CDC SOFTWARE (GREY:CDCSY)

NEW YORK, April 19, 2012 (GLOBE NEWSWIRE) -- The NASDAQ Stock Market announced today that it will delist the american depositary shares of CDC Software Corporation. CDC Software Corporation's stock was suspended on December 12, 2011 and has not traded on NASDAQ since that time.

Proposed Sale of the Company’s Indirect Ownership of CDC Software

On February 1, 2012, the Company and Software International entered into a Share Purchase Agreement (as amended, the “SPA”) with Archipelago Holdings (the “Buyer”), an affiliate of Vista Equity Holdings, for the sale of the Company’s indirect share holdings in CDC Software. The purchase price under the SPA for the Company’s share holdings of CDC Software is $10.50 per share, in cash, or approximately $249,788,301. A deposit of 10% of the purchase price, or $24,978,830.10, will be placed into escrow no later than five business days following the execution of the SPA (the “Deposit”). In the event the SPA is terminated by the Company as a result of Buyer’s material breach of any provision of the SPA, the Company will be entitled to retain the Deposit. Pursuant to the SPA, the Company has selected the Buyer as a “stalking horse” bidder. The purchase and sale of the shares are subject to solicitation of higher and otherwise better offers pursuant to bidding procedures approved by, and an auction and sale process to be conducted under the supervision of, the Court pursuant to Section 363 of the Bankruptcy Code (the “Sale Order”). A hearing on the bidding procedures and the auction and sale process has been set for February 16, 2012, by the Court.

ATLANTA--(BUSINESS WIRE)--CDC Software Corporation (CDCSY), a global enterprise software provider of on-premise and cloud deployments, today announced that it is considering potential steps it may take in the event its American Depositary Shares representing class A ordinary shares (“ADSs”) are delisted by NASDAQ, and what alternatives it may have to maximize liquidity for a continued market for its ADSs in the Pink OTC Market.

The Company has also been considering several ways in which it might reduce the burdens associated with its public reporting status in light of its previously-reported Form 20-F filing delinquency, resignation of its external auditors in November 2011 and the bankruptcy proceedings involving its parent, CDC Corporation.

Upon any delisting, CDC Software would be eligible to voluntarily deregister under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and to suspend its reporting obligations under Section 15(d) of the Exchange Act. The Company has therefore been considering whether following any NASDAQ delisting, it should deregister its ADSs under the Exchange Act and become a non-reporting company.

As of the date hereof, CDC Software has made no decision to voluntarily delist or deregister under the Exchange Act; however, the Company’s Board of Directors has been discussing several considerations relating to its status as an Exchange Act reporting company, including, without limitation, the potential impact of delisting and deregistration on minority shareholders, potential cost savings and others.

The Company intends to continue to consider its alternatives with respect to the foregoing in conjunction with the January 19, 2012 hearing in front of Nadsaq with respect to the reinstatement of the trading of its ADSs and will make a further filing or announcement following the date any decision is made

Third quarter 2011 Results

For the third quarter of 2011, Non-GAAP revenue^(a) was $53.4 million and Non-GAAP net income^(a) was $4.6 million, or $0.17 per share, compared to Non-GAAP revenue of $54.2 million and Non-GAAP net income of $6.9 million, or $0.24 per share in the third quarter of 2010.

Overall, earnings for CDC Software in the third quarter of 2011 have continued to be impacted by increased investments in sales and marketing, R&D as well as increased expenses for certain legal and governance matters related primarily to the litigation and settlement of Ross Systems’ Sunshine Mills lawsuit and the investigation undertaken by the special committee of the board of directors.

Share Buyback: 

Between August 2009 and Sept. 30, 2011, CDC Software, management, Peter Yip and family members and certain affiliates of the company, have purchased an aggregate of approximately 1.7 million shares at an average price of $7.56 per share. The company’s 10b5-1 repurchase plan is no longer in effect and company repurchases of its shares have ceased as of October 2011.

Comments:

“CDC Software is an independent public company that has a fiscally-sound foundation with virtually no debt,” Wong noted. “However, confusion continues to exist in the market between CDC Corporation and CDC Software, and this important distinction is often overlooked. While CDC Corporation’s bankruptcy filing does not significantly affect the day-to-day operations and assets of CDC Software, we anticipate that CDC Corporation’s Chapter 11 filing will have a significant adverse impact on CDC Software’s revenues in the fourth quarter of 2011. We have taken, and are continuing to take, affirmative, proactive steps to help address this situation, but we believe that this effect will continue, to some extent, until CDC Corporation emerges from the Chapter 11 process.”

Mr. Wong added, “It is also worth emphasizing that contrary to some of the inaccurate and confusing messages communicated by competitors to our current customers and prospects, CDC Software has not filed for bankruptcy and our positive operating results is testament to the financial health and viability of our organization.

“Despite the several, significant challenges we have faced, we believe we achieved a solid performance during Q3 2011,” Wong said. “Although we continue to face additional issues, as disclosed in our recent public filings, we continue to remain committed to delivering world-class solutions to our customers by continuing to invest in our products and providing outstanding customer service.”

Second Quarter 2011 Results

Total Non-GAAP recurring revenue, which CDC Software defines as Non-GAAP maintenance plus SaaS revenue, increased to $30.7 million in the second quarter of 2011, from $27.8 million in the second quarter of 2010.

Non-GAAP net income^(a) was $2.2 million, or $0.08 per share, compared to Non-GAAP net .$0.28 per share in the second quarter of 2010.

