Media Releases

Press Release

February 13, 2006

ACD Systems Announces Fiscal 2006 Third Quarter Results

Victoria, British Columbia – February 13, 2006 – ACD Systems International Inc. (TSX: ASA), makers of ACDSee™ photo management software and Canvas™ technical illustration software, today reported its Q3 2006 results. The financial figures in this release are reported in Canadian dollars in accordance with Canadian generally accepted accounting principles.

Summary of Financial Results (unaudited)
(millions of Canadian dollars except per share data)

Three months ended December 31
20052004
Sales$4.9$8.4
Net earnings (loss)(1.3)1.8
Number of shares- basic (millions)21.823.6
Number of shares- diluted (millions)21.823.7
Earning (loss) per share, basic and diluted$(0.06)$0.08

Nine months ended December 31
20052004
Sales$13.4$18.7
Net earnings (loss)(4.0)0.8
Number of shares- basic (millions)22.623.7
Number of shares- diluted (millions)22.623.8
Earning (loss) per share, basic and diluted$(0.18)$0.03

“Although I am disappointed with Q3 revenue, ACD Systems has completed a significant transition of its core business,” said Doug Vandekerkhove, chairman, chief executive officer and president of ACD Systems. “ACDSee has been repositioned as a professional product with the release of ACDSee Pro Photo Manager in January. ACDSee Pro is being well-received by the industry and marks an important step towards regaining our leadership in desktop digital imaging applications. Our recent agreement with CeWe Color, Europe’s largest photofinisher, also shows our progress in extending ACD Systems into online digital photography services.”

Summary of Q3 FY2006 Accomplishments

  • Partnership established with 3DMUSE LLC to release a new plug-in for ACDSee 8.
  • 1,254,856 shares purchased and returned to treasury for cancellation enabling the Corporation to continue its jurisdiction of incorporation from Alberta to British Columbia.
  • Hiro Uchida appointed to the Board of Directors.

Financial Highlights

Sales for the quarter ended December 31, 2005 were $4.9 million compared to $8.4 million in same quarter in the prior year. Year-to-date sales were $13.4 million compared to $18.7 million in the nine-month period ended December 31, 2004.

Digital imaging software sales during the third quarter, ended December 31, 2005 were $3.6 million versus $7.3 million in the same quarter of the prior year. In the nine month period ended December 31, 2005 digital imaging sales were $9.9 million, a decrease from $15.5 million in the same period in the prior year. These decreases were the result of a number of factors. Delayed email communications to customers related to the release of ACDSee™ 8.0 Photo Manager occurred as a result of integrity issues identified within the Company’s customer email lists. This resulted in domain blocks being placed on these email communications. A substantial portion of these domain blocks were subsequently lifted as a result of cleaning up the integrity issues and adopting new industry best practices in managing these customer lists going forward. In addition, the Company restructured an OEM contract and experienced delays in the German and Japanese product launches. The Company’s digital imaging software segment derives the majority of its revenues in U.S. dollars and Euros. Both the U.S. dollar and the Euro have weakened compared to the prior year, which resulted in a $1.0 million decrease in sales for the nine months ended December 31, 2005 compared to the prior and a decrease of $0.51 million in sales for the quarter ended December 31, 2005 compared to the prior year.

Technical drawing software sales increased from $1.1 million in the quarter ended December 31, 2004 to $1.2 million for the three months ended December 31, 2005. In the nine month period ended December 31, 2005, technical drawing software sales increased from $3.2 million in the nine month period ending December 31, 2004 to $3.5 million in the current nine month period. The Company derives the majority of its technical illustration software revenue in U.S. dollars. The weakening U.S. dollar resulted in a $0.14 million reduction in revenue quarter over quarter and a $0.3 million reduction in revenue year over year to date.

Operating expenses were $5.4 million for the three months ended December 31, 2005 compared to $5.7 million for the same quarter in the prior year. Operating expenses were $16.6 million for the nine months ended December 31, 2005 compared to $15.9 million for the same nine month period in the prior year. The increase in operating expenses year over year to date is primarily due to higher sales, marketing and customer service expenses and higher general and administrative expenses. Consolidated operating expenses, however, decreased quarter over quarter due to lower research and development expenses in particular in the technical illustration software segment where research and development expenses decreased by 52% quarter over quarter and by 46% year over year to date as a result of the April 2005 restructuring.

Net loss for the current quarter was $1.3 million compared to net earnings of $1.8 million in the third quarter of the previous fiscal year. Net loss for the nine months ended December 31, 2005 was $4.0 million compared to net earnings of $0.8 million for the nine months ended December 31, 2004.

Total assets at December 31, 2005 were $30.6 million, a decrease of $7.5 million, compared to $38.1 million at March 31, 2005. The Company’s cash position was $12.8 million at December 31, 2005 compared to $19.1 million at March 31, 2005. Working capital at December 31, 2005 decreased by $7.0 million from March 31, 2005 due to reductions in cash and cash equivalents and current future income tax assets.

ACD Systems will conduct a teleconference on February 16, 2006 at 10:00 a.m. Eastern Standard Time. To participate in the conference call, please use the phone numbers listed below.

Date:February 16, 2006
Time:10:00 am EST (7:00 am PST)
Dial In Numbers:
Toll Free (North America):877-407-9205
International:201-689-8054

Members of the news media, investors and the general public are invited to access a live broadcast of the conference call via the Investor Relations page of the ACD Systems Web site at: http://www.acdcorporate.com/english/Investors/financial.htm

The event will be archived and available for replay through 2/15/2007.

Further details with respect to ACD Systems’ year-end results, including the complete financial statements, will be available for download at http://www.sedar.com/.

About ACD Systems
Headquartered in British Columbia since 1993, ACD Systems International Inc. (TSX: ASA) is one of the world's leading developers and marketers of digital imaging software, including the renowned ACDSee image management tool and Canvas, an advanced cross-platform technical illustration and graphics program. ACD has delivered value to a global marketplace through Internet distribution and through partnerships with manufacturers and developers. ACD has millions of consumer and business users and over 33,000 corporate customers including many Fortune 500 companies. For further details, please visit us at our corporate web site: http://www.acdcorporate.com/.

ACD, ACD Systems and ACDSee are trademarks or registered trademarks of ACD Systems Ltd. in Canada, the United States, or certain other jurisdictions. Trademarks of ACD Systems Ltd. are used under license by ACD Systems of America, Inc. Canvas is a trademark or registered trademark of ACD Systems of America, Inc. in Canada, the United States, or certain other jurisdictions. Trademarks of ACD Systems of America, Inc. are used under license by ACD Systems Ltd.

Other trademarks, product names, company names, brands and service names mentioned herein are property of their respective owners.

Contacts
Doug Vandekerkhove
Corporate Affairs
ACD Systems International Inc.
TEL: (250) 544-6700
ir@acdsystems.com
Brian Harris
Director of Marketing
ACD Systems International Inc.
TEL: (250) 544-6700
pr@acdsystems.com

CERTAIN STATEMENTS CONTAINED IN THIS PRESS RELEASE INCLUDING WORDS SUCH AS “LOOKS FORWARD”, “ANTICIPATE”, “COULD”, “SHOULD”, “EXPECT”, BELIEVE”, “WILL” AND SIMILAR EXPRESSIONS AND STATEMENTS RELATING TO MATTERS THAT ARE NOT HISTORICAL FACTS ARE FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS.