##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                    to
 Commission file number 001-32711
 SoftBrands, Inc.
  Delaware
    
    41-2021446(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)800 LaSalle Avenue, Suite 2100Minneapolis, Minnesota
    
    55402(Address of principal executive offices)
    
    (Zip Code)
 (612) 851-1500
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ
   Common Stock, par value $.01 per share
    
    44,858,101(Title of class)
    
    (Outstanding at April 30, 2009)




---



##### 



SoftBrands, Inc.
 Quarterly Report on Form 10-Q
 Table of Contents
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    27Item 4. Controls and Procedures
    
    
    27PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    28Item 1A. Risk Factors
    
    
    28Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    28Item 3. Defaults Upon Senior Securities
    
    
    29Item 4. Submission of Matters to a Vote of Security Holders
    
    
    29Item 5. Other Information
    
    
    29Item 6. Exhibits
    
    
    29Signatures
    
    
    30EX-31.1EX-31.2EX-32
  2




---



##### Table of Contents



PART I.  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 PageConsolidated Balance Sheets
as of March 31, 2009 (unaudited) and September 30, 2008
    
    
    4Consolidated Statements of Operations
for the three and six months ended March 31, 2009 and 2008 (unaudited)
    
    
    5Consolidated Statements of Cash Flows
for the six months ended March 31, 2009 and 2008 (unaudited)
    
    
    6Notes to Consolidated Financial Statements (unaudited)
    
    
    7
 3




---



##### Table of Contents



SoftBrands, Inc.
 
 Consolidated Balance Sheets
 March 31,
    
    
    September 30,2009
    
    
    2008(In thousands, except share and per share data)
    
    (Unaudited)
    
    
    (See Note 1)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    14,183
    
    
    $
    11,948Accounts receivable, net
    
    
    22,519
    
    
    
    21,665Prepaid expenses and other current assets
    
    
    5,075
    
    
    
    4,791Total current assets
    
    
    41,777
    
    
    
    38,404Furniture, fixtures and equipment, net
    
    
    1,746
    
    
    
    2,095Goodwill
    
    
    35,299
    
    
    
    35,591Intangible assets, net
    
    
    2,951
    
    
    
    4,346Other long-term assets
    
    
    105
    
    
    
    425Total assets
    
    $
    81,878
    
    
    $
    80,861LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term obligations
    
    $
    3,312
    
    
    $
    3,407Revolving loan
    
    
    8,101
    
    
    
    7,782Accounts payable
    
    
    3,076
    
    
    
    5,194Accrued expenses
    
    
    5,991
    
    
    
    7,474Deferred revenue
    
    
    25,626
    
    
    
    21,500Other current liabilities
    
    
    1,871
    
    
    
    2,820Total current liabilities
    
    
    47,977
    
    
    
    48,177Long-term obligations
    
    
    11,048
    
    
    
    12,667Other long-term liabilities
    
    
    515
    
    
    
    487Total liabilities
    
    
    59,540
    
    
    
    61,331Commitments and contingencies (Note 4)Stockholders equity:Series A and undesignated preferred stock, $.01 par value; 10,647,973
shares authorized; no shares issued or outstanding
    
    
    
    
    
    
    Series B convertible preferred stock, $.01 par value; 4,331,540 shares
authorized, issued and outstanding; liquidation value of $4,591
    
    
    5,068
    
    
    
    5,068Series C-1 convertible preferred stock, $.01 par value; 18,000 shares
authorized, issued and outstanding; liquidation value of $18,000
plus unpaid dividends of $360 and $368, respectively
    
    
    18,000
    
    
    
    18,000Series D convertible preferred stock, $.01 par value; 6,673 shares
authorized, 6,000 shares issued and outstanding; liquidation value of
$6,000 plus unpaid dividends of $120 and $123, respectively
    
    
    5,051
    
    
    
    5,051Common stock, $.01 par value; 110,000,000 shares authorized; 44,858,101
and 41,931,386 shares issued and outstanding, respectively
    
    
    448
    
    
    
    419Additional paid-in capital
    
    
    175,165
    
    
    
    174,348Accumulated other comprehensive loss
    
    
    (1,231
    )
    
    
    (939
    )Accumulated deficit
    
    
    (180,163
    )
    
    
    (182,417
    )Total stockholders equity
    
    
    22,338
    
    
    
    19,530Total liabilities and stockholders equity
    
    $
    81,878
    
    
    $
    80,861
  4




---



##### Table of Contents



SoftBrands, Inc.
 
