Sonic Foundry Triples Revenues in Fiscal 2004.MADISON Madison, cities, United StatesMadison. 1 City (1990 pop. 12,006), seat of Jefferson co., SE Ind., on the Ohio River; settled c.1806, inc. 1838. It is a port of entry and a tobacco marketing center. , Wis adv. 1. Certainly; really; indeed. v. t. 1. To think; to suppose; to imagine; - used chiefly in the first person sing. present tense, I wis. See the Note under Ywis. . -- Sonic Foundry Sonic Foundry is the former developer of various media software suites, which were purchased by Sony in late 2003. Sonic Foundry's current product line consists of the webcasting, presentation software Mediasite. (R), Inc. (Nasdaq:SOFO SOFO Student Organization Financial Office (University of Colorado at Boulder) ), a leading rich media solutions company, today announced results for its 2004 fiscal year, including a number of key milestones in revenues, customers, markets and technology. During fiscal 2004, Sonic Foundry effectively rebuilt itself -- transforming from a rejuvenated re·ju·ve·nate tr.v. re·ju·ve·nat·ed, re·ju·ve·nat·ing, re·ju·ve·nates 1. To restore to youthful vigor or appearance; make young again. 2. start-up Start-up The earliest stage of a new business venture. into one of the industry's top rich media technology providers. Highlights for the year include: --Revenues more than triple. The ninth consecutive quarter of increased Mediasite(TM) sales bolstered bol·ster n. A long narrow pillow or cushion. tr.v. bol·stered, bol·ster·ing, bol·sters 1. To support or prop up with or as if with a long narrow pillow or cushion. 2. Sonic Foundry's fiscal 2004 revenues to $4.4 million for the year, more than triple the $1.3 million it reported for fiscal 2003. Sales from shipments of its Mediasite rich media presentation recorders also nearly tripled for the year -- rising to $3.4 million, up from $1.2 million for the prior year. As expected, the company continues to see a marked increase in its customer support and services revenue in line with its fast-paced Adj. 1. fast-paced - of communication that proceeds rapidly; "a fast-paced talker"; "fast-paced fiction" fast - acting or moving or capable of acting or moving quickly; "fast film"; "on the fast track in school"; "set a fast pace"; "a fast car" revenue growth. For fiscal 2004, customer support fees rose more than five times to $425,000 versus $84,000 reported for 2003. Additional revenue was garnered from ongoing licensing fees for its Publisher(TM) product and a grant it secured for advanced research in early 2004 from the U.S. Department of Justice. In addition, because the company amortizes its service contracts over the life of the agreement, it had $473,000 in unearned revenues Unearned Revenue When an individual or company receives money for a service or product that has yet to be fulfilled. Notes: For example, prepayment on a lease contract - the revenue is a liability until it has been earned. See also: Earned Income, Passive Income on its balance sheet that it will carry forward. This cache of unrecognized revenue is expected to grow proportionately pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. with the company's increased revenues over time. --Gross margins double year-to-year. Gross margins improved significantly from the previous year, growing to 60 percent, up from 30 percent reported a year ago. Gross margins are expected to improve even more near-term near-term adj. Of, for, or involving a short period of time in the near future. based on continued increases in revenues; non-cash amortization of purchased technology costs remaining constant; and, as the mix of revenues reflect a greater percentage of customer support, licensing and consulting fees. --Loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the reduced. For fiscal 2004, Sonic Foundry reported a loss from continuing operations of $5.5 million, an improvement of $2.0 million or 27 percent from the $7.5 million loss recorded in fiscal 2003. Bottom line results were a loss of $5.4 million, or 18 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , in 2004 versus income of $1.5 million or 5 cents per share in 2003. Prior year results include a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. $11.9 million gain related to the sale of discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: business units, partially offset by a $2.9 million loss from operations of the discontinued businesses. Increased sales and marketing expenses were slightly offset by reduced G&A and R&D expenses for the year. During the latter part of fiscal 2004, Sonic Foundry made investments in new sales staff, marketing and new product launch activities to help accelerate its continuing growth into new vertical and geographical markets. --Fourth quarter results improve. Revenues for the fourth quarter of fiscal 2004 were a record $1.4 million. Billings were $1.5 million, including new service and maintenance fees that were recorded as unearned revenue. Sales of Mediasite products increased 24 percent over the prior quarter. For the fourth quarter of fiscal 2004, the company reported a net loss of $1.4 million, or five cents per share. --Increased awareness in existing markets and budding budding, type of grafting in which a plant bud is inserted under the bark of the stock (usually not more than a year old). It is best done when the bark will peel easily and the buds are mature, as in spring, late summer, or early autumn. recognition in new large, growing arenas. Sonic Foundry's seeding efforts in the first half of fiscal 2004 blossomed into strong sales and momentum in several key market segments. Nearly half the company's customers are in the higher education higher education Study beyond the level of secondary education. Institutions of higher education include not only colleges and universities but also professional schools in such fields as law, theology, medicine, business, music, and art. market where distance and online education continue to rapidly expand in that sector. Evidence of the lucrative market