MADISON, Wis., Nov. 30 /PRNewswire-FirstCall/ -- Sonic Foundry,
Inc. (NASDAQ:SOFOD), the recognized market leader for rich media
webcasting and knowledge management, today announced financial
results for the fiscal year and quarter ended September 30, 2009.
Results include: 2009 Fiscal Year -- Revenue totaled $18.6 million
compared to $15.6 million in 2008 -- Billings totaled $19.2 million
compared to $16.9 million in 2008 -- Gross margin was 77 percent,
up from 73 percent in fiscal year 2008 -- Operating expenses were
reduced 13 percent from $19.3 million to $16.7 million -- Services
revenue increased 25 percent -- Cash used in operating activities
decreased 62 percent from $3.9 million in fiscal year 2008 to $1.5
million in fiscal year 2009 -- GAAP net loss was $(2.6) million or
$(0.74) per diluted share compared to a revised loss of $(8.1)
million or $(2.28) per diluted share in 2008 -- Non-GAAP net loss
was $(693) thousand or $(0.19) per diluted share compared to
non-GAAP net loss of $(4.6) million or $(1.29) per diluted share in
fiscal year 2008 Fourth Quarter -- Revenue was $4.1 million, up two
percent from 2008 fiscal fourth quarter -- Billings totaled $4.7
million compared to $5.3 million in the fourth quarter of 2008 --
GAAP net loss was $(1.1) million or $(0.30) per diluted share
compared to a revised loss of $(1.5) million or $(0.42) per diluted
share in the fourth quarter of 2008 -- Non-GAAP net loss was ($0.1)
million or $(0.04) per diluted share compared to non-GAAP net
income of $0.3 million or $0.08 per diluted share -- Deferred
revenue balance was $5.3 million compared to $4.7 million at June
30, 2009, and $4.7 million at September 30, 2008, partly due to
increase in webcasting events and other services -- Services
revenue was $2.1 million, up 20 percent from fiscal fourth quarter
of 2008 Non-GAAP net income primarily excludes all non-cash related
expenses of stock compensation, depreciation, amortization,
provision for income taxes and the cash impact of personnel and
program reductions and billings not recognized as revenue.
Reconciliation between GAAP and non-GAAP results is provided at the
end of this press release. In fiscal 2009, the company recorded a
non-cash deferred tax liability related to goodwill acquired in
2001 and made corresponding revisions to 2008 results. The net
impact was to record a $142 thousand non-cash provision for taxes
and an increase to a long-term deferred tax liability of $142
thousand in fiscal 2009 and to record a $256 thousand non-cash
provision for taxes in fiscal 2008 as well as the accumulated
impact of prior period amortization of goodwill. This liability had
historically been presented net of deferred tax assets and
associated valuation allowances. Management determined that due to
the nature of the deferred tax liability and future growth of such
non-cash liability it was more prudent to present separately.
Fiscal 2008 numbers have been revised to match this presentation.
On November 16, 2009, the company completed a one-for-ten reverse
stock split of its common stock. The net effect was to reduce the
number of common shares outstanding from approximately 36,069,000
to 3,606,900. Fiscal 2009 and prior period share and per share
amounts have been adjusted to reflect the split for comparative
purposes. The company increased the balance of unearned revenue by
$611 thousand or 13 percent year over year to its current end of
year level of $5.3 million. Of the unearned revenue balance, the
company expects to realize $2.2 million in the quarter ending
December 31, 2009. Total services revenue was $8.8 million for
fiscal 2009, an increase of 25 percent from fiscal 2008. Services
revenue includes Mediasite customer support contracts, as well as
training, installation, rental, event and content hosting services.
The increase was primarily due to event and content hosting
services plus support contracts on new Mediasite Recorders and
recurring renewals of support contracts entered into previous
years. The expense reductions and cost control initiated in January
2008 and continued throughout fiscal 2009 resulted in quarter over
quarter EPS improvement for the seventh consecutive reporting
period. U.S. higher education purchasing decreased year over year
as both public and private institutions struggled with state budget
deficits and mandates. Billings to higher education customers
totaled 61 percent of total billings for fiscal 2009. Corporate
sector sales appear to be recovering from the recession with sales
roughly flat compared to fiscal 2008. However, international sales
remained strong with approximately 27 percent of the year's
billings, compared to 14 percent in fiscal 2008. "While the last
year or two have been quite challenging, due primarily to
extraordinary economic conditions, we managed to grow our business
during a period when overall IT spending decreased," said Rimas
Buinevicius, chairman and CEO of Sonic Foundry. "Furthermore, we
are beginning to see signs of economic recovery, and specifically,
certain signals for expanded growth in mid-2010 as they relate to
the Mediasite product and service offering. Correspondingly, our
recent prospecting has resulted in additions to our sales pipeline
that, if consummated, would dwarf most of the previous sales made
by the company to date. These opportunities have been harvested
both domestically and internationally and in different vertical
segments of our customer base, most of it occurring in the last few
months. Based on the expected timing of these new opportunities,
mid-2010 may mark a significant turning point for the company,
which could substantially expand operating performance, especially
given the cost reductions and operating leverage now in place."