 Consolidated Statements of Operations
 Three Months Ended
    
    
    Six Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands, except per share data)
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Revenues:Software licenses
    
    $
    2,823
    
    
    $
    4,012
    
    
    $
    9,562
    
    
    $
    7,009Maintenance and support
    
    
    12,579
    
    
    
    13,513
    
    
    
    25,523
    
    
    
    27,077Professional services
    
    
    4,722
    
    
    
    4,691
    
    
    
    9,628
    
    
    
    9,617Third-party software and hardware
    
    
    1,232
    
    
    
    1,439
    
    
    
    2,195
    
    
    
    2,201Total revenues
    
    
    21,356
    
    
    
    23,655
    
    
    
    46,908
    
    
    
    45,904Cost of revenues:Software licenses
    
    
    504
    
    
    
    590
    
    
    
    1,594
    
    
    
    1,178Maintenance and support
    
    
    3,536
    
    
    
    4,151
    
    
    
    7,369
    
    
    
    8,156Professional services
    
    
    4,375
    
    
    
    3,902
    
    
    
    8,665
    
    
    
    8,015Third-party software and hardware
    
    
    908
    
    
    
    1,185
    
    
    
    1,806
    
    
    
    1,917Total cost of revenues
    
    
    9,323
    
    
    
    9,828
    
    
    
    19,434
    
    
    
    19,266Gross profit
    
    
    12,033
    
    
    
    13,827
    
    
    
    27,474
    
    
    
    26,638Operating expenses:Selling and marketing
    
    
    3,626
    
    
    
    4,968
    
    
    
    7,635
    
    
    
    9,920Research and product development
    
    
    3,905
    
    
    
    4,086
    
    
    
    7,933
    
    
    
    7,845General and administrative
    
    
    4,111
    
    
    
    5,571
    
    
    
    9,090
    
    
    
    10,881Restructuring related charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25Total operating expenses
    
    
    11,642
    
    
    
    14,625
    
    
    
    24,658
    
    
    
    28,671Operating income (loss)
    
    
    391
    
    
    
    (798
    )
    
    
    2,816
    
    
    
    (2,033
    )Interest expense
    
    
    (227
    )
    
    
    (496
    )
    
    
    (572
    )
    
    
    (988
    )Other income, net
    
    
    62
    
    
    
    153
    
    
    
    98
    
    
    
    510Income (loss) from continuing operations before
provision for (benefit from) income taxes
    
    
    226
    
    
    
    (1,141
    )
    
    
    2,342
    
    
    
    (2,511
    )Provision for (benefit from) income taxes
    
    
    23
    
    
    
    (1,186
    )
    
    
    450
    
    
    
    (2,223
    )Income (loss) from continuing operations
    
    
    203
    
    
    
    45
    
    
    
    1,892
    
    
    
    (288
    )Income from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    362
    
    
    
    Net income (loss)
    
    
    203
    
    
    
    45
    
    
    
    2,254
    
    
    
    (288
    )Preferred stock dividends
    
    
    (480
    )
    
    
    (485
    )
    
    
    (971
    )
    
    
    (976
    )Net income (loss) available to common shareholders
    
    $
    (277
    )
    
    $
    (440
    )
    
    $
    1,283
    
    
    $
    (1,264
    )Weighted-average shares outstanding:Basic
    
    
    44,790
    
    
    
    41,827
    
    
    
    47,739
    
    
    
    41,623Diluted
    
    
    44,790
    
    
    
    41,827
    
    
    
    47,825
    
    
    
    41,623Basic and diluted earnings (loss) per common share:Continuing operations
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    0.02
    
    
    $
    (0.03
    )Discontinued operations
    
    
    
    
    
    
    
    
    
    
    0.01
    
    
    
    Net income (loss) available to common shareholders
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    0.03
    
    
    $
    (0.03
    )
  5




---



##### Table of Contents



SoftBrands, Inc.
 
 Consolidated Statements of Cash Flows
 Six Months Ended March 31,2009
    
    
    2008(In thousands)
    
    (Unaudited)
    
    
    (Unaudited)Cash flows from operating activities:Income (loss) from continuing operations
    
    $
    1,892
    
    
    $
    (288
    )Adjustments to reconcile income (loss) from continuing operations to net cash
provided by operating activities:Deferred income taxes
    
    
    300
    
    
    
    Amortization
    
    
    1,380
    
    
    
    1,635Depreciation
    
    
    502
    
    
    
    769Stock-based compensation
    
    
    826
    
    
    
    1,305Provision for doubtful accounts
    
    
    612
    
    
    
    783Other
    
    
    2
    
    
    
    Change in operating assets and liabilities:Accounts receivable
    
    
    (1,290
    )
    
    
    (8,209
    )Prepaid expenses and other current assets
    
    
    (284
    )
    
    
    (2,355
    )Accounts payable
    
    
    (2,118
    )
    