“We are pleased with our Q2 2011 results,income of $80 million, or  including an improvement in revenue on a sequential quarterly basis as well as the growth in our pipeline,” said Bruce Cameron, president of CDC Software. “While our cloud business has been seeing good progress from a revenue growth perspective, we are evaluating the synergies of each of our completed cloud acquisitions with respect to the company’s cross-sell strategy, as well as how each of these businesses impacts the company’s overall profitability both in the short and longer term. Indeed, our profitability in Q2 2011 was impacted primarily by continued increases in spending for sales and marketing, product engineering and litigation, however, we believe that we have also continued to position ourselves for higher organic growth in our business. With higher spending in sales and marketing, we have already seen increases in our sales pipeline.”

Cameron added, “Notable sales wins included a seven digit renewal and add-on SaaS deal of CDC TradeBeam for a leading clothing retailer, and key new logo customers for CDC Factory that included a leading cosmetic and beauty company, as well as a chemical manufacturer, both new markets for this business.”

“We are pleased with our solid top line results and the progression of our cloud business in the second quarter of 2011,” said John Clough, interim CEO of CDC Software. ”While our profitability has been impacted by a variety of factors mentioned earlier, we plan to continue evaluating our investment programs relative to our expansion plans, including further investment in the cloud, as well as growth in regions like Brazil, Russia, India, and China. While there are currently negative drivers in the global economy which are beyond our control, we plan to focus on cash preservation and growth as we execute on our corporate strategy.”

Share Buyback: 

Between August 2009 and June 30, 2011, CDC Software, management, Peter Yip and family members and certain affiliates of the company, have purchased an aggregate of approximately 1.6 million shares at an average price of $7.75 per share. The Company has continued to repurchase its shares in the open market through a 10b5-1 trading plan.

First Quarter Results:

ATLANTA & SHANGHAI--(BUSINESS WIRE)--CDC Software Corporation (NASDAQ: CDCS), a hybrid enterprise software provider of on-premise and cloud deployments, today announced financial results for the quarter ended March 31, 2011. For the first quarter of 2011, Non-GAAP revenue was $52.6 million and Non-GAAP net income was $3.1 million, or $0.11 in Non-GAAP earnings per share, compared to Non-GAAP revenue of $51.7 million and Non-GAAP net income of $8.0 million, or $0.28 in Non-GAAP earnings per share in the first quarter of 2010.

"During the first quarter of 2011, we saw solid growth in our Cloud business despite the first quarter typically being lower than other quarters," said Bruce Cameron, president of CDC Software. "While our profitability was impacted primarily by the upfront costs associated with our Cloud investments, which we expect to continue in the foreseeable future, we are positioning ourselves for higher organic growth in that business. Our increased marketing investments also included a totally re-designed website and several scheduled user conferences, trade shows and marketing programs. We believe that we are starting to see returns on these investments. Our recurring revenue as a percentage of total revenue in the first quarter of 2011 was at 57 percent, compared to 48 percent in the first quarter of 2009, and we believe that will continue to grow. As we have previously stated, our strategy is to develop recurring revenue streams reaching closer to 70 percent of total revenue over the next few years, after completion of our planned SaaS acquisitions and our strategic investments in SaaS companies.

Third quarter 2010 Adjusted EBITDA^(a) was $10.1 million, compared to $13.2 million in the third quarter of 2009. The company’s third quarter 2010 Non-GAAP EPS, Adjusted EBITDA and Non-GAAP revenue exceeded current First Call consensus estimates of $0.22 per share for Non-GAAP EPS, $9.0 million for Adjusted EBITDA and $53.9 million for Non-GAAP revenue. CDC Software’s cash and cash equivalents totaled $36.4 million as of September 30, 2010. Third quarter 2010 Adjusted EBITDA margin^(a) was 19 percent, compared to 27 percent in the third quarter of 2009.

Third quarter 2010 license revenue increased by 18 percent to $9.0 million, compared to $7.6 million in the third quarter of 2009. Non-GAAP SaaS revenue^(a) increased 48 percent to $3.9 million, compared to $2.6 million in the second quarter of 2010. The number of enterprise sales deals increased to 348 in the third quarter of 2010, compared to 247 in the third quarter of 2009. Approximately 54 percent of CDC Software’s total license revenue was derived from North America, 30 percent from EMEA, and 16 percent from Asia/Pacific.

“Overall, we are pleased with third quarter 2010 results including our 18 percent growth in license revenue, 12 percent increase in Non GAAP revenue compared to the third quarter of 2009, significant expansion in application sales, and solid cash flow from operations of $12.0 million,” said Bruce Cameron, president of CDC Software. “Our third quarter Non-GAAP revenue, Adjusted EBITDA and Non-GAAP EPS beat consensus estimates despite the company’s transition to its hybrid software model, which required increased upfront costs for sales, marketing and R&D. Therefore, we believe we are on track to meet Non-GAAP EPS estimates of $1.02-$1.08 for 2010 and consider our EPS to be among the highest in our selected software peer group.

“So far, we have completed three cloud acquisitions and are on track to complete more by the end of the year, as well as execute a number of strategic investments and partner relationships like we recently did with Marketbright and eBizNET. In fact, earlier this week, we announced our signing of a term sheet with our largest potential SaaS acquisition to date. As a result, our goal is to reach a $50 million cloud revenue run rate on an annualized basis and an annualized total recurring revenue of $150 million in the first quarter of 2011. With this momentum, we feel confident that our recurring revenue can reach more than 60 percent of our total revenue by the first quarter of 2011 which is more than half way to our goal of 70 percent. Another exciting trend we have seen is that our second quarter to date sales pipeline has increased by approximately 60 percent compared to the same period in the second quarter in 2009.”