deemed, under SEC rules, to be soliciting proxies from IMSI's stockholders in favor of the proposed merger. Information regarding the identity of these persons, and their interests in the solicitation, will be set forth in a Schedule 14A to be filed with the SEC, and will be available free of charge at the SEC website and public reference rooms, and from the IMSI corporate secretary. 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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