    
    (200
    )Accrued expenses
    
    
    (1,472
    )
    
    
    423Deferred revenue
    
    
    4,126
    
    
    
    8,835Other current liabilities
    
    
    (949
    )
    
    
    186Other long-term assets and liabilities
    
    
    293
    
    
    
    (308
    )Net cash provided by continuing operations
    
    
    3,820
    
    
    
    2,576Net cash provided by discontinued operations
    
    
    362
    
    
    
    Net cash provided by operating activities
    
    
    4,182
    
    
    
    2,576Cash flows from investing activities:Purchases of furniture, fixtures and equipment
    
    
    (270
    )
    
    
    (400
    )Purchase of intangible assets
    
    
    
    
    
    
    (129
    )Change in restricted cash
    
    
    
    
    
    
    63Net cash used in investing activities
    
    
    (270
    )
    
    
    (466
    )Cash flows from financing activities:Short-term borrowings, net of repayments
    
    
    319
    
    
    
    1,416Repayment of long-term obligations
    
    
    (1,714
    )
    
    
    (1,760
    )Net proceeds from issuance of common stock from stock options
    
    
    
    
    
    
    76Preferred stock dividends paid
    
    
    
    
    
    
    (981
    )Net cash used in financing activities
    
    
    (1,395
    )
    
    
    (1,249
    )Effect of exchange rates on cash balances
    
    
    (282
    )
    
    
    (143
    )Change in cash and cash equivalents
    
    
    2,235
    
    
    
    718Cash and cash equivalents:Beginning of period
    
    
    11,948
    
    
    
    8,682End of period
    
    $
    14,183
    
    
    $
    9,400
  6




---



##### Table of Contents



SoftBrands, Inc.
 
 Notes to Consolidated Financial Statements
 Note 1. General
 Basis of Presentation
  Consolidation
  Use of Estimates
  Fiscal Periods
  Liquidity
   7




---



##### Table of Contents



New Accounting Pronouncements
 Fair
Value Measurements Effective Date of FASB Statement
No. 157
 Business Combinations Goodwill and Other Intangible Assets
 Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51
 Disclosures about Derivative Instruments and Hedging Activities  an amendment of FASB Statement
No. 133 Accounting for Derivative Instruments and Hedging
Activities
 Determination of the Useful Life of
Intangible Assets
 8




---



##### Table of Contents



Goodwill and Other Intangible Assets
 Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entitys
Own Stock Accounting for Derivative Instruments
and Hedging Activities
 Note 2. Goodwill and Intangible Assets
 Goodwill
  March 31,
    
    
    September 30,2009
    
    
    2008Manufacturing
    
    $
    20,382
    
    
    $
    20,674Hospitality
    
    
    14,917
    
    
    
    14,917$
    35,299
    
    
    $
    35,591
  Goodwill and Other
Intangible Assets
   9




---



##### Table of Contents



Intangible Assets
  March 31, 2009
    
    September 30, 2008Gross
    
    
    
    
    
    Net
    
    Gross
    
    
    
    
    
    NetCarrying
    
    Accumulated
    
    Carrying
    
    Carrying
    
    Accumulated
    
    CarryingAmount
    
    Amortization
    
    Amount
    
    Amount
    
    Amortization
    
    AmountAcquired technology
    
    $
    21,180
    
    
    $
    (21,014
    )
    
    $
    166
    
    
    $
    21,216
    
    
    $
    (20,923
    )
    
    $
    293Capitalized software development
    
    
    3,707
    
    
    
    (3,382
    )
    
    
    325
    
    
    
    3,707
    
    
    
    (2,950
    )
    
    
    757Consulting and
non compete agreements
    
    
    2,952
    
    
    
    (2,717
    )
    
    
    235
    
    
    
    2,952
    
    
    
    (2,244
    )
    
    
    708Customer relationships
    
    
    2,700
    
    
    
    (1,340
    )
    
    
    1,360
    
    
    
    2,700
    
    
    
    (1,085
    )
    
    
    1,615Other
    
    
    2,032
    
    
    
    (1,167
    )
    
    
    865
    
    
    
    2,059
    
    
    
    (1,086
    )
    
    
    973$
    32,571
    
    
    $
    (29,620
    )
    
    $
    2,951
    
    
    $
    32,634
    
    
    $
    (28,288
    )
    
    $
    4,346
   Remainder of 2009
    
    $
    1,0362010
    
    
    7262011
    
    
    6522012
    
    
    1102013
    
    
    100Thereafter
    
    
    327$
    2,951
 Note 3. Accrued Expenses
  March 31,
    
    
    September 30,2009
    
    
    2008Compensation and benefits
    
    $
    2,249
    
    
    $
    2,815Sales taxes
    
    
    642
    
    
    
