Unify Reports Record Revenue and Profitability for Fiscal 2008 Second Quarter

-- Total Revenue Increases 126% Over Q207-- Total Revenue Increases 126% Over Q207

-- Software License Revenue Increases 146% Over Q207 -- Software License Revenue Increases 146% Over Q207

-- Services Revenue Increases 115% Over Q207 -- Services Revenue Increases 115% Over Q207

-- Operating Income of $954,000 -- Operating Income of $954,000

-- Profitability with Net Income of $692,000; EPS of $0.10 -- Profitability with Net Income of $692,000; EPS of $0.10

-- Increases Annual Revenue and EBITDA Guidance -- Increases Annual Revenue and EBITDA GuidanceSACRAMENTO, Calif.--(Business Wire)--Unify Corp. (OTCBB:UFYC), a global provider of applicationmodernization software, today announced financial results for itssecond quarter of fiscal 2008, ended October 31, 2007. Fiscal Second Quarter 2008 Highlights:

-- Total revenue increased 126% year-over-year to $4.9 million. -- Total revenue increased 126% year-over-year to $4.9 million.

-- Software license revenue increased 146% year-over-year to $1.9 -- Software license revenue increased 146% year-over-year to $1.9

million.

-- Services revenue increased 115% year-over-year to $3.0 -- Services revenue increased 115% year-over-year to $3.0

million.

-- Income from operations of $954,000 versus $205,000 a year ago. -- Income from operations of $954,000 versus $205,000 a year ago.

-- Net income of $692,000 versus a net loss of $187,000 a year -- Net income of $692,000 versus a net loss of $187,000 a year

ago.

-- Earnings per share of $0.10 versus a loss per share of $0.03 a -- Earnings per share of $0.10 versus a loss per share of $0.03 a

year ago.

-- Adjusted EBITDA of $1.3 million versus $255,000 a year ago. -- Adjusted EBITDA of $1.3 million versus $255,000 a year ago.

-- Company signed 63 new customers in its database and -- Company signed 63 new customers in its database and

development business.

