SonoSite Reports 37% Increase in First Quarter Revenue; Company Begins to Regain Momentum in Japan Worldwide Sales and Marketing Executive Team Strengthened.Business Editors BOTHELL, Wash.--(BUSINESS WIRE)--April 29, 2004 SonoSite, Inc. (Nasdaq:SONO), the leader in high performance, hand-carried ultrasound ultrasound or sonography, in medicine, technique that uses sound waves to study and treat hard-to-reach body areas. In scanning with ultrasound, high-frequency sound waves are transmitted to the area of interest and the returning echoes recorded , today announced increased revenue and a reduced loss for the first quarter ended March 31, 2004 as compared with the first quarter of 2003. Worldwide revenue in the first quarter of 2004 grew 37% to $23.5 million compared to $17.2 million in the first quarter of 2003. The Company reported a net loss of $1.4 million or $0.10 per share for the quarter compared to a net loss of $2.6 million or $0.18 per share in the first quarter of 2003. As of March 31, 2004, cash, cash equivalents and investments grew to $64.1 million. The Company generated cash from operations of $2.8 million. "The Company's revenue growth resulted from an exceptionally strong performance in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). as well as excellent growth
in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Our installed base now numbers over 15,000 systems
worldwide," said Kevin M. Goodwin, president 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. . "We are
beginning to regain momentum in the Japanese market, which we expect to
continue to build through the year. Sales of TITAN(TM) continue to ramp
worldwide. We received a very good response to the system's new
cardiology cardiologyMedical specialty dealing with heart diseases and disorders. It began with the 1749 publication by Jean Baptiste de Sénac of contemporary knowledge of the heart. Diagnostic methods improved in the 19th century, and in 1905 the electrocardiograph was invented. capabilities at medical society meetings in the United States and Europe, and we are on schedule to begin customer deliveries of this release this summer. Additionally, we will soon begin shipments of an expanded TITAN feature set for the OB/Gyn OB/GYN A common abbreviation for obstetrics and gynecology market. Customers can easily upgrade existing systems by purchasing a compact flash card." Gross margin rose to 64.8% in the first quarter compared to 62.9% in the first quarter of 2003 due to increased sales of TITAN, the company's new high performance system introduced during the second quarter of 2003 and higher margin achieved through growth of the Company's European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. direct operations. In the first quarter of 2004, US revenue grew 20% over the first quarter of 2003 and accounted for 50% of total Company revenue. International revenue grew 60% over the first quarter of 2003, propelled in part from strong year-end hospital demand in the United Kingdom and Japan, which have fiscal years ending March 31, 2004. Excluding the impact from the change in currency exchange rates, international revenue grew 48% over the prior year comparable quarter. Sales of the TITAN system accounted for nearly half of total revenue in the first quarter. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. grew 23% during the first quarter over the prior year to $16.9 million due to new domestic and international sales initiatives and training programs, as well as start-up Start-up The earliest stage of a new business venture. expenses and transition costs associated with the Company's international expansion in Japan, Australia and Canada. Excluding the impact from the change in currency exchange rates, operating expenses grew 20% over the prior year comparable quarter. "Our Japanese subsidiary, SonoSite Japan KK, is now open for business and we have made progress on a number of fronts," Goodwin said. "We have recruited a highly experienced executive to manage our subsidiary and Japan operations. We have contracted with Sonic Japan, a nationwide ultrasound management company with over 20 years of Japanese ultrasound industry experience, to manage and support the dealer network we are establishing as well as to support our customer base. We have established a national sub-dealer network consisting of 23 agents to support our product distribution." Goodwin added, "We have signed a three-year distribution and product collaboration Working together on a project. See collaborative software. agreement with Olympus Corporation This article refers to a Japanese camera maker. For other meanings, see Olympus (disambiguation). Olympus Corporation (オリンパス株式会社 targeted at the endoscopy endoscopy Examination of the body's interior through an instrument inserted into a natural opening or an incision, usually as an outpatient procedure. Endoscopes include the upper gastrointestinal endoscope (for the esophagus, stomach, and duodenum), the colonoscope (for the market. Additional partnership agreements are in process and will be announced as they are finalized See finalization. . We look forward to SonoSite Japan introducing