20-20 Technologies Reports Results for Fiscal 2008



    LAVAL, QC, Jan. 29 /CNW Telbec/ - 20-20 Technologies Inc. (TSX: TWT), the
world leader in 3D interior design and furniture manufacturing software, today
announced its results for the fiscal year and fourth quarter ended October 31,
2008. All amounts are in U.S. dollars unless otherwise indicated. The Company
also announced that it has taken further measures to reduce costs in view of
the ongoing global economic situation.

    
    Fiscal 2008 highlights:

    - Revenues up 16.2% to $78.6 million, mainly from acquisitions and growth
      in the European manufacturing sector

    - Spending up $1.8 million due to higher Canadian/US exchange rate

    - Operating loss of $2.7 million including restructuring charge of
      $2.3 million

    - Additional cost alignment measures to result in $3.4 million in
      projected annualized savings in addition to $6.1 million in savings
      announced in third quarter
    

    "While we maintain the market share and competitive position that
identify 20-20 as the leader in our industry worldwide, those continuing
positives do not compensate for the negative result on our bottom line," said
Jean Mignault, Co-Chairman of the Board and CEO. "Accordingly, as announced,
we continue to implement the measures required to maintain a reasonable EBITDA
given the current economic conditions."
    Jean-Francois Grou, President and COO, elaborated: "The past year clearly
represented a challenge for 20-20. As residential property values fell in the
U.S., homeowners declined to invest in renovations. Since 20-20's main market
for new software license sales derives from kitchen and bath remodeling
projects, our profitability was severely affected."
    "In response," said Mr. Grou, "20-20 implemented a major restructuring
and continued to align its costs with revenues while creating a more
integrated organization. Already in 2008, our workforce was downsized by 13%.
We instituted a program of ongoing expense control and in these past weeks
undertook additional cost saving measures. We are continuously monitoring our
revenue forecasts to quickly react to any market trend that might arise in
order to ensure the financial strength of the Company. We postponed or reduced
all projects that do not carry short term potential. These and other measures
relate to the Company's top priorities of sales execution, EBITDA generation
and a return to profitability."
    Since the beginning of this year, we implemented diverse measures such as
unpaid leave of absence, permanent and temporary layoffs and work sharing and
government training programs, mostly in North America and in other regions of
the world in response to local economic conditions.

    YEAR-END RESULTS

    Annual revenues grew by 16.2% to $78.6 million in fiscal 2008, compared
with $67.6 million a year ago. Acquisitions made during the year contributed
$12.4 million whereas, organically, revenues were down slightly, reflecting
more difficult conditions in North America caused by a weak housing and
renovation market. Europe accounted for 42.0% of revenues or $33.0 million for
the year, with 63.5% growth driven by the addition of Planit(*) Fusion and by
organic growth of 15.0% in part due to currency gains. North American revenues
were down 5.8% to $44.2 million.
    Revenues from license sales increased by 7.8% or $1.9 million, to $26.4
million in fiscal 2008. Maintenance and other recurring revenues increased by
23.8%, or $6.8 million, to $35.4 million. Finally, revenues from professional
services increased by 15.5% or $2.3 million, to $16.8 million.
    The Company incurred an operating loss of $2.7 million for fiscal 2008,
compared with an operating loss of $7.5 million last year. Adjusted operating
income stood at $2.6 million in fiscal 2008, versus $7.3 million a year
earlier. This decrease is mainly due to expensed R&D costs in fiscal 2008,
which were capitalized in 2007, to increased amortization of acquisition
intangibles and to the negative effect on expenses due to a stronger Canadian
dollar versus fiscal 2007. EBITDA decreased to $4.3 million for the year from
$12.7 million a year ago.
    On June 11, 2008, the Company approved and initiated a restructuring plan
to restore profitability and align its cost structure to the realities of
current market conditions in North America, as well as to benefit from cost
synergies related to its recent acquisitions. Additional measures were
approved on October 15, 2008, to further adjust the cost structure due to
deteriorating market conditions. As a result, restructuring charges totaling
$2.3 million were recognized in fiscal 2008 primarily related to employee
severance.
    The Company incurred a net loss of $1.8 million for the year, or $0.09
per share, compared with a net loss of $5.2 million, or $0.28 per share, a
year ago. A translation gain of $220,000 was recorded in fiscal 2008 (2007 -
exchange loss of $1.5 million) relating principally to 20-20's net monetary
asset holdings in foreign currency.
    The balance sheet remained strong with cash, cash equivalents and
short-term investments totaling $15.1 million and a long-term debt, including
installments due within one year, of $15.6 million.

