Island Pacific to Sell IPMS Division

October 23, 2007 Alex Woodie

Island Pacific, the troubled developer of enterprise software for retailers, last week announced that it’s very close to finalizing the sale of the Island Pacific Merchandising System (IPMS), the multi-channel merchandise management system that runs exclusively under i5/OS. The Irvine, California, company also released preliminary financial results going back to April 2006.

Few details about the sale of its IPMS division were revealed with last week’s announcement. The company said it is in “final negotiations” to sell the division for $16 million, that it expects the deal to be finalized by the end of October, and that the transaction should close by the end of the year.

Island Pacific did not name the potential buyer, but those details should be available by the end of the month, when it holds a conference call to discuss the sale of IPMS and its financial results for fiscal year 2007.

Last week, the company announced preliminary results for fiscal year 2007, which ended March 31. The company expects to report revenues of about $25.5 million for the year, which would entail a 7 percent improvement over the previous year.

The company also expects to have quarterly reports for the previous three quarters finalized by the end of the month, which will allow the company to become eligible to be traded on the OTC Bulletin Board. Its stock is currently traded on the Pink Sheets.

The company also stated that estimated earnings before interest, tax, depreciation and amortization (EBITDA) for fiscal 2007 should be $3.4 million, an increase of 142 percent compared to the previous year. The non-GAAP results are the result of a significant reduction in operating expenses, the company says, from $18.3 million in 2005 to $12.2 million in 2006 and $12.0 million in 2007.