    584Lease obligations
    
    
    475
    
    
    
    912Professional services
    
    
    84
    
    
    
    263Preferred stock dividends
    
    
    480
    
    
    
    491Other
    
    
    2,061
    
    
    
    2,409$
    5,991
    
    
    $
    7,474
 10




---



##### Table of Contents



Note 4. Commitments and Contingencies
  Note 5. Stockholders Equity
   Before
    
    
    
    
    
    
    AfterAdjustment
    
    
    Adjustment
    
    
    AdjustmentSeries B convertible preferred stock
    
    
    4,332
    
    
    
    103
    
    
    
    4,435Series C-1 convertible preferred stock
    
    
    8,955
    
    
    
    210
    
    
    
    9,165Series D convertible preferred stock
    
    
    3,593
    
    
    
    79
    
    
    
    3,672Total
    
    
    16,880
    
    
    
    392
    
    
    
    17,272
   Note 6. Stock-Based Compensation
 Share-Based Payment
  11




---



##### Table of Contents



Three Months Ended
    
    Six Months EndedMarch 31,
    
    March 31,2009
    
    2008
    
    2009
    
    2008Cost of revenues
    
    $
    51
    
    
    $
    77
    
    
    $
    102
    
    
    $
    161Selling and marketing expense
    
    
    43
    
    
    
    37
    
    
    
    79
    
    
    
    86Research and product development expense
    
    
    66
    
    
    
    77
    
    
    
    118
    
    
    
    163General and administrative expense
    
    
    207
    
    
    
    313
    
    
    
    527
    
    
    
    895
  Weighted
    
    
    Weighted-Average
    
    
    AggregateNumber
    
    
    Average
    
    
    Remaining
    
    
    Intrinsicof Options
    
    
    Exercise
    
    
    Contractual
    
    
    Value(in thousands)
    
    
    Price
    
    
    Life (Years)
    
    
    (in thousands)Outstanding, September 30, 2008
    
    
    8,245
    
    
    $
    2.21
    
    
    
    4.1
    
    
    $
    Cancelled
    
    
    (546
    )
    
    
    1.59Outstanding, March 31, 2009
    
    
    7,699
    
    
    
    2.25
    
    
    
    3.6
    
    
    
    Exercisable, March 31, 2009
    
    
    7,681
    
    
    
    2.25
    
    
    
    3.6
    
    
    
    
  Restricted Stock Units
    
    Stock Appreciation RightsWeighted
    
    
    
    
    
    WeightedNumber
    
    Average
    
    Number
    
    Averageof Awards
    
    Grant Date
    
    of Awards
    
    Grant Date(in thousands)
    
    Fair Value
    
    (in thousands)
    
    Fair ValueOutstanding, September 30, 2008
    
    
    1,504
    
    
    $
    1.78
    
    
    
    3,062
    
    
    $
    0.89Granted
    
    
    1,164
    
    
    
    0.52
    
    
    
    1,180
    
    
    
    0.35Vested
    
    
    (571
    )
    
    
    1.48
    
    
    
    
    
    
    
    Cancelled
    
    
    (238
    )
    
    
    1.69
    
    
    
    (447
    )
    
    
    0.97Outstanding,
March 31, 2009
    
    
    1,859
    
    
    
    1.09
    
    
    
    3,795
    
    
    
    0.71
  Note 7. Income Taxes
  12




---



##### Table of Contents



Note 8. Discontinued Operations
   Note 9. Earnings (Loss) Per Share
 Earning per Share
 13




---



##### Table of Contents



Participating Securities and the Two-Class Method under FASB
Statement No. 128 The Effect of Contingently Convertible Instruments on Diluted
Earnings per share
  Six Months Ended March 31, 2009Basic
    
    
    DilutedIncome
    
    
    Shares
    
    
    
    
    
    
    Income
    
    
    Shares(Numerator)
    
    
    (Denominator)
    
    
    Per Share
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Per ShareIncome from continuing operations
    
    $
    1,892
    
    
    
    
    
    
    
    
    
    
    $
    1,892
    
    
    
    Preferred stock dividends
    
    
    (971
    )
    
    
    
    
    
    
    
    
    
    
    (971
    )
    
    
    Weighted average common shares
outstanding
    
    
    
    
    
    
    43,355
    
    
    
    
    
    
    
    
    
    
    
    43,355Series B preferred
    
    
    
    
    
    
    4,384
    
    
    
    
    
    
    
    
    
    
    
    4,384Restricted stock units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86Income from continuing operations
available to common shareholders
    
    
    921
    
    
    
    47,739
    
    
    $
    0.02
    
    
    