    FOURTH QUARTER RESULTS

    Fourth quarter revenues increased 11.2% to $19.6 million from $17.6
million in 2007. Acquisitions made during the year contributed $3.5 million
whereas, organically, revenues were down by approximately $1.5 million.
European revenues increased by $2.7 million or 54.6% compared with the same
period in 2007 reflecting acquisitions and, to a lesser extent, currency
gains. As a result, Europe accounted for 39.6% of revenues in the fourth
quarter of fiscal 2008, up from 28.5% a year earlier. Revenues generated in
North America were down approximately 9.0% versus last year owing to weaker
market conditions.
    In the fourth quarter, license sales increased by 7.2%, or $0.5 million,
over last year, maintenance and other recurring revenues increased by 11.0%,
or $0.9 million, while revenues from professional services increased by 18.7%,
or $0.7 million, to $4.2 million.
    The operating loss in the fourth quarter was $0.5 million, compared with
a loss of $11.5 million a year ago. During the fourth quarter of fiscal 2008,
the Company recorded a $1.4 million charge related to its operational
restructuring plan, whereas the fourth quarter of fiscal 2007 was marked by
the write-off of development costs amounting to $12.6 million. Adjusted
operating income reached $1.6 million in the fourth quarter of 2008 versus
$1.9 million a year earlier. EBITDA reached $2.0 million, down from $3.2
million a year ago. Despite these year-over-year reductions, the Company
generated significantly higher EBITDA and adjusted operating margins in
comparison with the third quarter of fiscal 2008.
    For the fourth quarter, the net loss was $0.8 million, or $0.04 per
share, compared with $8.3 million, or $0.44 per share, for the same period in
2007.

    KEY EVENTS OF Q4

    A number of developments in the fourth quarter of 2008 reflects and
further illustrates 20-20's global leading market position and the value of
its technology to the supply chain of the interior design industry:

    
    - BrandSource (USA), the $11 billion-dollar appliance, consumer
      electronics and home furnishings buying organization, selected 20-20
      Design software as the preferred tool for BrandSource Home Gallery, its
      new retail entity. The Home Gallery offers in one location everything
      the remodeling customer requires, including flooring, kitchen and bath
      products, as well as expert design and installation services.

    - Global E-Sourcing Inc., the interior design industry's leading provider
      of business solutions for countertop fabricators, opted to integrate
      its web-based order management and scheduling system with 20-20
      Countertop Design Module. This strategic partnership allows both
      organizations to leverage their core competencies, technologies, and
      people, thereby providing industry-specific products for countertop
      manufacturers, fabricators, retailers, and dealers.

    - 20-20 Technologies completed its end-to-end software offering for the
      fast-growing Chinese furniture manufacturing market, with every element
      of the solution available in Chinese. This makes it possible for
      manufacturers in China to design, sell, manufacture and manage on a
      digital platform entirely provided by 20-20. The Chinese manufacturers
      can thus significantly extend their reach by creating 3D electronic
      catalogs compatible with 20-20 Design, the Company's flagship software
      which is used by thousands of dealers worldwide.

    - 20-20 Icovia, recently announced that four of the flagship companies of
      US-based Furniture Brands International - Broyhill, Drexel Heritage,
      Lane, and Thomasville - have adopted Icovia 2D Business Edition as
      their exclusive online interior design and space planning solution for
      their furniture retailers' websites.

    - Home Hardware Stores Limited (Canada) announced last week the launch of
      20-20 Technologies' Virtual Planner, a fully interactive 3D Web
      visualization and space-planning tool, now available on its corporate
      website. The Home Hardware Virtual Planner will act to attract and
      retain customers by offering an online kitchen or closet planning and
      decorating service as a lead-in to an in-store visit.

    - 20-20 Technologies recently signed an agreement with the well-
      established leading Austrian office furniture manufacturer Mobelwerk
      Svoboda. Enterprise inSight will replace Svoboda's legacy ERP system
      and will support all business processes from order entry through
      engineering configuration into shop floor execution in order to achieve
      reliable, flexible and lean processes.
    

    OUTLOOK

    "We expect that the economic conditions prevalent in North America will
persist or could further deteriorate in 2009, and that recessionary conditions
in Europe will also maintain their hold," said Mr. Grou. "Nevertheless, the
expense control measures and our highly disciplined approach to execution
should position us strongly for the recovery. The current market decline has
not affected our well established strategic position, nor has it changed in
any way our long term objectives. We continue to invest selectively in R&D,
serve our customers and raise the bar for our competition. Once the upturn
begins, we are confident that the entrenched lead and efficiency worldwide of
20-20 will help us deliver the value that our shareholders deserve."

