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Sonic Foundry Announces First Fiscal 2002 Quarter Results
Sonic Foundry[R] Inc. (NASDAQ: SOFO), a leading provider of rich media software, systems and services, today announced its financial results for the fiscal first quarter ended December 31, 2001.
The Company reported revenues for the quarter ended December 31, 2001 of $6.0 million compared to revenues of $5.4 million for the most recent quarter ended September 30, 2001 and $6.5 million in the comparable prior year quarter ended December 31, 2000. Software products contributed $3.6 million of the total revenues for the quarter while media services generated $2.3 million. Before goodwill, restructuring and the impact of implementing FAS 142, losses were reduced to $2.6 million or $0.10 per diluted common share for the quarter, down from $8.9 million or $0.41 per share for the prior year quarter.
Total cash declined during the quarter by $2.7 million, of which $1.6 million represented payments for closing costs and assumed liabilities related to the MediaSite acquisition, and another $0.7 million represented payments to fund initial operations for MediaSite. Total cash on hand at December 31, 2001 was $5.1 million including $.7 million held in escrow but excluding the remainder of the $5 million convertible debt transaction completed this week. The Company expects a final tranche of $3.0 million will be completed within the next week, leaving the Company with cash of approximately $12 million.
"We continued to execute on our long-term strategy of delivering technology-enabled solutions to the rich media industry while, simultaneously, meeting several important milestones that set the course for the future", said Rimas P. Buinevicius, Chairman and CEO. "We are starting to see a resurging interest in our integrated technology offerings. Our customers are recognizing that our rich media solutions provide immediate and tangible returns on investment through lower implementation and maintenance costs. This heightened interest in our strategic initiatives in the government security and surveillance markets as well as corporate vertical markets, gives us great confidence that we are on the brink of returning to a growth and profit oriented business model."
Recent Key milestones for the Company:
- Strengthened the balance sheet through completion of a $5 million convertible debt transaction, net of expenses of $0.3 million.
- Announced the Company's Unified Security View technology to offer a multi-modal solution to security and surveillance needs.
- Made five submissions in response to the Department of Defense's Broad Agency Announcement on the topic of Homeland Defense and Security.
- Scheduled key opportunity to address Congress on February 12, 2002 regarding important advances in Sonic Foundry's security and surveillance technology that eliminates the need for a National ID card.
- Launched MediaSite Live and entered into license agreement with Real Networks to offer it as part of their suite of services on the Real Broadcast Network for use in live and on-demand webcasts over the Internet.
- Released version 3.0 upgrade to our popular Vegas Video product.
Effective October 1, 2001, the Company adopted new accounting rules dealing with goodwill and other intangible assets. Under the new rules, the Company ceased the amortization of goodwill associated with the acquisition of International Image and STV Communications. Implementation of the new rules also requires an assessment of the carrying value of goodwill using a number of criteria, including the value of the overall enterprise. The Company retained an independent appraisal firm to assist in the assessment and has determined that a one-time write off of the entire value of goodwill associated with the STV and International Image acquisitions is necessary.
Losses for the current quarter, including the $44.7 million non-cash impact of adopting the new accounting change, were $47.4 million or $1.84 per diluted share as compared to $19.7 million or $0.90 per share for the same period of the prior year. For the prior year quarter, losses included a restructuring charge of $3.8 million.
Sonic Foundry will host a conference call today to discuss fiscal year end results at 10:00 am CST/11:00 am EST. A live webcast and replay of the conference call can be accessed at www.vcall.com.
Sonic Foundry, Inc.
Consolidated Balance Sheets
(in thousands except for share data)
December 31, September 30,
2001 2001
-----------------------------------
Assets (Unaudited)
Current Assets:
Cash and cash equivalents $ 4,124 $ 7,809
Restricted cash 1,000 -
Accounts receivable, net of
allowances of $1,081 and $1,075 4,312 4,065
Accounts receivable, other 41 26
Inventories 903 1,118
Prepaid expenses and other
current assets 742 1,085
-----------------------------------
Total current assets 11,122 14,103
Property and equipment:
Buildings and improvements 2,406 2,409
Equipment 13,993 13,823
Furniture and fixtures 541 542
Assets held for sale 40 40
-----------------------------------
Total property and equipment 16,980 16,814
Less accumulated depreciation 5,865 5,010
-----------------------------------
Net property and equipment 11,115 11,804
Other assets:
Goodwill and other
intangibles, net 9,124 44,732
Capitalized software
development costs, net 18 73
Long-term investment 514 514
Other assets 35 457
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Total other assets 9,691 45,776
-----------------------------------
Total assets $ 31,928 $ 71,683
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Sonic Foundry, Inc.
