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SumTotal Systems Reports Record FourthQuarter Preliminary Results



SumTotal's8482; Systems, Inc. (Nasdaq: SUMT), the largest provider of learning and business performance technologies and services, today announced its preliminary financial results for the fourth quarter and full year ended December 31, 2005.



Fourth-Quarter 2005 Results



On a Generally Accepted Accounting Principles ("GAAP") basis, total revenue for the fourth quarter of 2005 was $23.9 million, an increase of 28% from the $18.7 million reported in the fourth quarter of 2004. Net loss for the fourth quarter of 2005 was $2.5 million, or $0.10 per share on both a basic and diluted basis, compared to a net loss of $1.9 million or $0.09 per share, in the same quarter one year ago.



On a non-GAAP basis in the fourth quarter of 2005, revenue increased by 38% to $26.9 million from non-GAAP revenue of $19.5 million reported in the fourth quarter of 2004. Non-GAAP net income for the fourth quarter was $2.5 million, or $0.10 per share on both a basic and diluted basis, compared to $0.5 million, or $0.03 per share and $0.02 per share on a basic and diluted basis, respectively, for the fourth quarter a year ago.



Deferred revenue on a GAAP basis at the end of the fourth quarter increased 67%, sequentially, and 77% on a year-over-year basis, to end at $26.7 million. This figure compares with $16.0 million in the prior quarter and $15.1 million in the same quarter one year ago and includes $4.0 million acquired from Pathlore.



The results for the fourth quarter of 2005 include the results for Pathlore Software Corporation, which SumTotal Systems acquired on October 3, 2005. Non-GAAP results exclude the impact of certain non-cash accounting adjustments and one-time charges primarily related to acquisition accounting. These are described in more detail in the attached exhibits.



Results for the fourth quarter and the full year 2005 are preliminary, as the company is still in the process of completing the acquisition accounting for Pathlore Software Corporation. Also, the company continues to be involved in settlement discussions related to the intellectual property litigation brought against it by IpLearn, LLC. At the time of this release, the company cannot determine whether a settlement is probable on acceptable terms and has therefore not accrued for any such settlement in the attached financial exhibits.



"The fourth quarter marked a strong finish to 2005 for SumTotal," commented Donald Fowler, CEO. "Our record top line and strong operating cash flow for the quarter exceeded our expectations, and demonstrate the leverage of our scale and ability to execute against our strategy. We continued to see very strong demand for upgrades and additional services, as existing customers continue to move to the SumTotal Enterprise Suite. While we would have liked to have seen greater growth in license revenue, we are encouraged by the growth in our deferred revenue levels entering the current quarter. Our efforts remain focused on driving both top and bottom line results."



Full-Year 2005 Results



For the year 2005, GAAP revenue increased 36% to $75.0 million, compared to $55.2 million reported for the year 2004. On a GAAP basis, net loss for the year was $8.3 million, or $0.38 per share compared to net loss of $16.0 million, or $0.87 per share for the year 2004.



On a non-GAAP basis for the year 2005, revenue increased 20% to $78.4 million, compared to $65.6 million reported for the year 2004. On a non-GAAP basis, n et income for the year 2005 was $0.6 million, or $0.03 per share compared to net loss of $5.3 million, or $0.29 per share for the year 2004. Non-GAAP results exclude the impact of certain non-cash accounting adjustments and one-time charges primarily related to acquisition accounting. These are described in more detail in the attached exhibits.



SumTotal Systems generated cash flow from operating activities of $1.6 million for the year 2005 compared to $0.1 million for 2004. Cash, cash equivalents and short-term investments were $19.1 million at December 31, 2005.



Check out the complete news at http://www.sumtotalsystems.com/press/2006/02/13/1






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