    CONFERENCE CALL INFORMATION

    20-20 will host a conference call to discuss these results today, January
29, 2009 at 2 p.m. (EST). The call will be accessible by telephone at
514-807-8791 and 1-800-731-5319. The call will be webcast at
www.2020Technologies.com on the Investors page, Presentations & Webcasts
section. An audio replay of the conference call will be available until
midnight on Thursday, February 5, 2009. To access it, dial 416-640-1917 or
1-877-289-8525 and enter the pass code: 21296197#.
    Please note that 20-20 Technologies' full financials and MD&A are
available on SEDAR as well as on the Company's web site,
www.2020technologies.com.

    ABOUT 20-20 TECHNOLOGIES INC.

    20-20 Technologies is the world's leading provider of computer-aided
design, business and manufacturing software solutions tailored for the
interior design and furniture industries. Dealers and retailers use its
desktop and Web-based products and solutions for the residential and
commercial markets. 20-20 offers a unique proprietary end-to-end solution,
integrating the entire breadth of functions in interior design. It provides a
bridge for data communication from the point-of-sale to manufacturing and
world-leading enterprise resource planning (ERP) systems, including
computer-aided engineering and plant floor automation software. Operating in
12 countries with more than 590 employees, 20-20 is a publicly traded company
(TWT) on the Toronto Stock Exchange (TSX). For more information, visit
www.2020Technologies.com.

    NON-GAAP MEASURES

    References in this press release to the term "EBITDA" are related to cash
earnings. EBITDA is defined for these purposes as Operating Income before
restructuring charges plus amortization and depreciation expenses, less
capitalized development costs. EBITDA is not a recognized measure under GAAP
in Canada and may not be comparable to similar measures used by other
companies.
    Reference in this press release to the term "Adjusted operating income"
is defined for these purposes as operating income excluding stock-based
compensation, amortization of business acquisition-related intangibles and
development costs, and non-recurring items. Adjusted operating income is a
supplemental measure and should not be construed as an alternative to
operating income as defined under Canadian GAAP as a measure of profitability.
Our method of measuring adjusted operating income is unlikely to be comparable
to similar measures provided by other companies.

    FORWARD-LOOKING STATEMENTS

    Certain statements contained in this news release constitute
forward-looking information within the meaning of securities laws.
    Implicit in this information, particularly in respect of future operating
results and economic performance of the Company are assumptions regarding
projected revenue and expenses. These assumptions, although considered
reasonable by the Company at the time of preparation, may prove to be
incorrect. Readers are cautioned that actual future operating results and
economic performance of the Company are subject to a number of risks and
uncertainties, including general economic, market and business conditions and
could differ materially from what is currently expected.
    For more exhaustive information on these risks and uncertainties, please
refer to our most recently filed annual information form, available at
www.sedar.com. Forward-looking information contained in this report is based
on management's current estimates, expectations and projections, which
management believes are reasonable as of the current date. You should not
place undue importance on forward-looking information and should not rely upon
this information as of any other date. While we may elect to do so, we are
under no obligation and do not undertake to update this information at any
particular time unless required by applicable securities law.

    
    (i) Planit is a trademark of Planit Holdings Limited (used with
        permission).


    20-20 Technologies Inc.
    CONSOLIDATED BALANCE SHEETS
    (Amounts in thousands of U.S. dollars)

    -------------------------------------------------------------------------
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                                                                  October 31,
    -------------------------------------------------------------------------
                                                            2008        2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                               $           $
    ASSETS
    Current assets
     Cash and cash equivalents                            13,487      25,280
     Short-term investments                                1,644      18,495
     Accounts receivable                                  17,856      16,629
     Income taxes receivable                                 585           -
     Contracts in progress                                   267         378
     Prepaid expenses                                      1,244       1,949
     Future income taxes                                     598         167
    -------------------------------------------------------------------------
                                                          35,681      62,898
    Property and equipment                                 2,894       3,941
    Intangibles                                           10,417       5,665
    Goodwill                                              52,367      29,407
    Future income taxes                                    1,409         995
    Other assets                                             519       1,157
    -------------------------------------------------------------------------
                                                         103,287     104,063
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES
    Current liabilities
     Accounts payable                                     12,665       9,885
     Income taxes payable                                  1,465         355
     Deferred revenue                                     12,481      15,384
     Installment on long-term debt                         3,805          54
     Future income taxes                                       -          70
    -------------------------------------------------------------------------
                                                          30,416      25,748
    Long-term debt                                        11,824         463
    Leasehold inducements                                    364         410
    Non-controlling interest                                  33           -
    Future income taxes                                    3,756       1,807
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                          46,393      28,428
    -------------------------------------------------------------------------
    SHAREHOLDERS' EQUITY
    Capital stock                                         58,647      58,183
    Common stock options                                   1,145       1,600
    Contributed surplus                                      961         963