potential for Mediasite was supported by the Sloan Sloan , John French 1871-1951. American painter whose scenes of urban life include Sunday, Women Drying Their Hair (1912). Consortium's latest study, Entering the Mainstream -- The Quality and Extent of Online Education in the United States Education in the United States is provided mainly by government, with control and funding coming from three levels: federal, state, and local. School attendance is mandatory and nearly universal at the elementary and high school levels (often known outside the United States as the , 2003 and 2004. The 1,100-plus colleges and universities surveyed for the report expect nearly a 25 percent average growth rate in online enrollment figures, while a majority stated that online education is critical to their long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. strategy. The company also made significant in-roads into both the state and federal government markets during fiscal 2004. The company is pursuing leading organizations within each of its key target market segments of education, health, pharmaceutical, defense and aerospace. To date, Sonic Foundry has secured multiple organizations as customers in each of these market segments. --Solid customer growth. During fiscal 2004, Sonic Foundry expanded its customer base to 228, up 150 percent from 91 in 2003. Likewise, it grew its number of installed units by more than 200 percent -- to 390 in fiscal 2004 from 123 in 2003. Existing customers are experiencing strong internal demand for rich media content and are making additional purchases -- more than 35 percent of the company's end user Mediasite revenues were attributed to multi-unit sales -- an indication of the growing market acceptance and demand for Mediasite and rich media communications in general. New customers signed include George Washington University George Washington University, at Washington, D.C.; coeducational; chartered 1821 as Columbian College (one of the first nonsectarian colleges), opened 1822, became a university in 1873, renamed 1904. , New York University New York University, mainly in New York City; coeducational; chartered 1831, opened 1832 as the Univ. of the City of New York, renamed 1896. It comprises 13 schools and colleges, maintaining 4 main centers (including the Medical Center) in the city, as well as the , University of Texas -- Austin Austin. 1 City (1990 pop. 21,907), seat of Mower co., SE Minn., on the Cedar River, near the Iowa line; inc. 1868. The commercial and industrial center of a rich farm region, it is noted as home to the Hormel meatpacking company, whose Spam Town museum , American Family Insurance American Family Insurance Group (aka "AmFam") is a private mutual company which focuses on property, casualty and auto insurance, but also offers commercial insurance, life, health, and homeowners coverage, as well as investment and retirement-planning products. , Northrop Grumman Northrop Grumman Corporation (NYSE: NOC) is an aerospace and defense conglomerate that is the result of the 1994 purchase of Grumman by Northrop. The company is the third largest defense contractor for the U.S. , Pepsi-Cola and Sandia National Laboratories Sandia National Laboratories, which is managed and operated by the Sandia Corporation (a wholly owned subsidiary of Lockheed Martin Corporation), is a major United States Department of Energy research and development national laboratory with two locations, one in Albuquerque, New . --Introduced the industry's first family of rich media recorders. Mid-way through the year, Sonic Foundry unveiled significant new additions to its Mediasite family. New presentation recorders and server software to automate To turn a set of manual steps into an operation that goes by itself. See automation. and manage rich media publishing were key additions to the product line. Significant technology enhancements, such as one-button 'start, stop, burn' capabilities along with AV automation built on a new hardware design are extending Mediasite into new markets and deepening deep·en tr. & intr.v. deep·ened, deep·en·ing, deep·ens To make or become deep or deeper. Noun 1. deepening - a process of becoming deeper and more profound its roots in existing accounts. The Company continues to advance its real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. rich media technology through simplification of the capture process and providing more flexible viewing and navigation. --Transforming the way organizations communicate. Companies that use Mediasite report a transformed workplace where a culture of rich media usage begins to develop. People in the field or at a satellite office feel more connected to corporate headquarters, and all employees quickly become accustomed to going to the company's Intranet for rich, timely information. Users also report the benefits of flexible delivery, viewing Mediasite's auto-published content in on-demand On-Demand refers to a service or feature which addresses the user's need for instant gratification and immediacy of use. In most cases the value proposition for an on-demand service is wrapped up in the fact that the user or consumer of the service avoids a significant up-front mode. When given a choice between live and on-demand viewing, individuals are leaning heavily towards on-demand -- clearly illustrating the preference for convenient anywhere/anytime access. "Sonic Foundry made great strides this past year and accomplished the objectives it set forth at the beginning of 2004," noted Rimas Buinevicius, chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Sonic Foundry. "The rich media market is a young, emerging industry ripe for fast-paced growth. While we've we've Contraction of we have. we've have seen growing enthusiasm for our family of products, there is much more ahead. In 2005, we will continue to do what Sonic Foundry has always done -- deliver practical and innovative technologies that change the way organizations create and deliver rich media content. We are confident that this recipe of