    921
    
    
    
    47,825
    
    
    $
    0.02Income from discontinued operations,
net of tax
    
    
    362
    
    
    
    47,739
    
    
    
    0.01
    
    
    
    362
    
    
    
    47,825
    
    
    
    0.01Net income available to common
shareholders
    
    
    1,283
    
    
    
    47,739
    
    
    $
    0.03
    
    
    
    1,283
    
    
    
    47,825
    
    
    $
    0.03
   Three Months
    
    Three and SixEnded
    
    Months EndedMarch 31,
    
    March 31,2009
    
    2008Employee and non-employee stock options
    
    
    8,683
    
    
    
    8,909Warrants
    
    
    6,114
    
    
    
    6,114Restricted stock units
    
    
    1,859
    
    
    
    1,550Stock-settled stock appreciation rights
    
    
    3,796
    
    
    
    2,810Series B convertible preferred stock
    
    
    4,435
    
    
    
    4,332Series C-1 convertible preferred stock
    
    
    9,165
    
    
    
    8,955Series D convertible preferred stock
    
    
    3,672
    
    
    
    3,59337,724
    
    
    
    36,263
 14




---



##### Table of Contents



Note 10. Comprehensive Income (Loss)
 Reporting Comprehensive Income
 Three Months Ended
    
    
    Six Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income (loss)
    
    $
    203
    
    
    $
    45
    
    
    $
    2,254
    
    
    $
    (288
    )Foreign currency translation adjustments
    
    
    (87
    )
    
    
    (276
    )
    
    
    (292
    )
    
    
    (17
    )Comprehensive income (loss)
    
    $
    116
    
    
    $
    (231
    )
    
    $
    1,962
    
    
    $
    (305
    )
  Note 11. Segment Reporting
 Disclosures about Segments of an Enterprise and Related Information
   Three Months Ended March 31,2009
    
    2008Manufacturing
    
    Hospitality
    
    Total
    
    Manufacturing
    
    Hospitality
    
    TotalRevenues
    
    $
    10,104
    
    
    $
    11,252
    
    
    $
    21,356
    
    
    $
    11,916
    
    
    $
    11,739
    
    
    $
    23,655Operating income (loss)
    
    
    1,930
    
    
    
    (1,539
    )
    
    
    391
    
    
    
    1,699
    
    
    
    (2,497
    )
    
    
    (798
    )
 Six Months Ended March 31,2009
    
    2008Manufacturing
    
    Hospitality
    
    Total
    
    Manufacturing
    
    Hospitality
    
    TotalRevenues
    
    $
    20,758
    
    
    $
    26,150
    
    
    $
    46,908
    
    
    $
    24,476
    
    
    $
    21,428
    
    
    $
    45,904Operating income (loss)
    
    
    3,069
    
    
    
    (253
    )
    
    
    2,816
    
    
    
    3,998
    
    
    
    (6,031
    )
    
    
    (2,033
    )
 15




---



##### Table of Contents



Three Months Ended
    
    
    Six Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008United States
    
    $
    14,860
    
    
    $
    14,298
    
    
    $
    32,990
    
    
    $
    27,336United Kingdom
    
    
    2,372
    
    
    
    4,525
    
    
    
    5,396
    
    
    
    8,626Other
    
    
    4,124
    
    
    
    4,832
    
    
    
    8,522
    
    
    
    9,942$
    21,356
    
    
    $
    23,655
    
    
    $
    46,908
    
    
    $
    45,904
  March 31,
    
    
    September 30,2009
    
    
    2008United States
    
    $
    1,028
    
    
    $
    1,093Other
    
    
    718
    
    
    
    1,002$
    1,746
    
    
    $
    2,095
 16




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion of our financial condition and results of operations should be read
together with the financial statements and related notes, which are included elsewhere in this
Quarterly Report on Form 10-Q . This discussion contains forward-looking statements based upon
current expectations that involve risks and uncertainties. Our actual results may differ
materially from those anticipated in these forward-looking statements as a result of various
factors, including those set forth in more detail in our 2008 Annual Report on Form 10-K . We
undertake no obligation to update any information in our forward-looking statements.
 Fiscal Year
  Critical Accounting Policies and Estimates
   
    
    revenue recognition;
    
    the valuation of deferred tax assets;
    
    the valuation of accounts receivable; and
    
    the valuation of goodwill and intangible assets.
  17




---



##### Table of Contents



Results of Operations
 Revenues.
 Three Months Ended March 31,2009
    
    
    2008Manufacturing
    
    
    Hospitality
    
    
    Total
    
    
    Manufacturing
    
    
    Hospitality
    
    
    TotalSoftware licenses
    
    $
    1,070
    
    
    $
    1,753
    
    
    $
    2,823
    
    
    $
    1,204
    
    
    $
    2,808
    
    
    $
    4,012Maintenance and support
    
    
    7,134
    
    
    