    Deficit                                               (6,367)     (4,474)
    Accumulated other comprehensive income                 2,508      19,363
                                                      -----------------------
                                                          (3,859)     14,889
    -------------------------------------------------------------------------
                                                          56,894      75,635
    -------------------------------------------------------------------------
                                                         103,287     104,063
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    20-20 Technologies Inc.
    CONSOLIDATED EARNINGS
    (Amounts in thousands of U.S. dollars, except per-share data)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                      Years ended October 31,
    -------------------------------------------------------------------------
                                                            2008        2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                               $           $
    Revenues
      License sales                                       26,392      24,488
      Maintenance and other recurring revenues            35,368      28,562
      Professional services                               16,842      14,577
    -------------------------------------------------------------------------
                                                          78,602      67,627
    -------------------------------------------------------------------------
    Cost of revenues
      License sales                                        2,854       2,720
      Maintenance and services                            18,756      15,719
    -------------------------------------------------------------------------
                                                          21,610      18,439
    -------------------------------------------------------------------------
    Gross margin                                          56,992      49,188
    -------------------------------------------------------------------------
    Operating expenses
      Sales and marketing                                 26,015      21,305
      Research and development                            16,945      10,200
      General and administrative                          14,420      12,267
      Stock-based compensation                               (27)        351
      Restructuring costs                                  2,329           -
      Unusual item - write-off of development costs            -      12,558
    -------------------------------------------------------------------------
                                                          59,682      56,681
    -------------------------------------------------------------------------
    Operating loss                                        (2,690)     (7,493)

    Financial expenses                                       358         407
    Non-controlling interest                                  28           -
    -------------------------------------------------------------------------
    Loss before income taxes                              (3,076)     (7,900)
    -------------------------------------------------------------------------
    Income taxes
      Current                                                735         222
      Future                                              (2,030)     (2,873)
    -------------------------------------------------------------------------
                                                          (1,295)     (2,651)
    -------------------------------------------------------------------------
    Net loss                                              (1,781)     (5,249)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Loss per share
      Basic and diluted                                    (0.09)      (0.28)
    -------------------------------------------------------------------------


    20-20 Technologies Inc.
    CONSOLIDATED CASH FLOWS
    (Amounts in thousands of U.S. dollars)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                      Years ended October 31,
    -------------------------------------------------------------------------
                                                            2008        2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                               $           $
    OPERATING ACTIVITIES
    Net loss                                              (1,781)     (5,249)
    Non-cash items
      Amortization                                         4,687       7,669
      Unusual item - write-off of developments costs           -      12,558
      Leasehold inducements                                   53          39
      Stock-based compensation                              (115)        317
      Capitalized interest on long-term debt                  27          22
      Future income taxes                                 (2,030)     (2,873)
      Unrealized loss (gain) on foreign exchange           3,215         (68)
      Unrealized loss (gain) on forward exchange
       contracts and currency options                        143        (455)
      Changes in working capital items                       685      (1,354)
    -------------------------------------------------------------------------
    Cash flows from operating activities                   4,884      10,606
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Business acquisitions                                (40,765)       (948)
    Short-term investments                               (24,790)    (15,942)
    Short-term investments dispositions                   39,998      30,472
    Property and equipment                                (1,103)     (1,163)
    Intangible assets                                          -      (6,269)
    Other assets                                            (124)        (84)
    -------------------------------------------------------------------------
    Cash flows from investing activities                 (26,784)      6,066
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Long-term debt                                        15,000           -
    Repayment of long-term debt                             (203)        (51)
    Options exercised                                        118          82
    Common shares buyback                                   (280)       (369)
    -------------------------------------------------------------------------
    Cash flows from financing activities                  14,635        (338)
    -------------------------------------------------------------------------

    Effect of changes in exchange rate on cash held
     in foreign currencies                                (4,528)      3,609
    -------------------------------------------------------------------------
    Net increase (decrease) in cash and cash
     equivalents                                         (11,793)     19,943
    Cash and cash equivalents, beginning of year          25,280       5,337
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of year                13,487      25,280
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

For further information: Media Relations: Rick Leckner, MaisonBrison,
Montréal: (514) 731-0000

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