Absolute Software Reports Fiscal 2009 Year-End Results



    
    Absolute issues Sales Contract and Cash from Operating Activities
    guidance for F2010
    

    VANCOUVER, Aug. 25 /CNW/ - Absolute(R) Software Corporation ("Absolute"
or the "Company") (TSX: ABT), the leading provider of firmware-based,
patented, computer theft recovery, data protection and secure IT asset
management solutions announces its financial results for the three- and
twelve-month periods ended June 30, 2009. All dollar amounts are in Canadian
dollars unless otherwise stated.

    
    -------------------------------------------------------------------------
    Key Financial Metrics   Q4 F2009  Q4 F2008    %     F2009   F2008    %
                                                change                 change
    -------------------------------------------------------------------------
    Sales Contracts
     reported(1.a)            $20.2M    $21.5M    -6%  $71.9M  $72.5M    -1%
    -------------------------------------------------------------------------
    Sales Contracts in
     constant currency(1.b)   $17.7M    $21.5M   -17%  $62.9M  $72.5M   -13%
    -------------------------------------------------------------------------
    Cash from Operating
     Activities(1.a)           $2.1M     $5.4M   -60%  $17.4M  $30.0M   -42%
      Per share (Basic)        $0.05     $0.11   -58%   $0.37   $0.64   -72%
      Per share (diluted)      $0.05     $0.11   -55%   $0.36   $0.60   -40%
    -------------------------------------------------------------------------
    Revenue                   $14.3M    $11.2M   +28%  $53.2M  $37.9M   +41%
    -------------------------------------------------------------------------
    Net Income (loss)         $16.5M    ($2.3M)  N/A%  ($2.3M) ($8.4M)  +72%
      Per share (basic)        $0.36    ($0.05)  N/A%  ($0.05) ($0.18)  +67%
      Per Share (diluted)      $0.35    ($0.05)  N/A%  ($0.05) ($0.18)  +67%
    -------------------------------------------------------------------------
    Cash, cash equivalents
     and investments
     (including long term)                             $68.9M  $64.0M    +8%
    -------------------------------------------------------------------------
    Deferred revenue, net                              $95.9M  $79.5M   +21%
    -------------------------------------------------------------------------

    Fiscal 2009 Highlights:

    -  Increased contracted subscription base by 26% to 4.1 million
       computers, from 3.3 million at the end of F2008
    -  Expanded retail reach with Computrace(R) LoJack(R) for Laptops being
       rolled out to 1,010 Best Buy U.S. stores and online at bestbuy.com
    -  Released IT Asset Management and Theft Recovery Solutions for netbooks
    -  Added Wi-Fi geo-location tracking to the Computrace line of products
    -  Announced general availability of Computrace with Intel's Anti Theft
       technology on Lenovo Think Pad T400 notebooks
    -  Launched a new Global Customer Center with multi-lingual capability
       enhanced security and management features
    -  Launched Computrace Mobile for the BlackBerry(R) platform, which
       provides asset management, data protection and geo-location tracking
    -  Launched Computrace LoJack for Laptops in Europe
    -  Announced BIOS firmware support for the Computrace line of products
       with select Acer, ASUS and Getac laptop and notebook models
    -  Purchased 3.26 million shares during F2009 under the company's normal
       course issuer bid, at a total cost of $10.6 million
    

    "In fiscal 2009, despite it being a challenging year economically, we
made strategic investments in our product, personnel, partner relationships
and geographic reach in order to enhance our positioning for future growth,"
said John Livingston, Chairman and CEO of Absolute. "As a result, we ended the
year with renewed momentum throughout the business and we have firmly
established Absolute as the industry leader capable of providing a diversified
suite of asset management, data security and theft protection solutions."
    Mr. Livingston added: "With our extensive partnership network, we have
one of the software industry's broadest international footprints on desktop,
notebook and netbook computers. Our solutions provide clients with a permanent
tether to their devices that allows them to deploy a variety of services to
track, manage and protect digital assets, both pre- and post-theft. In fiscal
2010 and beyond, we will continue to leverage our footprint and our unique
technology capabilities to launch new services, expand our global presence and
capitalize on our growing market opportunity."