Highlights of fiscal year 2009 include: -- Further product
development and enhancements including integration with Moodle and
the introduction of Mediasite 5.1 and 5.2, which introduced new
Mediasite Players, embeddable Mediasite content and the Mediasite
Recorder Control Center -- Webcasting high-profile conferences,
events and product launches for Fortune 1000 companies and major
brands including Autodesk, Fiserv, OfficeMax, Research In Motion
(RIM) and T-Mobile. -- New higher education customer acquisitions
including Duke University Pratt School of Engineering, Johns
Hopkins University Schools of Nursing and Biotechnology, King
Abdullah University of Science and Technology, Tecnologico de
Monterrey - School of Medicine, Temple University Fox School of
Business, University of Denver - Sturm College of Law, University
of Florida Radiology, University of Iowa College of Business
Administration, University of Michigan School of Social Work,
University of New Mexico Health Science Center and Center for Long
Term Ecological Research, University of Washington School of
Medicine, UCLA School of Public Health, Vanderbilt University,
Villanova University School of Business and Virtual University of
Tunis -- Numerous awards and analyst recognition including Frost
& Sullivan's World Market Leadership Award, positioned as
Market Leader for Distance Education and e-Learning by Wainhouse
Research, plus Best Presentation Tool by Best of Elearning!, Best
Webcasting Platform in the Streaming Media Magazine Readers' Choice
for the third consecutive year as well as in the inaugural
Streaming Media European Readers' Choice, the only United States
based company to receive an award Sonic Foundry will host a
corporate webcast today for analysts and investors to discuss its
fiscal 2009 results at 3:30 p.m. CT / 4:30 p.m. ET. It will use its
patented rich media communications system, Mediasite, to webcast
the presentation for both live and on-demand viewing. To access the
presentation, go to http://www.sonicfoundry.com/fy09. An archive of
the webcast will be available for 30 days. EXPLANATION OF NON-GAAP
MEASURES To supplement our financial results presented on a GAAP
basis, we use a measure of non-GAAP net income or loss in our
financial presentation, which excludes certain non-cash costs and
includes certain cash billings not recognized as revenue for GAAP
purposes. Our non-GAAP financial measure is not meant to be
considered in isolation or as a substitute for comparable GAAP
measures, and should be read only in conjunction with our
consolidated financial statements prepared in accordance with GAAP.
Our management regularly uses our supplemental non-GAAP financial
measures internally to understand, manage and evaluate our business
and make operating decisions. These non-GAAP measures are among the
factors management uses in planning for and forecasting future
periods. Our non-GAAP financial measures reflect adjustments based
on the following items: -- Billings not recorded as revenue: We
have included the cash effect of billings not recorded as revenue,
which are deferred for GAAP purposes, in arriving at non-GAAP net
income or loss. Our services are typically billed and collected in
advance of providing the service which requires minimal cost to
perform in the future. Billings are a better indicator of customer
activity and cash flow than revenue is, in management's opinion,
and is therefore used by management as a key operational indicator.
-- Depreciation and amortization of intangible and other assets
expenses: We have excluded the effect of depreciation and
amortization of assets from our non-GAAP net income or loss.
Amortization of intangible assets expense varies in amount and
frequency and it is significantly affected by the timing and size
of our acquisitions. Depreciation and amortization of asset costs
is a non-cash expense that includes the periodic write-off of
tooling, product design and other assets that contributed to
revenues earned during the periods presented and will contribute to
future period revenues as well. -- Non-tax provision for income
taxes: We have excluded the impact of the provision for income
taxes from our non-GAAP net income or loss. The provision for
income taxes is associated with the difference in treatment of
goodwill which is not expensed for GAAP purposes but is amortized
over a fifteen year life for Federal income tax purposes. The
result is a non-cash expense and liability that will never be paid.