TITAN to the Japanese market at the annual meeting of the Asian Federation of Societies for Ultrasound in Medicine and Biology to be held near Tokyo in May." Executive Sales and Marketing Appointments Announced for US, Europe and Japan The Company announced the following key executive appointments and promotions in its worldwide sales and marketing organization: Edison ("Ed") C. Russell as senior vice president, U.S. Sales and Marketing; Daniel S Daniel, book of the Bible Daniel, book of the Bible. It combines "court" tales, perhaps originating from the 6th cent. B.C., and a series of apocalyptic visions arising from the time of the Maccabean emergency (167–164 B.C. . Walton, vice president, Enterprise Markets; Graham D. Cox, vice president, European Sales; and Tomo Hasegawa, senior director, Japan - International Operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. . "I am very pleased to announce the appointments of these superbly qualified individuals to executive sales and marketing positions at SonoSite," said Goodwin. "All have excellent track records of performance and accomplishment and have the experience to drive SonoSite forward to achieve our sales and growth objectives." Ed Russell will have responsibility for all aspects of SonoSite's sales and marketing activities in the U.S. His career includes more than 20 years in the health care industry, most recently as vice president of sales for Immunex Corporation. Mr. Russell has extensive experience in building and leading successful sales and marketing teams, managing large field sales forces, and developing sales and distribution channels. In his new role as vice president, Enterprise Markets, Dan Walton, will drive U.S. sales at the organizational level for both private and public sector customers and expand sales opportunities through development of third party strategic alliances and distribution agreements. Mr. Walton joined SonoSite in 2000 and under his leadership, productivity of the Company's US sales force increased over 50% in 2003. He also established key relationships with the nation's largest health care organizations. His new responsibilities will capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. that foundation. Graham Cox, formerly general manager at SonoSite, joined the Company in 1999 and has been responsible for developing its sales and distribution infrastructure in Europe, the Middle East and Africa Europe, the Middle East and Africa, usually abbreviated to EMEA, is a regional designation used for government, marketing and business purposes. It is particularly common amongst North American based companies, who often divide their international operations into the . Under his leadership, sales in these geographic regions grew from $4 million in his first year to just over $21 million in 2003. Mr. Cox has established direct sales subsidiaries in the United Kingdom, France, Germany and Spain and manages over 50 distributor relationships. Tomo Hasegawa joins SonoSite from Philips Medical Systems Corporation and will be responsible for SonoSite's operations in Japan, including its subsidiary, SonoSite Japan KK, and distributor relationships. The subsidiary will provide customer service, quality assurance, sales support and direct sales into certain clinical segments. Mr. Hasegawa has an extensive background in both ultrasound product development and sales and marketing and served as general manager of the ultrasound business line for Philips in Japan. He has authored patents in pulsed Doppler Doppler /Dop·pler/ (dop´ler) see under ultrasonography. color Doppler color flow Doppler imaging. flow mapping and signal processing See DSP. . Company Updates 2004 Guidance The Company now expects a revenue growth rate for 2004 of approximately 30% and an operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. growth rate of approximately 20% over 2003 levels. These percentages are higher than the Company announced in a press release on February 12, 2004 due to a change in currency exchange rate assumptions. The Company continues to expect gross margin to be between 64 and 65%. The Company continues to expect the percentages of revenue and expenses by quarter to approximate their 2003 quarterly percentages. The Company added that it expects its financial results to approach 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 in the second quarter. Conference Call Information SonoSite will hold a conference call today at 1:30 p.m. PDT/4:30 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . The call will be broadcast live and can be accessed via the "Investors" Section of SonoSite's website at www.sonosite.com. A replay of the audio webcast will be available beginning April 29, 2004, 4:30 p.m. (PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT ) until May 10, 2004, 12:00 midnight (PDT) by dialing (719) 457-0820 or toll-free (888) 203-1112. The confirmation code 398334 is required to access the replay. The call will be also archived on SonoSite's website at http://investor.sonosite.com/medialist.cfm. About SonoSite SonoSite, Inc. (www.sonosite.com), headquartered in Bothell, Wash., is the innovator and worldwide market leader in high-performance, hand-carried ultrasound technology. By creating modular, compact systems that meet customer needs, SonoSite is removing barriers to the use of ultrasound across medicine and positively impacting the cost-effectiveness cost-effectiveness pertaining to cost-effective. cost-effectiveness analysis a comparison of the relative cost-efficiencies of two or more ways of performing a task or achieving an objective. and efficiency of ultrasound use. With more than 15,000 units sold worldwide since 1999, SonoSite's products have become known for exceptional durability du·ra·ble adj. 1. Capable of withstanding wear and tear or decay: a durable fabric. 