    Financial Review

    Sales Contracts(1.a), a non-standard measure under Canadian Generally
Accepted Accounting Principals ("GAAP"), totaled $71.9 million in F2009, down
1% compared to $72.5 million in F2008. Sales Contracts for Q4-F2009 totaled
$20.2 million, down 6% compared to $21.5 million in Q4-F2008. A majority of
Absolute's sales are denominated in U.S. dollars and therefore, periodic
fluctuations in the US/Canadian exchange rate can impact reported Sales
Contract levels. In constant dollar terms, Sales Contracts declined 13% for
F2009 and 17% for Q4-F2009 compared to the same periods last year. The
declines from the prior periods in constant dollar terms are primarily due to
reduced consumer sales (down 43% for the year in constant dollars) from a
bundle sales program with one PC OEM partner. In addition, commercial sales
were down 5% for the year in constant dollars (up 9% in Canadian dollars)
primarily due to reduced U.S. federal government sales and new customer
adoption due to the challenging economy. Conversely, commercial sales to
existing customers continued to show strength, generating sales of $52.5
million for the year, up 23% (8% in U.S. dollars) compared to $42.6 million in
fiscal 2008. On a sequential basis, Q4-F2009 sales increased 20% (30% in U.S.
dollars) due to seasonally strong commercial sales.
    As a software-as-a-service ("SaaS") company, Absolute considers Cash from
Operating Activities one of its key financial metrics. For F2009, Cash from
Operating Activities was $17.4 million, compared to $30.0 million in F2008.
Absolute's Cash from Operating Activities for Q4-F2009 totaled $2.1 million
compared to $5.4 million in Q4-F2008.
    "Having navigated through a challenging economic environment, we view
fiscal 2009 as an important year of investment and planning for strong future
growth," said Rob Chase, CFO of Absolute. "We continue to believe that the
long term opportunity for Absolute is significant and expanding, and that our
computer security management solutions are a "must-have" in our increasingly
mobile world. Supported by our investment in fiscal 2009 as well as our
ongoing sales and marketing and product development initiatives, in fiscal
2010 we expect to resume our Sales Contract growth. However, as we continue to
invest significantly for future growth, and given the current economic
conditions, we are expecting reduced cash flow in fiscal 2010."
    Revenue for F2009 was $53.2 million, an increase of 41% from $37.9
million in F2008. Revenue in Q4-F2009 increased 28% to $14.3 million, compared
to $11.2 million in Q4-F2008. Revenue is a lagging performance indicator as it
is a function of deferred revenue as opposed to sales in the quarter. The
majority of all of the revenue from Q4-F2009 Sales Contracts is included in
deferred revenue on the balance sheet at June 30, 2009, which climbed to $95.9
million, compared to $79.5 million at June 30, 2008.
    For Q4-F2009, Absolute generated operating income, excluding stock-based
compensation and investment tax credits, of $101,000, compared to a loss of
$792,000 in Q4-F2008. For fiscal 2009, Absolute generated an operating loss,
excluding stock-based compensation and investment tax credits, of $3.8
million, compared to $3.2 million in fiscal 2008. The operating income in
Q4-F2009 is due to adjustments for positive warranty experience which
benefited Q4-F2009, offset by an increase in bad debt provisions. The
increased operating loss for fiscal 2009 reflects the revenue increase offset
by increased operating costs resulting from Absolute's investment in sales and
marketing and research and development.
    The GAAP net income in Q4-F2009 was $16.5 million ($0.36 earnings per
share) compared to a net loss of $2.3 million ($0.05 loss per share) in
Q4-F2008. The net income for Q4-F2009 was due to a $16.8 million income tax
recovery for future income tax assets. For fiscal 2009, net loss decreased to
$2.3 million ($0.05 loss per share), compared to $8.4 million ($0.18 loss per
share) in fiscal 2008. The year-over-year decrease is primarily due to the
income tax benefits recorded in Q4, offset by a one time $12.0 million
stock-based compensation charge incurred in Q2-F2009 for the cancellation of
2.9 million employee stock options.
    Absolute is in a strong financial position. The Company is generating
positive operating cash flow, has no debt and has the financial resources
necessary to fund its operating and capital requirements and to execute on its
growth strategies. Accordingly, the company launched a normal course issuer
bid in November 2008 for the repurchase and retirement of up to 4.2 million of
Absolute's shares. Under this bid, Absolute has repurchased 3.26 million
shares for a total of $10.6 million. After the share repurchase, at June 30,
2009, Absolute's cash, cash equivalents and investments (including long term)
were $68.9 million, compared to $64.0 million at June 30, 2008.