-- Personnel and program reduction costs: We have excluded the
additional costs incurred as a result of our cost reduction plan
which was communicated in January 2008. These costs include
severance costs associated with employee reductions as we better
aligned ourselves with key vertical markets. Also excluded is a one
time charge associated with an early extinguishment of a lease. --
Stock-based compensation expenses: We maintain an employee
qualified stock option plan under which we grant options to acquire
common stock to eligible employees. We also maintain an employee
stock purchase plan under which common stock may be issued to
eligible employees at a reduced price. Stock-based compensation
expenses are recorded for these plans in accordance with Statement
of Financial Accounting Standard No. 123R, Share-Based Payment - an
Amendment of FASB Statement Nos. 123 and 95. Stock-based
compensation expense is a non-cash expense. As a result, we have
excluded the effect of stock-based compensation expenses from our
non-GAAP net income or loss. About Sonic Foundry®, Inc. Sonic
Foundry (NASDAQ:SOFODNASDAQ:www.sonicfoundry.com) is the global
leader for rich media webcasting and knowledge management,
providing enterprise communication solutions for more than 1,600
customers in education, business and government. Powered by
Mediasite, the patented webcasting platform which automates the
capture, management, delivery and search of lectures, online
training and briefings, Sonic Foundry empowers people to transform
the way they communicate. Through the Mediasite platform and its
Events Services group, the company helps customers connect a
dynamic, evolving world of shared knowledge and envisions a future
where learners and workers around the globe use webcasting to
bridge time and distance, accelerate research and improve
performance. Certain statements contained in this news release
regarding matters that are not historical facts may be
forward-looking statements. Because such forward-looking statements
include risks and uncertainties, actual results may differ
materially from those expressed in or implied by such
forward-looking statements. Factors that could cause actual results
to differ materially include, but are not limited to, uncertainties
pertaining to continued market acceptance for Sonic Foundry's
products, its ability to succeed in capturing significant revenues
from media services and/or systems, the effect of new competitors
in its market, integration of acquired business and other risk
factors identified from time to time in its filings with the
Securities and Exchange Commission. Sonic Foundry, Inc.
Consolidated Balance Sheets (in thousands, except for share data)
September 30, ------------- Revised 2009 2008 ---- ---- Assets
Current assets: Cash and cash equivalents $2,598 $3,560 Accounts
receivable, net of allowances of $105 and $150 3,741 3,864
Inventories 440 330 Prepaid expenses and other current assets 472
429 --- --- Total current assets 7,251 8,183 Property and
equipment: Leasehold improvements 980 980 Computer equipment 2,545
2,476 Furniture and fixtures 461 461 --- --- Total property and
equipment 3,986 3,917 Less accumulated depreciation and
amortization 2,670 2,223 ----- ----- Net property and equipment
1,316 1,694 Other assets: Goodwill 7,576 7,576 Other intangibles,
net of amortization of $35 and $19 30 21 --- --- Total assets
$16,173 $17,474 ======= ======= Liabilities and stockholders'
equity Current liabilities: Revolving line of credit $300 $-
Accounts payable 636 1,256 Accrued liabilities 1,047 1,113 Unearned
revenue 5,272 4,661 Current portion of capital lease obligations 24
46 Current portion of notes payable 316 333 --- --- Total current
liabilities 7,595 7,409 Long-term portion of capital lease
obligations - 24 Long-term portion of notes payable 557 223 Other
liabilities 170 255 Deferred tax liability 1,250 1,108 ----- -----
Total liabilities 9,572 9,019 Commitments and contingencies
Stockholders' equity: Preferred stock, $.01 par value, authorized
500,000 shares; none issued - - 5% preferred stock, Series B,
voting, cumulative, convertible, $.01 par value (liquidation
preference at par), authorized 1,000,000 shares, none issued - -
Common stock, $.01 par value, authorized 10,000,000 shares;
3,619,639 and 3,572,883 shares issued and 3,606,922 and 3,560,167
shares outstanding 362 357 Additional paid-in capital 184,990
184,204 Accumulated deficit (178,556) (175,911) Receivable for
common stock issued (26) (26) Treasury stock, at cost, 12,716
shares (169) (169) ---- ---- Total stockholders' equity 6,601 8,455
----- ----- Total liabilities and stockholders' equity $16,173
$17,474 ======= ======= See accompanying notes Sonic Foundry, Inc.
