SoftNet Systems, Inc. Reports Fiscal 2000 Year End Results; Outlines ISP
Channel and Aerzone Discontinued Operations; Intellicom Outlook
SAN FRANCISCO, Jan 16, 2001 (BUSINESS WIRE) --
SoftNet Systems,
Inc. (Nasdaq:SOFN), today announced that revenue from continuing
operations for its fiscal year 2000 ended September 30, 2000 was $9.9
million compared to $1.6 million for the same period in the previous
year. Net loss per share for the year from continuing operations was
$0.87, versus a net loss of $1.78 per share a year ago. Net loss per
share, excluding amortization and compensation expenses related to
stock options, was $0.16, compared to a loss per share of $0.96 for
the previous year. Total net loss per share including discontinued
operations was $9.88 compared to $4.09 the previous year. In addition,
SoftNet announced selected numbers from its fiscal 2001 first quarter,
including a one-time corporate reorganization charge of approximately
$4 million. Based on issued share count of approximately 26.2 million,
cash and non-equity investments per share as of December 31, 2000 was
approximately $4.57.
SoftNet's chairman and chief executive officer, Garrett J. Girvan,
said, "While SoftNet has faced several challenges in the recent past,
we are following the path of cash management that is critical to
success in the face of the changing economy. SoftNet's fiscal 2000
year end numbers were significantly affected by treating both ISP
Channel and Aerzone as discontinued operations. As a result,
continuing operations numbers reflect Intellicom and SoftNet corporate
activities."
Selling and marketing costs for the year ended September 30, 2000
were $5.0 million, up 802% over the previous year. Engineering costs
were $4.3 million in for the year ended September 30, 2000, a rise of
908% over the previous year.
General and administrative costs for the year ended September 30,
2000 were $12.8 million, an increase of 56% the previous year.
Depreciation and amortization were $987,000 and $2.3 million,
respectively, in the year ended September 30, 2000, up 176% and 50%,
respectively, over the previous year. Compensation expenses related to
stock options, a non-cash charge, were $14.6 million for the year
ended September 30, 2000 compared to $8.5 million for the year ended
September 30, 1999.
Net working capital for the company at September 30, 2000 totaled
$113.9 million. Cash and short-term investments totaled approximately
$172.1 million - including $9.7 million in equity investments - an
increase from $142.1 million at September 30, 1999.
In addition, during the fourth quarter of fiscal 2000 the company
repurchased 409,500 shares of common stock for $2.3 million within a
buyback authority instituted in August 2000. While the program
continued into fiscal 2001, SoftNet's Board of Directors voted to
cease the program on December 19, by which date the company had
repurchased approximately 2.3 million shares in total, amounting to
approximately $9.1 million total cash expenditure in the program.
Discontinued Operations
As a result of the company's decision December 11 to discontinue
operations at ISP Channel, SoftNet's wholly owned Internet-over-cable
subsidiary, the operating loss from ISP Channel of $60.2 million in
fiscal 2000 is reported as a discontinued operation. In addition, ISP
Channel recorded a one-time, non-recurring charge of $97.2 million due
to the disposal of operations. This one-time charge consists of $65.2
million to write off assets, including cable affiliate launch
incentives, equipment and inventory, plus $32.0 million in settlement
of estimated losses and liabilities through the completion of close.
The impact on earnings per share due to ISP Channel, including the
one-time charge, was a loss of $6.70 for fiscal 2000, compared to a
loss of $2.39 last year.
"The company previously stated a target of $28-33 million total in
cash charges related to the discontinuing operations at ISP Channel -
we continue to aggressively pursue this financial goal," said Girvan.
In addition, as a result of SoftNet's decision to discontinue
operations of Aerzone, the business's operating loss of $12.2 million
in fiscal 2000 is also reported as discontinued operations. Aerzone
recorded a one-time, non-recurring charge of $42.2 million due to the
disposal of operations, including $24.0 million to write off assets,
plus approximately $18.2 million in settlement of estimated losses and
liabilities through completion of close. The loss per share due to
Aerzone was $2.31.
Continuing Operations
For the year ended September 30, 2000, SoftNet's
Internet-over-satellite business, Intellicom, recorded external sales
of $9.9 million. Intellicom had more than 400 contracted VSAT (very
small aperture terminal) sites, up from approximately 100 at the end
of fiscal 1999. Of these contracted sites, approximately two-thirds
have been activated, with average revenue per unit of approximately
$800. In the beginning months of fiscal 2001, Intellicom activated an
additional 90 sites.
Earnings per share, excluding amortization and compensation
expenses related to stock options, due to Intellicom represented a
loss of $0.45 for the year compared to $0.16 last year ($0.16 last
year represented losses accrued from February 1999 - the date of
Intellicom's acquisition - through September 1999). "While we believe
Intellicom has the potential to significantly increase shareholder
value, current sales have slowed momentum significantly. This leads us
to a projection for future earnings that is less than originally
forecast. At this point it appears unlikely that Intellicom will be
cash flow positive in fiscal 2001," Girvan explained.
SoftNet's Future
"As we continue seeking growth at Intellicom, we recognize the
need to further reduce costs throughout the company. SoftNet will
continue to downsize operations and reduce costs in the new-year,"
said Girvan, "SoftNet previously announced the intention to sell
Laptop Lane, which continues to remain a focus of the company moving
into this year."
At the end of December, cash and non-equity investments decreased
approximately $42 million from the end of fiscal year 2000, due to the
stock re-purchase program, and expenses, liabilities and severance
payments related to the discontinued operations. Also included were
standard operating expenses within Intellicom as well as corporate
activities. The company estimates its cash reserves will be
approximately $70 to $80 million by June 30, 2001, not including any
potential asset sale with regard to Laptop Lane. SoftNet's Board of
Directors is evaluating the strategic direction of the company going
forward.
About SoftNet Systems, Inc.
SoftNet is a global broadband Internet services company.
SoftNet's wholly owned Intellicom subsidiary combines Internet
services with sophisticated two-way satellite technology to deliver a
turnkey solution for ISPs, schools, corporations and businesses.
Intellicom provides two-way satellite Internet access using a
proprietary network optimizing technology. The company utilizes
state-of-the-art wireless technologies, broadband delivery, data-push
and satellite-based Internet access caching products to provide its
customers with fast access to information and efficient utilization of
existing network capacity. Intellicom operates more than 400 earth
stations in the United States, Latin America and the Caribbean as well
as a 24-hour-a-day, seven-day-a-week Network Operations Center,
Internet Data Center and Customer Support Center.
SoftNet is also known for its ISP Channel and Aerzone
subsidiaries. For further information about SoftNet Systems, Inc. and
its subsidiaries, please visit www.softnet.com or call 415-365-2500.
This press release contains forward-looking statements concerning
SoftNet Systems' anticipated future operating results, future revenues
and earnings or adequacy of future cash flow. (These forward-looking
statements include, but are not limited to, statements containing the
words "expect", "believe", "will", "may", "should", "project",
"estimate" and like expressions, and the negative thereof.) These
statements are subject to risks and uncertainties that could cause
actual results to differ materially from the statements, including the
risks attendant to a growing business in a new industry as well as
those risks described in SoftNet Systems' Quarterly or Annual Report. |