    
    Guidance

    With today's announcement, based on current U.S. dollar exchange rates of
$1.10, Absolute is issuing F2010 financial guidance of:
      -  Sales Contracts of $80-86 million
      -  Cash from Operations of $12-15 million

    Management's discussion and analysis (MD&A), consolidated financial
statements and notes thereto for the first quarter can be obtained today from
Absolute's corporate website at www.absolute.com. The documents will also be
available at www.sedar.com.

    Notice of Conference Call

    Absolute Software will hold a conference call to discuss the contents of
this release on Tuesday August 25, 2009 at 8:30 a.m. ET (5:30 a.m. PT). All
interested parties can join the call by dialing 416-644-3414 or
1-800-733-7560. Please dial-in 15 minutes prior to the call to secure a line.
The conference call will be archived for replay until Tuesday, September 1,
2009 at midnight. To access the archived conference call, please dial
416-640-1917 or 1-877-289-8525 and enter the reservation code 21311364
followed by the number sign.
    A live audio webcast of the conference call will be available at
www.absolute.com and www.newswire.ca. Please connect at least 15 minutes prior
to the conference call to ensure adequate time for any software download that
may be required to join the webcast. An archived replay of the webcast will be
available for 365 days.

    (1.a) Absolute refers to "Sales Contracts" (invoiced sales) as a revenue
    measure, "Cash from Operations" as a profitability measure, and "Basic
    and Diluted Operating Cash per Share" (Cash from Operations divided by
    the average shares outstanding for the period; diluted calculated using
    the treasury stock method) as an earnings per share measure. With the
    exception of Cash from Operations, these are non-standard measures under
    Canadian Generally Accepted Accounting Principals. Absolute considers
    these measures to be key performance metrics as substantially all Sales
    Contracts in each quarter are deferred on the balance sheet, while the
    related costs are expensed in that same quarter. Refer to the Business
    Model section in our Management Discussion and Analysis for more details.

    (1.b) Sales Contracts in constant currency refers to the Canadian dollar
    sales that would have been reported had the U.S. dollar exchange rate
    been unchanged from the rate in the prior year. With approximately 95% of
    Sales Contracts in U.S. dollars management believes this to be a more
    meaningful evaluation of the underlying performance of the business.
    

    About Absolute Software

    Absolute Software Corporation (TSX: ABT) is the leader in computer theft
recovery, data protection and Secure Asset Tracking(R) solutions. Absolute
Software provides organizations and consumers with solutions in the areas of
regulatory compliance, data protection and theft recovery. The Company's
Computrace software is embedded in the firmware of computers by global
leaders, including ASUS, Dell, Fujitsu, General Dynamics Itronix, HP, Lenovo,
Motion, Panasonic and Toshiba, and the Company has reselling partnerships with
these OEMs and others, including Apple. For more information about Absolute
Software and Computrace, visit www.absolute.com and http://blog.absolute.com.