Consolidated Statements of Operations (in thousands, except for
share and per share data) Years Ended September 30,
------------------------- Revised 2009 2008 ---- ------- Revenue:
Product $9,644 $8,439 Services 8,813 7,037 Other 120 125 --- ---
Total revenue 18,577 15,601 Cost of revenue: Product 3,794 3,886
Services 537 319 --- --- Total cost of revenue 4,331 4,205 -----
----- Gross margin 14,246 11,396 Operating expenses: Selling and
marketing 10,350 12,905 General and administrative 2,910 2,843
Product development 3,464 3,531 ----- ----- Total operating
expenses 16,724 19,279 ------ ------ Loss from operations (2,478)
(7,883) Interest expense (72) (89) Other income, net 47 99 --- ---
Total other income (expense) (25) 10 --- --- Loss before income
taxes (2,503) (7,873) Provision for income taxes (142) (256) ----
---- Net loss $(2,645) $(8,129) ======= ======= Loss per common
share: Basic net loss per common share $(0.74) $(2.28) ======
====== Diluted net loss per common share $(0.74) $(2.28) ======
====== Weighted average common shares - Basic 3,598,040 3,557,966
========= ========= - Diluted 3,598,040 3,557,966 =========
========= See accompanying notes Non-GAAP Consolidated Statements
of Operations (in thousands) Fiscal Quarter Ended Revised Fiscal
Quarter Ended September 30, 2009 September 30, 2008
-------------------- ---------------------------- Non- Non- GAAP
Adj(1) GAAP GAAP Adj(1) GAAP ---- ----- ---- ---- ----- ----
Revenues $4,128 $575 $4,703 $4,065 $1,220 $5,285 Cost of revenue
1,015 - 1,015 1,125 - 1,125 Total Operating expenses 4,065 (237)
3,828 4,158 (304) 3,854 ----- ---- ----- ----- ---- ----- Loss from
operations (952) 812 (140) (1,218) 1,524 306 Other income (expense)
4 - 4 (8) - (8) Provision for income taxes (142) 142 - (256) 256 -
---- --- --- ---- --- --- Net income (loss) $(1,090) $954 $(136)
$(1,482) $1,780 $298 ======= ==== ===== ======= ====== ==== Diluted
net income (loss) per common share $(0.30) $0.26 $(0.04) $(0.42)
$0.50 $0.08 ====== ===== ====== ====== ===== ===== (1) Adjustments
consist of the following: Billings $575 $1,220 Depreciation (in
G&A) 145 195 Personnel and program reductions Non-cash tax
provision 142 256 Stock-based compensation(2) 92 109 --- --- Total
non-GAAP adjustments $954 $1,780 ==== ====== (2) Stock-based
compensation is included in the following GAAP operating expenses:
Selling and marketing $59 $71 General and administrative 8 30
Research and development 25 8 --- --- Total stock-based
compensation $92 $109 === ==== Fiscal Year Ended Revised Fiscal
Year Ended September 30, 2009 September 30, 2008
-------------------- ---------------------------- Non- Non- GAAP
Adj(1) GAAP GAAP Adj(1) GAAP ---- ----- ---- ---- ----- ----
Revenues $18,577 $611 $19,188 $15,601 $1,347 $16,948 Cost of
revenue 4,331 - 4,331 4,205 - 4,205 Total Operating expenses 16,724
(1,199) 15,525 19,279 (1,953) 17,326 ------ ------ ------ ------
----- ------ Loss from operations (2,478) 1,810 (668) (7,883) 3,300
(4,583) Other income (25) - (25) 10 - 10 Provision for income taxes
(142) 142 - (256) 256 - ---- --- --- ---- --- --- Net income (loss)
$(2,645) 1,952 $(693) $(8,129) $3,556 $4,573 ======= ===== =====
======= ====== ====== Diluted net income (loss) per common share
$(0.74) $0.55 $(0.19) $(2.28) $0.99 $(1.29) ====== ===== ======
====== ===== ====== (1) Adjustments consist of the following:
Billings $611 $1,347 Depreciation (in G&A) 615 702 Personnel
and program reductions - 612 Non-cash tax provision 142 256
Stock-based compensation(2) 584 639 --- --- Total non-GAAP
adjustments $1,952 $3,556 ====== ====== (2) Stock-based
compensation is included in the following GAAP operating expenses:
Selling and marketing $375 $352 General and administrative 52 90
Research and development 157 197 --- --- Total stock-based
compensation $584 $639 ==== ==== DATASOURCE: Sonic Foundry, Inc.
CONTACT: investor inquiries, , or media relations, , both of Sonic
Foundry, Inc. Web Site: http://www.sonicfoundry.com/
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