-- Company signed EMC as partner in Composer initiative. -- Company signed EMC as partner in Composer initiative. Business Discussion: "Our second quarter results were driven by the 146 percent growthwe reported in our new software license revenues as a result oforganic and acquisition related growth - the largest growth we'veexperienced in years," said Todd Wille, CEO of Unify. "Our recurringmaintenance revenues, which represented 55 percent of total Q2revenues, also remained strong with renewals in excess of 95 percent.In addition, we achieved profitability for the first time in sixquarters, reporting net income of $692,000 or $0.10 per share." Mr. Wille continued, "We experienced strong growth in our databaseand development software business. We added 63 new customers, bringingthe total new customers for the first half of our fiscal year to 142.We had nearly 350 attendees at our developer conferences compared to135 at the conferences last year, validating the growing interest weare experiencing for our database and development products from bothbrand new customers as well as existing customers. In addition, welaunched two new products during the quarter, SQLBase 11 and TeamDeveloper 5.1, which are driving new customer acquisition and furtherpenetration into our customer base, as well as sustaining a solidmaintenance stream. "In our application modernization business, we formed asignificant partnership with EMC Corp., a world leader in informationinfrastructure solutions. EMC has a strategic practice focused ontransitioning Lotus Notes customers to Microsoft technologies. Throughthis partnership, Unify and EMC will now be able to provideapplication migration services to large global companies looking tomigrate custom, complex, legacy Lotus Notes applications to theMicrosoft platform. "Also in our second quarter, we were selected as a strategicpartner for the Microsoft Global Seminar Series for Lotus NotesCustomers, a road show focused on educating Microsoft partners and theworld's largest IT customers about transitioning to the Microsoftframework. Thru today, we have presented to over a hundred Microsoftfield and partner sales executives who are focused on the Lotus Notesmigration initiative and several dozen Lotus Notes customers lookingfor ways to transition off of Notes. We see both of these partnershipsas significant steps in growing our application modernization serviceoffering," commented Wille. Financial Results: The company reported total revenues in the second quarter offiscal 2008 of $4.9 million, up 126% as a result of organic andacquisition related growth when compared to $2.2 million in the secondquarter of fiscal 2007. Software licenses revenue increased 146%, to$1.9 million, compared to $785,000 for the fiscal second quarter in2007. Services revenue was up 115%, to $3.0 million for the quarter,compared to $1.4 million for the same quarter of fiscal 2007. Net income was $692,000 or $0.10 per share compared to a net lossof $187,000 or $0.03 loss per share in the second quarter of fiscal2007. For the six month period of fiscal 2008, the Company reportedtotal revenues of $8.9 million, up 127 percent as a result of organicand acquisition related growth, compared to $2.2 million for the sameperiod of fiscal 2007. Software licenses revenue for the six monthperiod increased 189 percent to $3.4 million, compared to $1.2 millionfor the same period of fiscal 2007. Services revenue was up 101percent, to $5.5 million, compared to $2.7 million for the same periodlast year. Net income for the six month period of fiscal 2008 was $473,000 or$0.07 per share, compared to a net loss of $941,000 or $0.16 loss pershare for the same period of fiscal 2007. Adjusted EBITDA for the second quarter was $1.3 million comparedto $255,000 last year. Adjusted EBITDA for the first six months offiscal 2008 was $1.65 million compared to a negative $5,000 for thesame period last year. Adjusted EBITDA is calculated by taking theCompany's operating income and adjusting for depreciation andamortization, non-cash stock-based compensation and other charges. TheCompany believes that this non-GAAP measure, viewed in addition to andnot in lieu of the Company's reported GAAP results, provides usefulinformation to investors because it is an integral part of theCompany's internal evaluation of operating results. Unify ended its fiscal 2008 second quarter with total cash andcash equivalents of $1.7 million, compared to $1.4 million at October31, 2006 and $2.1 million at April 30, 2007. During the first six months of fiscal 2008, the Company made over$650,000 of acquisition- related payments, which impacted the secondquarter ended cash balance. Fully diluted share count used for GAAPearnings per share calculations in the fiscal second quarter was 2008was 6.6 million. Fiscal 2008 Annual Guidance Update Wille concluded, "As a result of the momentum we are seeing in oursoftware business, we are increasing our annual guidance for fiscal2008 as follows: revenue is expected to be in the range of $17 millionto $18 million and EBITDA is expected to be in the range of $2.75million to $3.25 million." Fiscal 2007 In conjunction with the sale of the Company's insurance divisionin November 2006 of last year, the Company accrued $734,000 asadditional consideration for the original purchase of the insurancedivision. As a part of routine discussions with the Company's auditorsduring the quarterly review of the second quarter ended October 31,2007, the auditors informed the Company this additional considerationpaid for the original purchase of the insurance division should becategorized as expense during the third quarter of fiscal 2007,instead of as additional consideration. Based on this information, theCompany may need to restate fiscal 2007 results to re-categorize the$734,000 as an expense which would increase last year's audited netloss of $2.4 million to $3.2 million. There is no change to the April30, 2007 total stockholder's equity balance or any other impact on theCompany's fiscal 2007 audited financial statements. The $734,000 inaccrued additional consideration has been fully paid. Additionally,the anticipated revision will have no impact on the Company's fiscal2008 operations or results. Investor Conference Call: Unify management will host a conference call today, November 29,2007, at 2:00 p.m. PT (5:00 p.m. ET) to review the fiscal secondquarter 2008 financial results. The call can be accessed by dialing (800) 218-8862 or (303)262-2190, and giving the pass code "UNIFY." Participants are asked tocall the assigned number approximately 10 minutes before theconference call begins. In addition, the conference call will beavailable over the Internet at www.unify.com in the Investor Relationssection of the site. About Unify Unify is a global provider of application modernization softwarethat enables Service-Oriented Architecture (SOA). Unify allows anorganization to modernize mission critical applications whilemaximizing its legacy investments throughout the enterprise. Unify'senterprise software portfolio enhances SOA environments by improvingapplication time-to-market metrics, increasing collaboration andservice-enabling legacy information. Headquartered in Sacramento,Calif., Unify has offices in London, Munich, Paris and Sydney. Visitwww.unify.com or email us at info@unify.com. Some of the information in this press release may containprojections or other forward-looking statements regarding futureevents or the future financial performance of the Company. We wish tocaution you that these statements involve risks and uncertainties andactual events or results may differ materially. Among the importantfactors which could cause actual results to differ materially fromthose in the forward-looking statements are general market conditions,unfavorable economic conditions, our ability to execute our businessstrategy, the effectiveness of our sales team and approach, ourability to target, analyze and forecast the revenue to be derived froma client and the costs associated with providing services to thatclient, the date during the course of a calendar year that a newclient is acquired, the length of the integration cycle for newclients and the timing of revenues and costs associated therewith, ourclient concentration given that the Company is currently dependent ona few large client relationships, potential competition in themarketplace, the ability to retain and attract employees, marketacceptance of our product and service programs and pricing options,our ability to maintain our existing technology platform and to deploynew technology, our ability to sign new clients and control expenses,the possibility of the discontinuation of some client relationships,the financial condition of our clients' business and other factorsdetailed in the Company's filings with the Securities and ExchangeCommission, including our recent filings on Forms 10-K and 10-Q.-0-*T