    Forward-Looking Statements

    This press release contains forward-looking statements that involve risks
and uncertainties. These forward-looking statements relate to, among other
things, a continuing, or increased need for data protection and theft recovery
services in difficult economic times, the attainment of certain subscription
targets, attach rates and company performance, the increased adoption of the
Company's data protection and theft deterrence products, the ability of the
Company to achieve its fiscal 2010 Sales Contracts and cash from operating
activities guidance, the ability of the Company to successfully execute on its
growth strategies, including attracting new distribution partners,
continuation of embedded firmware support from its current and anticipated PC
OEM partners, the demand for its products continuing to increase, stable
currency valuations and a sufficiently stable and healthy global economic and
business environment, and other expectations, intentions and plans contained
in this press release that are not historical fact. When used in this press
release, the words "plan," "expect," "believe," and similar expressions
generally identify forward-looking statements. These statements reflect
Absolute's current expectations. They are subject to a number of risks and
uncertainties, including, but not limited to, changes in technology and
general market conditions. In light of the many risks and uncertainties you
should understand that Absolute cannot assure you that the forward-looking
statements contained in this press release will be realized.

    
    (C)2009 Absolute Software Corporation. All rights reserved. Computrace,
    Secure Asset Tracking and Absolute are registered trademarks of Absolute
    Software Corporation. All other trademarks are property of their
    respective owners. Computrace U.S. patents No. 5,715,174, No. 5,764,892,
    No. 5,802,280, No. 5,896,497, No. 6,244,758, No. 6,269,392, No.
    6,300,863, and No. 6,507,914. Canadian patents No. 2,284,806 and No.
    2,205,370. U.K. patents No. EP793823 and No. GB2338101. German patent No.
    695 125 34.6-08. Australian patent No. 699045. Japanese patent No.
    JP4067035. The Toronto Stock Exchange has neither approved nor
    disapproved of the information contained in this news release.


    ABSOLUTE SOFTWARE CORPORATION
    Consolidated Balance Sheets (Unaudited)
    (Expressed in Canadian dollars)
    -------------------------------------------------------------------------
                                                             As At
                                                      June 30,       June 30,
                                                         2009           2008
                                                 -------------  -------------
    ASSETS

    CURRENT
      Cash and cash equivalents                  $ 56,078,004   $ 46,460,299
      Short-term investments                        8,743,861     10,488,167
      Accounts receivable, net of allowance
       for doubtful accounts of $715,000
       (2007 - $20,000)                            15,570,780     18,396,731
      Prepaid expenses and deposits                   974,564        906,792
      Current portion of deferred
       contract costs                               3,609,944      3,086,833
      Current portion of future income
       tax assets                                  10,646,521      1,341,691
    -------------------------------------------------------------------------
                                                   95,623,674     80,680,513
    INVESTMENTS                                     4,076,211      7,016,074
    DEFERRED CONTRACT COSTS                         3,765,717      3,212,827
    PROPERTY AND EQUIPMENT                          2,644,275      1,971,003
    FUTURE INCOME TAX ASSETS                       11,081,073      1,512,970
    INTANGIBLE ASSET                                  127,775        255,549
    -------------------------------------------------------------------------
                                                 $117,318,725   $ 94,648,936
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    CURRENT
      Accounts payable and accrued
       liabilities                               $  6,775,466   $  6,240,941
      Income tax payable                         $  1,575,000   $          -
      Current portion of accrued warranty           5,288,520      5,448,513
      Current portion of deferred revenue          46,577,880     37,527,453
    -------------------------------------------------------------------------
                                                   60,216,866     49,216,907
    ACCRUED WARRANTY                                5,963,650      6,396,080
    DEFERRED REVENUE                               49,278,726     41,934,880
    -------------------------------------------------------------------------
                                                  115,459,242     97,547,867
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY (DEFICIENCY)

    Share capital and other equity                 41,988,977     41,915,225
    Contributed surplus                            26,822,975     11,938,462
    Deficit                                       (66,952,469)   (56,752,618)
    -------------------------------------------------------------------------
                                                    1,859,483     (2,898,931)
    -------------------------------------------------------------------------
                                                 $117,318,725   $ 94,648,936
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ABSOLUTE SOFTWARE CORPORATION
    Consolidated Statements of Income (Loss)
    Three and twelve months ended June 30, 2009 and 2008
    (Expressed in Canadian dollars)
    -------------------------------------------------------------------------