success will translate into helping us meet our goals in the months and years ahead." In its fiscal third quarter 2004 release, the company stated it anticipates exceeding $10 million in revenue, improving gross margins and reaching breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations late next year. Buinevicius states that it is on track to meet or exceed this financial goal in 2005. Sonic Foundry will host a Webcast today to discuss its 2004 fiscal year end results at 10:00 a.m. CT/11:00 a.m. ET. It will use Mediasite to Webcast the presentation for both live and on-demand viewing. To access the presentation, go to www.sonicfoundry.com. An archive of the Webcast will be available for 30 days. About Sonic Foundry(R), Inc. Founded in 1991, Sonic Foundry (Nasdaq:SOFO) is a provider of rich media communications technology Noun 1. communications technology - the activity of designing and constructing and maintaining communication systems engineering, technology - the practical application of science to commerce or industry for the enterprise. The company's high-performance Adj. 1. high-performance - modified to give superior performance; "a high-performance car" superior - of high or superior quality or performance; "superior wisdom derived from experience"; "superior math students" rich media presentation systems are trusted by Fortune 500 companies, education institutions and government agencies for a variety of critical communication needs. Sonic Foundry is based in Madison, Wis. For more information about Sonic Foundry, visit the company's Web site at www.sonicfoundry.com. Certain statements contained in this news release regarding matters that are not historical facts may be forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . 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 per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to continued market acceptance for Sonic Foundry's products, its ability to succeed in capturing multi-unit and repeat purchases, 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 and per share data)
September 30,
-----------------
2004 2003
------- -------
Assets
Current assets:
Cash and cash equivalents $ 7,583 $12,623
Accounts receivable, net of allowances of $98
and $40 1,345 508
Accounts receivable, other 18 139
Inventories 371 111
Prepaid expenses and other current assets 281 214
------- -------
Total current assets 9,598 13,595
Property and equipment:
Leasehold improvements 185 132
Computer equipment 1,010 741
Furniture and fixtures 177 96
------- -------
Total property and equipment 1,372 969
Less accumulated depreciation 627 381
------- -------
Net property and equipment 745 588
Other assets:
Goodwill and other intangible assets, net 7,676 7,726
Capitalized software development costs, net of
amortization of $788 and $508 612 892
------- -------
Total other assets 8,288 8,618
------- -------
Total assets $18,631 $22,801
======= =======
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 879 $ 1,065
Accrued liabilities 686 1,263
Unearned revenue 473 194
Current portion of capital lease obligations -- 48
------- -------
Total current liabilities 2,038 2,570
Other liabilities 27 --
------- -------
Total liabilities 2,065 2,570
Stockholders' equity:
Preferred stock, $.01 par value, authorized
5,000,000 shares; none issued -- --
5% preferred stock, Series B, voting,
cumulative, convertible, $.01 par value
(liquidation preference at par), authorized
10,000,000 shares, none issued -- --
Common Stock, $0.01 par value, authorized
100,000,000 shares; 29,782,269 and 28,684,449
shares issued and 29,712,019 and 28,614,199
shares outstanding 298 287
Additional paid-in capital 169,383 168,106
Accumulated deficit (152,908)(147,532)
Receivable for common stock issued (39) (462)
Treasury stock, at cost, 70,250 shares (168) (168)
------- -------
Total stockholders' equity 16,566 20,231
------- -------
Total liabilities and stockholders' equity $18,631 $22,801
======= =======
Years Ended September 30,
--------------------------------------
Continuing Operations 2004 2003 2002
----------- ----------- -----------
Revenue:
Product sales $ 3,443 $ 1,172 $ 206
Customer support fees 425 84 12
Other 545 8 641
----------- ----------- -----------
Total revenue 4,413 1,264 859
Cost of revenue 1,759 888 380
----------- ----------- -----------
Gross margin 2,654 376 479
Operating expenses:
Selling and marketing expenses 3,826 2,975 2,548
General and administrative expenses 2,826 3,189 2,728
Product development expenses 1,609 1,742 3,079
----------- ----------- -----------
Total operating expense 8,261 7,906 8,355
----------- ----------- -----------
Loss from operations (5,607) (7,530) (7,876)
Other income (expense):
Interest expense -- -- (13)
Other income (expense), net 99 (19) (425)
----------- ----------- -----------
Total other income (expense) 99 (19) (438)
----------- ----------- -----------
Loss from continuing operations (5,508) (7,549) (8,314)
Gain (loss) from operations of
discontinued operations
including $68 of income tax
benefit in 2003 and $12 of
income tax expense in 2002 132 (2,930) (3,691)
Gain on disposal of discontinued
operations -- 11,932 --
------------ ----------- ------------
Income (loss) before cumulative
effect of change in accounting
principle (5,376) 1,453 (12,005)
Cumulative effect of change in
accounting principle -- -- (44,732)
------------ ------------ -----------
Net income (loss) $ (5,376) $ 1,453 $ (56,737)
=========== =========== ===========
Income (loss) per common share:
Continuing operations $ (0.18) $ (0.27) $ (0.31)
Discontinued operations -- 0.32 (0.14)
Cumulative effect of change in
accounting principle -- -- (1.67)
------------ ------------ -----------
Basic net income (loss) per
common share $ (0.18) $ 0.05 $ (2.12)
=========== =========== ===========
Diluted net income (loss) per
common share $ (0.18) $ 0.05 $ (2.12)
=========== =========== ===========
Weighted average common shares 29,457,000 27,794,000 26,812,000
=========== =========== ===========
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