Consolidated Balance Sheets
(in thousands except for share data)
December 31, September 30,
Liabilities and stockholders' equity 2001 2001
-----------------------------------
Current liabilities:
Accounts payable $ 3,338 $ 2,316
Unearned revenue 71 83
Accrued liabilities 3,234 1,719
Accrued restructuring charges 267 345
Current portion of long-term debt 3,989 4,003
Current portion of capital
lease obligations 1,213 1,216
-----------------------------------
Total current liabilities 12,112 9,682
Long-term obligations, net
of current portion 184 217
Capital lease obligations, net
of current portion 376 525
Other liabilities 28 28
Stockholders' equity:
Preferred stock, $.01 par value,
authorized 5,000,000 shares,
none issued and outstanding - -
5% preferred stock, Series B,
voting, cumulative, convertible,
$.01 par value (liquidation
preference at par), authorized
10,000,000 shares, none issued
and outstanding - -
Common stock, $.01 par value,
authorized 100,000,000 shares;
26,363,283 and 22,345,503 shares
issued and 26,335,533 and
22,317,753 outstanding at
December 31, 2001 and
September 30, 2001 264 223
Common stock to be issued 4,900 5,375
Additional paid-in capital 154,064 148,188
Accumulated deficit (139,598) (92,248)
Receivable for common stock issued (26) (34)
Cumulative foreign currency
translations/adjustments (5) 7
Unearned compensation (221) (130)
Treasury stock, at cost,
27,750 shares (150) (150)
-----------------------------------
Total stockholders' equity 19,228 61,231
-----------------------------------
Total liabilities and
stockholders' equity $ 31,928 $ 71,683
===================================
Sonic Foundry, Inc
Statements of Operations
(Unaudited)
(in thousands except for per share data)
Three Months Ended
December 31,
2001 2000
--------------------------
Revenue:
Software $ 3,553 $ 3,988
Media services 2,347 2,530
Media systems 138 -
--------------------------
Total revenue 6,038 6,518
Cost of revenue:
Cost of software 963 1,404
Cost of media services 1,777 2,333
Cost of media systems 36 -
--------------------------
Total cost of revenues 2,776 3,737
--------------------------
Gross profit 3,262 2,781
Operating expenses:
Selling and marketing expenses 2,401 5,228
General and administrative expenses 1,601 3,684
Product development expenses 1,847 2,834
Amortization of goodwill
and other intangibles - 7,018
Restructuring charges - 3,782
--------------------------
Total operating expenses 5,849 22,546
--------------------------
Loss from operations (2,587) (19,765)
Other income (expense):
Interest expense (35) (187)
Interest and other income 4 279
--------------------------
Total other income (expense) (31) 92
--------------------------
Loss before cumulative effect of
changes in accounting principle (2,618) (19,673)
Cumulative effect of adopting SFAS No. 142 (44,732) -
--------------------------
Net loss $(47,350) $(19,673)
==========================
Loss per common share:
Loss before cumulative effect
of changes in accounting principle $ (10) $ (90)
Cumulative effect of adopting SFAS No. 142 (1) -
--------------------------
Net loss per common share -
Basic and diluted $ (1) $ (90)
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About Sonic Foundry®, Inc.
Sonic Foundry (NASDAQ: SOFO) is the trusted market leader for enterprise webcasting solutions, providing video content management and distribution for education, business and government. Powered by the patented Mediasite webcasting platform and webcast services of Mediasite Events, the company empowers people to advance how they share knowledge online, using video webcasts to bridge time and distance, enhance learning outcomes and improve performance.