                           Three Months                  Twelve Months
                           2009           2008           2009           2008
                   -------------  -------------  -------------  -------------

    REVENUE          14,330,961     11,215,693     53,218,894     37,853,404

    COST OF SALES     1,278,594      2,880,408     11,733,139     11,459,549
    -------------------------------------------------------------------------

    GROSS MARGIN     13,052,367      8,335,285     41,485,755     26,393,855
    -------------------------------------------------------------------------

    EXPENSES
      Sales and
       marketing      7,479,674      5,717,932     29,039,585     18,078,427
      Research and
       development    2,014,294      1,559,400      7,259,803      4,782,038
      General and
       adminis-
       tration        3,457,514      1,850,438      8,951,743      6,686,105
      Investment
       tax credits   (2,225,000)    (1,400,000)    (3,000,000)    (1,400,000)
      Stock-based
       compensation     642,213      1,592,734     15,792,738      4,948,972
    -------------------------------------------------------------------------
                     11,368,695      9,320,504     58,043,869     33,095,542
    -------------------------------------------------------------------------
    OPERATING
     INCOME (LOSS)    1,683,672       (985,219)   (16,558,114)    (6,701,687)
    -------------------------------------------------------------------------

    OTHER INCOME
     (EXPENSE)
      Interest and
       bank charges     151,317        503,122      1,384,195      1,885,071
      Foreign
       exchange
       (loss) gain     (888,443)        81,808      1,407,946       (805,115)
      Gain (loss)
       on foreign
       exchange
       contracts        663,000              -       (849,500)             -
      Restructuring
       charges                -              -       (989,132)             -
      Write-down of
       investment      (197,569)      (526,586)      (952,023)    (1,369,786)
    -------------------------------------------------------------------------
                       (271,695)        58,344          1,486       (289,830)
    -------------------------------------------------------------------------
    LOSS FOR PERIOD
     BEFORE INCOME
     TAXES            1,411,977       (926,875)   (16,556,628)    (6,991,517)
    CURRENT INCOME
     TAX EXPENSE     (1,700,000)    (1,400,000)    (4,575,000)    (1,400,000)
    FUTURE INCOME
     TAX RECOVERY    16,772,933              -     18,872,933              -
    -------------------------------------------------------------------------
    NET INCOME
     (LOSS) FOR
     THE PERIOD      16,484,910     (2,326,875)    (2,258,695)    (8,391,517)
    DEFICIT,
     BEGINNING
     OF PERIOD      (83,437,379)   (54,425,743)   (56,752,618)   (48,361,101)
    ADJUSTMENT
     RELATED TO
     SHARE
     REPURCHASE               -              -     (7,941,156)             -
    -------------------------------------------------------------------------
    DEFICIT, END
     OF PERIOD     $(66,952,469)  $(56,752,618)  $(66,952,469)  $(56,752,618)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    BASIC EARNINGS
     (LOSS) PER
     SHARE         $       0.36   $      (0.05)  $      (0.05)  $      (0.18)
    DILUTED
     EARNINGS
     (LOSS) PER
     SHARE         $       0.35   $      (0.05)  $      (0.05)  $      (0.18)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    WEIGHTED
     AVERAGE NUMBER
     OF COMMON
     SHARES
     OUTSTANDING:
      BASIC          45,477,754     47,666,899     47,057,386     47,160,094
      DILUTED        47,106,085     47,666,899     47,057,386     47,160,094
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ABSOLUTE SOFTWARE CORPORATION
    Consolidated Statements of Cash Flows
    Three and twelve months ended June 30, 2009 and 2008
    (Expressed in Canadian dollars)
    -------------------------------------------------------------------------