2. with a high design value. Forward-looking Information and the Private Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Reform Act of 1995 Certain statements in this press release relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the market acceptance of our products, possible future sales relating to expected orders, and our future financial and operations results are "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. " for the purposes of the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements are based on the opinions and estimates of our management at the time the statements are made and are subject to risks and uncertainties that could cause actual results to differ materially from those expected or implied by the forward-looking statements. These statements are not guaranties of future performance and are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions. Factors that could affect the rate and extent of market acceptance of our products, the receipt of expected orders, and our financial performance include our ability to accurately forecast customer demand for our products, our ability to manufacture and ship our systems in a timely manner to meet customer demand, timely receipts of regulatory approvals to market and sell our products, the willingness of healthcare providers who do not currently use ultrasound to use ultrasound, the extent to which healthcare insurers reimburse re·im·burse tr.v. re·im·bursed, re·im·burs·ing, re·im·burs·es 1. To repay (money spent); refund. 2. To pay back or compensate (another party) for money spent or losses incurred. providers for ultrasound procedures, regulatory changes in various national health care markets, constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. in government and public health spending, the ability of our distribution partners to market and sell our products, as well as other factors described under the heading, "Important Factors that May Affect Our Business, Our Results of Operating and Our Stock Price," included in our latest periodic report filed with the Securities and Exchange Commission. We caution readers not to place undue reliance upon these forward-looking statements that speak only as to the date of this release. We undertake no obligation to publicly revise any forward-looking statements to reflect new information, events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date of this release or to reflect the occurrence of unanticipated events.
SonoSite, Inc.
Selected Financial Information
Consolidated Statements of Operations
(in thousands except per share data)
(unaudited)
Three Months Ended
March 31,
2004 2003
----------- -------------
Revenue $23,514 $17,158
Cost of revenue 8,285 6,367
----------- -------------
Gross margin 15,229 10,791
Operating expenses:
Research and development 3,073 2,833
Sales and marketing 11,585 8,890
General and administrative 2,232 2,005
----------- -------------
Total operating expenses 16,890 13,728
Other income, net 261 373
----------- -------------
Net loss $(1,400) $(2,564)
=========== =============
Basic and diluted net loss per share $(0.10) $(0.18)
=========== =============
Weighted average common shares used in
computing net loss per share 14,631 14,206
=========== =============
Condensed Consolidated Balance Sheets
(in thousands) (unaudited)
March 31, December 31,
2004 2003
----------- -------------
Cash and cash equivalents $14,203 $13,683
Short-term investment securities 5,770 13,094
Accounts receivable, net 22,799 25,849
Inventories 13,137 14,148
Prepaid expenses and other current assets 1,811 1,520
----------- -------------
Total current assets 57,720 68,294
Property and equipment, net 5,997 5,564
Investment securities 44,102 34,239
Other assets 1,915 993
----------- -------------
Total assets $109,734 $109,090
=========== =============
Accounts payable $3,290 $3,054
Accrued expenses 6,806 6,503
Current portion of long-term obligations 51 88
Deferred revenue 3,835 3,840
----------- -------------
Total current liabilities 13,982 13,485
Deferred rent 263 275
----------- -------------
Total liabilities 14,245 13,760
Shareholders' equity:
Common stock and additional paid-in
capital 182,694 180,985
Accumulated deficit (88,816) (87,416)
Accumulated other comprehensive income 1,611 1,761
----------- -------------
Total shareholders' equity 95,489 95,330
----------- -------------
Total liabilities and shareholders' equity $109,734 $109,090
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