Cedara Software Announces First Quarter Revenue Gain and Positive Earnings TORONTO, Nov. 8 /PRNewswire-FirstCall/ -- CEDARA SOFTWARE CORP. (NASDAQ:CDSW/TSX:CDE) today announced results for the first quarter of fiscal year 2005 ended September 30, 2004. Revenue from continuing operations in the first quarter was $12.3 million, an increase of 22% compared to $10.1 million in the first quarter of last year. Net income increased 89% to $3.2 million compared to a net income of $1.7 million in the same quarter last year. Diluted earnings per share were $0.10 for the quarter compared to diluted earnings per share of $0.06 in the same period last year. Software license revenue was up by $0.4 million to $6.6 million and engineering services revenue increased 42% to $4.3 million for this quarter. Gross margin was $9.9 million or 81% of revenue in the first quarter of fiscal 2005, compared to a gross margin of $7.7 million or 77% of revenue for the first quarter of fiscal 2004. The increase in gross margin reflects higher than normal gross margins on certain engineering services contracts and an increase in higher margin software license revenues. Operating expenses in the first quarter of fiscal 2005 increased by $1.2 million or 20% to $7.0 million compared to $5.8 million in the same period last year. However, included in the $7.0 million of operating expenses was $1.2 million of unrealized foreign exchange charges, leaving the remaining operating expenses in line with the prior year's first quarter. "I am delighted to start the new fiscal year by reporting a strong profitable quarter," said Abe Schwartz, Cedara's President and Chief Executive Officer. Operating results of eMed Technologies Corporation, recently acquired in October 2004 by Cedara, are not reflected in this quarter's results and will be included in the quarter ended December 31, 2004. Conference Call Information The Cedara Software Corp. first quarter fiscal 2005 conference call and web cast to discuss results and corporate strategy is scheduled for 11:00 am EST on Tuesday, November 9, 2004. The conference call can be accessed via audio web cast by visiting http://www.cedara.com/investors/teleconference_webcast.htm. Participants in the conference call are asked to dial 416-405-9328 or 1-800-387-6216, five to ten minutes prior to the November 9, 2004, 11:00 am start of the teleconference to participate in the call. This conference call will be recorded and will be available on instant replay at the end of the call, until midnight December 14, 2004. To listen to the replay, please dial 416-695-5800 or 1-800-408-3053, and enter pass code 3106714 followed by the number sign. About Cedara Software: Cedara Software Corp. is a leading independent provider of medical technologies for many of the world's leading medical device and healthcare information technology companies. Cedara software is deployed in hospitals and clinics worldwide -- approximately 28,000 medical imaging systems and 6,400 Picture Archiving and Communications System (PACS) workstations have been licensed to date. Cedara is enabling the future of the healthcare industry with new innovative approaches to workflow, data and image management, integration, the web, software components and professional services. The Company's medical imaging solutions are used in all aspects of clinical workflow including the capture of patient digital images; the sharing and archiving of images; sophisticated tools to analyze and manipulate images; and even the use of imaging in surgery. Cedara is unique in that it has expertise and technologies that span all the major digital imaging modalities including angiography, computed tomography (CT), echo-cardiology, digital X-ray, fluoroscopy, mammography, magnetic resonance imaging (MRI), nuclear medicine, positron emission tomography (PET) and ultrasound. Certain statements contained in this news release are forward-looking within the meaning of securities laws and are based on current expectations that are subject to a number of assumptions, uncertainties and risks, and the actual results may differ materially from what is currently expected. These assumptions, uncertainties and risks include, but are not limited to: the management of the growth of the Company, dependence on key personnel of the Company, competitive pressures (including price competition), changes in market activity, risks associated with international operations, the development of new products and services, the enhancement of existing products and services, the introduction of competing products having technological and/or other advantages, the dependence on key customers, regulatory changes to the health care industry, seasonality, economic and political conditions and adequate protection of the proprietary interests of the Company. Further information about these risks and uncertainties can be found in the continuous disclosure documents filed from time to time by Cedara with the securities regulatory authorities, which documents are available at http://www.sedar.com/. Three pages of consolidated financial statements follow: CEDARA SOFTWARE CORP. Consolidated Balance Sheets (In thousands of Canadian dollars) ------------------------------------------------------------------------- September 30, June 30, 2004 2004 ------------------------------------------------------------------------- (Unaudited) Assets