    5,445
    
    
    
    12,579
    
    
    
    7,817
    
    
    
    5,696
    
    
    
    13,513Professional services
    
    
    1,788
    
    
    
    2,934
    
    
    
    4,722
    
    
    
    2,751
    
    
    
    1,940
    
    
    
    4,691Third party software
and hardware
    
    
    112
    
    
    
    1,120
    
    
    
    1,232
    
    
    
    144
    
    
    
    1,295
    
    
    
    1,439Total
    
    $
    10,104
    
    
    $
    11,252
    
    
    $
    21,356
    
    
    $
    11,916
    
    
    $
    11,739
    
    
    $
    23,655% ChangeManufacturing
    
    
    Hospitality
    
    
    TotalSoftware licenses
    
    
    -11.1
    %
    
    
    -37.6
    %
    
    
    -29.6
    %Maintenance and support
    
    
    -8.7
    %
    
    
    -4.4
    %
    
    
    -6.9
    %Professional services
    
    
    -35.0
    %
    
    
    51.2
    %
    
    
    0.7
    %Third party software
and hardware
    
    
    -22.2
    %
    
    
    -13.5
    %
    
    
    -14.4
    %Total
    
    
    -15.2
    %
    
    
    -4.1
    %
    
    
    -9.7
    %Six Months Ended March 31,2009
    
    2008Manufacturing
    
    
    Hospitality
    
    
    Total
    
    
    Manufacturing
    
    
    Hospitality
    
    
    TotalSoftware licenses
    
    $
    2,159
    
    
    $
    7,403
    
    
    $
    9,562
    
    
    $
    2,731
    
    
    $
    4,278
    
    
    $
    7,009Maintenance and support
    
    
    14,732
    
    
    
    10,791
    
    
    
    25,523
    
    
    
    15,913
    
    
    
    11,164
    
    
    
    27,077Professional services
    
    
    3,670
    
    
    
    5,958
    
    
    
    9,628
    
    
    
    5,573
    
    
    
    4,044
    
    
    
    9,617Third party software
and hardware
    
    
    197
    
    
    
    1,998
    
    
    
    2,195
    
    
    
    259
    
    
    
    1,942
    
    
    
    2,201Total
    
    $
    20,758
    
    
    $
    26,150
    
    
    $
    46,908
    
    
    $
    24,476
    
    
    $
    21,428
    
    
    $
    45,904% ChangeManufacturing
    
    
    Hospitality
    
    
    TotalSoftware licenses
    
    
    -20.9
    %
    
    
    73.0
    %
    
    
    36.4
    %Maintenance and support
    
    
    -7.4
    %
    
    
    -3.3
    %
    
    
    -5.7
    %Professional services
    
    
    -34.1
    %
    
    
    47.3
    %
    
    
    0.1
    %Third party software
and hardware
    
    
    -23.9
    %
    
    
    2.9
    %
    
    
    -0.3
    %Total
    
    
    -15.2
    %
    
    
    22.0
    %
    
    
    2.2
    %
 18




---



##### Table of Contents



Three Months Ended March 31,2009
    
    
    2008Manufacturing
    
    
    Hospitality
    
    
    Total
    
    
    Manufacturing
    
    
    Hospitality
    
    
    TotalAmericas
    
    $
    6,419
    
    
    $
    8,603
    
    
    $
    15,022
    
    
    $
    7,077
    
    
    $
    7,458
    
    
    $
    14,535Europe, Middle East
and Africa (EMEA)
    
    
    2,313
    
    
    
    1,095
    
    
    
    3,408
    
    
    
    3,312
    
    
    
    2,390
    
    
    
    5,702Asia Pacific (APAC)
    
    
    1,372
    
    
    
    1,554
    
    
    
    2,926
    
    
    
    1,527
    
    
    
    1,891
    
    
    
    3,418Total
    
    $
    10,104
    
    
    $
    11,252
    
    
    $
    21,356
    
    
    $
    11,916
    
    
    $
    11,739
    
    
    $
    23,655% ChangeManufacturing
    
    
    Hospitality
    
    
    TotalAmericas
    
    
    -9.3
    %
    
    
    15.4
    %
    
    
    3.4
    %Europe, Middle East
and Africa (EMEA)
    
    
    -30.2
    %
    
    
    -54.2
    %
    
    
    -40.2
    %Asia Pacific (APAC)
    