UNIFY CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

October 31, April 30,

2007 2007

----------- ----------- ASSETSCurrent assets:Cash and cash equivalents $ 1,694 $ 2,064Accounts receivable, net 3,925 4,227Prepaid expenses and other current assets 444 520 ----------- -----------Assets of discontinued operations held for sale 6,063 6,811Total current assetsProperty and equipment, net 189 229Other investments 39 214Goodwill 6,019 5,667Intangibles, net 2,564 2,643Other assets, net 297 474 ----------- -----------Total assets $ 15,171 $ 16,038 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable $ 519 $ 620Current portion of long term debt 1,211 1,361Accrued compensation and related expenses 939 804Other accrued liabilities 1,119 1,792Deferred revenue 4,611 5,577 ----------- -----------Total current liabilities 8,399 10,154Long term debt, net 4,300 4,910Other long term liabilities 114 121Commitments and contingencies - -Total stockholders' equity 2,358 853 ----------- -----------Total liabilities and stockholders' equity $ 15,171 $ 16,038 =========== ===========*T-0-*T UNIFY CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Six Months Ended Ended October 31, October 31, --------------- --------------- 2007 2006 2007 2006 ------- ------- ------- -------Revenues: Software licenses $1,932 $ 785 $3,396 $1,176 Services 3,017 1,405 5,514 2,748 ------- ------- ------- ------- Total revenues 4,949 2,190 8,910 3,924 ------- ------- ------- -------Cost of Revenues: Software licenses 46 31 93 69 Services 296 256 491 532 ------- ------- ------- ------- Total cost of revenues 342 287 584 601 ------- ------- ------- -------Gross profit 4,607 1,903 8,326 3,323 ------- ------- ------- -------Operating Expenses: Product development 796 391 1,708 767 Selling, general and administrative 2,857 1,307 5,556 2,665 ------- ------- ------- ------- Total operating expenses 3,653 1,698 7,264 3,432 ------- ------- ------- ------- Income (loss) from operations 954 205 1,062 (109)Other income (expense), net (163) 86 (480) 109 ------- ------- ------- ------- Income from continuing operations before income taxes 791 291 582 - ------- ------- ------- -------Provision for income taxes 99 - 109 - ------- ------- ------- ------- Income from continuing operations 692 291 473 - Loss from discontinued operations - (478) - (941) ------- ------- ------- ------- Net income (loss) $ 692 $ (187) $ 473 $ (941) ======= ======= ======= =======Net income (loss) per share: Basic earnings per share: Continuing operations $ 0.11 $ 0.05 $ 0.08 $ - Discontinued operations - (0.08) - (0.16) ------- ------- ------- ------- Net income (loss) $ 0.11 $(0.03) $ 0.08 $(0.16) ======= ======= ======= ======= Dilutive earnings per share: Continuing operations $ 0.10 $ 0.05 $ 0.07 $ - Discontinued operations - (0.08) - (0.16) ------- ------- ------- ------- Net income (loss) $ 0.10 $(0.03) $ 0.07 $(0.16) ======= ======= ======= =======Shares used in computing net income (loss) per share: Basic 6,100 5,905 6,068 5,905 Dilutive 6,627 5,905 6,502 5,905 RECONCILIATION OF GAAP TO NON-GAAP (In thousands) Three Months Six Months Ended Ended October 31, October 31, --------------- --------------- 2007 2006 2007 2006 ------- ------- ------- -------GAAP operating income (loss) $ 954 $ 205 $1,062 $ (109) ------- ------- ------- -------Amortization of intangible assets 219 - 403 -Depreciation 44 37 96 75Stock based compensation expenses 44 13 87 29 ------- ------- ------- ------- Total adjustments to GAAP operating income 307 50 586 104 ------- ------- ------- ------- ------- ------- ------- -------Non-GAAP operating income (loss) - Adjusted EBITDA $1,261 $ 255 $1,648 $ (5) ======= ======= ======= =======*TUnify Corp.Steven Bonham, 916-928-6400Chief Financial Officerinvestors@unify.comorMKR Group, Inc.Todd Kehrli or Mary Magnani, 323-468-2300ufyc@mkr-group.comCopyright Business Wire 2007