Current assets: Cash and cash equivalents $ 38,432 $ 40,510 Short-term investments 10,962 10,902 Accounts receivable 11,960 7,449 Inventory 325 268 Prepaid expenses and other assets 924 881 ----------------------------------------------------------------------- 62,603 60,010 Capital assets 1,968 2,201 Long-term investment 510 510 Goodwill 9,053 9,053 Deferred acquisition costs 772 - Intangible assets 370 373 ------------------------------------------------------------------------- $ 75,276 $ 72,147 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current liabilities: Accounts payable and accrued liabilities $ 4,710 $ 4,207 Deferred revenue 976 861 Current liabilities of discontinued operations 199 986 ------------------------------------------------------------------------- 5,885 6,054 Non-current portion of provision for loss on sublease 30 44 Shareholders' equity: Capital stock 161,608 161,536 Contributed surplus 439 388 Deficit (92,686) (95,875) ------------------------------------------------------------------------- 69,361 66,049 ------------------------------------------------------------------------- $ 75,276 $ 72,147 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CEDARA SOFTWARE CORP. Unaudited Consolidated Statements of Operations (In thousands of Canadian dollars, except per share amounts) ------------------------------------------------------------------------- Three months ended September 30 ------------------------------- 2004 2003 ------------------------------------------------------------------------- Revenue $ 12,341 $ 10,103 Direct costs 2,404 2,364 ------------------------------------------------------------------------- Gross margin 9,937 7,739 Expenses: Research and development 1,918 2,310 Sales and marketing 1,688 1,015 General and administration 1,913 1,554 Severance costs 79 21 Other charges 1,069 435 Amortization of intangible assets 13 56 Depreciation and amortization 303 449 ------------------------------------------------------------------------- 6,983 5,840 ------------------------------------------------------------------------- Income before interest expense 2,954 1,899 Interest income (expense), net 235 (266) ------------------------------------------------------------------------- Income from continuing operations 3,189 1,633 Income from discontinued operations - 53 ------------------------------------------------------------------------- Net income $ 3,189 $ 1,686 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings per share from continuing operations: Basic $ 0.10 $ 0.07 Diluted $ 0.10 $ 0.06 Earnings per share: Basic $ 0.10 $ 0.07 Diluted $ 0.10 $ 0.06 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of shares outstanding - basic 31,378,091 23,954,467 Weighted average number of shares outstanding - diluted 33,485,858 26,427,255 CEDARA SOFTWARE CORP. Unaudited Consolidated Statements of Cash Flows (In thousands of Canadian dollars) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three months ended September 30 ------------------------------- 2004 2003 ------------------------------------------------------------------------- Cash provided by (used in): Operating activities: Net income from continuing operations $ 3,189 $ 1,633 Items not involving cash: Depreciation and amortization 316 505 Accretion of interest on convertible subordinated debentures - 18 Stock-based compensation charges 51 - Other 1,103 50 ------------------------------------------------------------------------- 4,659 2,206 ------------------------------------------------------------------------- Change in non-cash operating working capital: Accounts receivable (5,915) (2,769) Inventory (57) (7) Prepaid expenses and other assets (43) 310 Accounts payable and accrued liabilities 509 (1,121) Deferred revenue 167 780 ------------------------------------------------------------------------- (5,339) (2,807) ------------------------------------------------------------------------- (680) (601) Investing activities: Increase in deferred acquisition costs (772) - Increase in short-term investments (60) - Additions to intangible assets (10) (34) Additions to capital assets (68) (230) ------------------------------------------------------------------------- (910) (264) Financing activities: Increase in bank indebtedness - 1,229 Issue of shares on exercise of stock options 72 - ------------------------------------------------------------------------- 72 1,229 Effect of exchange rate changes on cash and cash equivalents (560) - ------------------------------------------------------------------------- Change in cash and cash equivalents from continuing operations (2,078) 364 Change in cash and cash equivalents from discontinued operations - (364) Cash and cash equivalents, beginning of period 40,510 - ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 38,432 $ - ------------------------------------------------------------------------- ------------------------------------------------------------------------- DATASOURCE: Cedara Software Corp. CONTACT: please contact: Brian Pedlar, Chief Financial Officer, Cedara Software Corp., (905) 672-2100, ; To request a free copy of this organization's annual report, please go to http://www.newswire.ca/ and click on reports@cnw.

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