    
    -10.2
    %
    
    
    -17.8
    %
    
    
    -14.4
    %Total
    
    
    -15.2
    %
    
    
    -4.1
    %
    
    
    -9.7
    %Six Months Ended March 31,2009
    
    
    2008Manufacturing
    
    
    Hospitality
    
    
    Total
    
    
    Manufacturing
    
    
    Hospitality
    
    
    TotalAmericas
    
    $
    13,028
    
    
    $
    20,360
    
    
    $
    33,388
    
    
    $
    14,671
    
    
    $
    13,236
    
    
    $
    27,907Europe, Middle East
and Africa
(EMEA)
    
    
    4,959
    
    
    
    2,478
    
    
    
    7,437
    
    
    
    6,661
    
    
    
    4,334
    
    
    
    10,995Asia Pacific (APAC)
    
    
    2,771
    
    
    
    3,312
    
    
    
    6,083
    
    
    
    3,144
    
    
    
    3,858
    
    
    
    7,002Total
    
    $
    20,758
    
    
    $
    26,150
    
    
    $
    46,908
    
    
    $
    24,476
    
    
    $
    21,428
    
    
    $
    45,904% ChangeManufacturing
    
    
    Hospitality
    
    
    TotalAmericas
    
    
    -11.2
    %
    
    
    53.8
    %
    
    
    19.6
    %Europe, Middle East
and Africa (EMEA)
    
    
    -25.6
    %
    
    
    -42.8
    %
    
    
    -32.4
    %Asia Pacific (APAC)
    
    
    -11.9
    %
    
    
    -14.2
    %
    
    
    -13.1
    %Total
    
    
    -15.2
    %
    
    
    22.0
    %
    
    
    2.2
    %
 Manufacturing Segment
  19




---



##### Table of Contents



Software License Revenue.
 Maintenance and Support Revenue.
 Professional Services Revenue.
 Third Party Software and Hardware Revenue.
 Revenue by Geography.
 Hospitality Segment
  Software License Revenue.
 20




---



##### Table of Contents



Maintenance and Support Revenue.
 Professional Services.
 Third Party Software and Hardware Revenue.
 Revenue by Geography.
 Gross Margin.
 Three Months Ended March 31,2009
    
    2008Manufacturing
    
    Hospitality
    
    Total
    
    Manufacturing
    
    Hospitality
    
    TotalSoftware licenses
    
    
    80.3
    %
    
    
    83.3
    %
    
    
    82.2
    %
    
    
    88.8
    %
    
    
    83.8
    %
    
    
    85.3
    %Maintenance and support
    
    
    80.9
    %
    
    
    60.0
    %
    
    
    71.9
    %
    
    
    77.6
    %
    
    
    57.9
    %
    
    
    69.3
    %Professional services
    
    
    -6.7
    %
    
    
    15.9
    %
    
    
    7.4
    %
    
    
    20.2
    %
    
    
    2.7
    %
    
    
    13.0
    %Third party software
and hardware
    
    
    47.7
    %
    
    
    24.2
    %
    
    
    26.3
    %
    
    
    -19.9
    %
    
    
    35.8
    %
    
    
    30.2
    %Total
    
    
    65.0
    %
    
    
    48.6
    %
    
    
    56.3
    %
    
    
    64.3
    %
    
    
    52.5
    %
    
    
    58.5
    %
 Six Months Ended March 31,2009
    
    2008Manufacturing
    
    Hospitality
    
    Total
    
    Manufacturing
    
    Hospitality
    
    TotalSoftware licenses
    
    
    62.0
    %
    
    
    89.6
    %
    
    
    83.3
    %
    
    
    88.3
    %
    
    
    79.9
    %
    
    
    83.2
    %Maintenance and support
    
    
    80.6
    %
    
    
    58.1
    %
    
    
    71.1
    %
    
    
    78.5
    %
    
    
    57.6
    %
    
    
    69.9
    %Professional services
    
    
    -6.8
    %
    
    
    20.3
    %
    
    
    10.0
    %
    
    
    20.1
    %
    
    
    7.5
    %
    
    
    14.8
    %Third party software
and hardware
    
    
    26.9
    %
    
    
    16.9
    %
    
    
    17.8
    %
    
    
    -26.3
    %
    
    
    27.4
    %
    
    
    21.1
    %Total
    
    
    62.7
    %
    
    
    55.3
    %
    
    
    58.6
    %
    
    
    65.2
    %
    
    
    49.9
    %
    
    
    58.0
    %
 21




---



##### Table of Contents



Manufacturing Segment
      Hospitality Segment
      22




---



##### Table of Contents



Operating Expenses and Operating Income (Loss).
 Three Months Ended March 31,2009
    