                           Three Months                 Twelve Months
                           2009           2008           2009           2008
                    ------------   ------------   ------------   ------------
    OPERATING
     ACTIVITIES
      Net income
       (loss) for
       the period   $16,484,910    $(2,326,875)   $(2,258,695)   $(8,391,517)
      Items not
       involving
       cash
        Amortization
         of property
         and
         equipment      446,333        249,571      1,238,643        813,597
        Stock-based
         compensation   642,213      1,592,734     15,792,738      4,948,972
        Amortization
         of intangible
         asset           31,943         31,944        127,775        127,775
        Future
         income
         taxes      (16,772,933)             -    (18,872,933)             -
        Write-down
         (write-up)of
         investment     197,569        526,586        952,023      1,369,786
        Realized loss
         (gain) on
         foreign
         exchange
         contract       (38,000)             -        849,500              -
      Change in
       non-cash
       operating
       items
        Accounts
         receivable  (2,145,301)    (6,931,554)     2,825,950     (6,740,471)
        Prepaid
         expenses
         and deposits  (165,111)      (577,905)       (67,772)      (121,055)
        Deferred
         contract
         costs         (292,675)      (893,188)    (1,076,001)    (1,675,620)
        Accounts
         payable and
         accrued
         liabilities    133,709      3,629,144        534,524      4,069,096
        Income tax
         payable       (525,000)             -      1,575,000              -
        Accrued
         warranty    (2,806,810)     1,231,354       (592,423)     3,839,542
        Deferred
         revenue      6,959,134      8,819,761     16,394,273     31,782,978
    -------------------------------------------------------------------------
    CASH FROM
     OPERATING
     ACTIVITIES       2,149,981      5,351,572     17,422,602     30,023,083
    -------------------------------------------------------------------------

    INVESTING
     ACTIVITIES
      Property and
       equipment
       purchased       (670,343)      (469,789)    (1,911,915)    (1,580,581)
      Realized gain
       (loss) on
       foreign
       exchange
       contract          38,000              -       (849,500)             -
      Proceeds from
       maturities of
       short term
       investments    5,590,000      9,414,988     15,570,571     31,672,314
      Purchases of
       short term
       investments   (5,646,510)      (486,001)   (14,778,288)   (16,413,299)
      Proceeds from
       maturities of
       investments       38,061              -      8,375,000              -
      Purchases of
       investments            -     (4,161,907)    (5,435,137)    (7,016,074)
    -------------------------------------------------------------------------
    CASH (USED IN)
     FROM INVESTING
     ACTIVITIES        (650,792)     4,297,291        970,731      6,662,360
    -------------------------------------------------------------------------

    FINANCING
     ACTIVITIES
      Repurchase
       of common
       shares for
       cancellation           -              -    (10,637,373)             -
      Issuance of
       common shares    355,324        213,049      1,861,745      1,995,351
    -------------------------------------------------------------------------
    CASH FROM (USED
     IN) FINANCING
     ACTIVITIES         355,324        213,049     (8,775,628)     1,995,351
    -------------------------------------------------------------------------
    NET CASH INFLOW
     (OUTFLOW)        1,854,513      9,861,912      9,617,705     38,680,794
    CASH AND CASH
     EQUIVALENTS,
     BEGINNING OF
     PERIOD          54,223,491     36,598,387     46,460,299      7,779,505
    -------------------------------------------------------------------------
    CASH AND CASH
     EQUIVALENTS,
     END OF PERIOD  $56,078,004    $46,460,299    $56,078,004    $46,460,299
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    COMPOSITION OF
     CASH AND CASH
     EQUIVALENTS:
      Cash                                        $13,516,317    $ 3,472,324
      Cash
       equivalents                                 42,561,687     42,987,975
    -------------------------------------------------------------------------
                                                  $56,078,004    $46,460,299
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00013849E




For further information:

For further information: John Livingston, Chief Executive Officer
(jliving@absolute.com), Phone: (604) 730-9851; Rob Chase, Chief Financial
Officer (rchase@absolute.com), Phone: (604) 730-9851; Dave Mason, Investor
Relations (dmason@equicomgroup.com), Phone: (416) 815-0700 x237; Website:
http://www.absolute.com

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