    
    2008Manufacturing
    
    
    Hospitality
    
    
    Total
    
    
    Manufacturing
    
    
    Hospitality
    
    
    TotalSelling and marketing
    
    $
    1,626
    
    
    $
    2,000
    
    
    $
    3,626
    
    
    $
    2,025
    
    
    $
    2,943
    
    
    $
    4,968Research and product development
    
    
    1,434
    
    
    
    2,471
    
    
    
    3,905
    
    
    
    1,674
    
    
    
    2,412
    
    
    
    4,086General and administrative
    
    
    1,576
    
    
    
    2,535
    
    
    
    4,111
    
    
    
    2,256
    
    
    
    3,315
    
    
    
    5,571Restructuring related charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    4,636
    
    
    $
    7,006
    
    
    $
    11,642
    
    
    $
    5,955
    
    
    $
    8,670
    
    
    $
    14,625Operating income (loss)
    
    $
    1,930
    
    
    $
    (1,539
    )
    
    $
    391
    
    
    $
    1,699
    
    
    $
    (2,497
    )
    
    $
    (798
    )
 Six Months Ended March 31,2009
    
    
    2008Manufacturing
    
    
    Hospitality
    
    
    Total
    
    
    Manufacturing
    
    
    Hospitality
    
    
    TotalSelling and marketing
    
    $
    3,427
    
    
    $
    4,208
    
    
    $
    7,635
    
    
    $
    4,155
    
    
    $
    5,765
    
    
    $
    9,920Research and product development
    
    
    2,938
    
    
    
    4,995
    
    
    
    7,933
    
    
    
    3,282
    
    
    
    4,563
    
    
    
    7,845General and administrative
    
    
    3,589
    
    
    
    5,501
    
    
    
    9,090
    
    
    
    4,480
    
    
    
    6,401
    
    
    
    10,881Restructuring related charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    25Total
    
    $
    9,954
    
    
    $
    14,704
    
    
    $
    24,658
    
    
    $
    11,942
    
    
    $
    16,729
    
    
    $
    28,671Operating income (loss)
    
    $
    3,069
    
    
    $
    (253
    )
    
    $
    2,816
    
    
    $
    3,998
    
    
    $
    (6,031
    )
    
    $
    (2,033
    )
   Selling and Marketing.
 23




---



##### Table of Contents



Research and Product Development.
 General and Administrative.
 Restructuring Related Charges.
 Non-Operating Income and Expenses, Income Taxes, Discontinued Operations and Preferred Stock
Dividends.
 Three Months Ended
    
    Six Months EndedMarch 31,
    
    March 31,2009
    
    2008
    
    2009
    
    2008Interest expense
    
    $
    (227
    )
    
    $
    (496
    )
    
    $
    (572
    )
    
    $
    (988
    )Other income, net
    
    
    62
    
    
    
    153
    
    
    
    98
    
    
    
    510Provision for (benefit from) income taxes
    
    
    23
    
    
    
    (1,186
    )
    
    
    450
    
    
    
    (2,223
    )Income from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    362
    
    
    
    Preferred stock dividends
    
    
    (480
    )
    
    
    (485
    )
    
    
    (971
    )
    
    
    (976
    )
 Interest Expense.
 24




---



##### Table of Contents



Other Income, Net.
 Provision for Income Taxes.
     Income from Discontinued Operations.
  25




---



##### Table of Contents



Preferred Stock Dividends.
 Liquidity and Capital Resources
 Cash and Cash Equivalents.
 Working Capital Deficit.
 Cash Flows from Operating Activities.
 Cash Flows from Investing Activities.
 Cash Flows from Financing Activities.
 26




---



##### Table of Contents



Commitments and Capital Adequacy
    Off-Balance Sheet Arrangements
  New Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  27




---



##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 PART II.  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A.
Risk Factors
       
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  28




---



##### Table of Contents



Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  1.
    
    Election of Director Randal B. Tofteland: For 43,189,690, Withhold 5,801,429.2.
    
    Election of Director Elaine Wetmore: For 43,415,778, Withhold 5,575,341.3.
    
    Approval of an amendment to the SoftBrands, Inc. 2001 Stock Incentive Plan to authorize
a stock option and stock appreciation right exchange program for employees: For 24,348,953,
Against 9,216,552, Abstain 5,949, Broker Non-Vote 15,419,665.
 
 Item 5. Other Information
  
 Item 6. Exhibits
 31.1
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act  Randal B. Tofteland31.2
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act  Gregg A. Waldon32
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
 29




---



##### Table of Contents



SIGNATURE
  SoftBrands, Inc.Date: May 15, 2009
    By:
    /s/ GREGG A. WALDONGregg A. WaldonSenior Vice President and Chief Financial Officer
(principal financial and accounting officer) 30