Attached files
| file | filename |
|---|---|
| 8-K - SCIENTIFIC LEARNING CORP. 8-K - SCIENTIFIC LEARNING CORP | a50055109.htm |
Exhibit 99.1
Scientific Learning Reports Third Quarter 2011 Financial Results
OAKLAND, Calif.--(BUSINESS WIRE)--November 3, 2011--Scientific Learning Corporation (NASDAQ:SCIL), a leading provider of technologies for accelerated learning, today announced financial results for the third quarter ended September 30, 2011.
Total revenue in the third quarter of 2011 was $10.5 million, compared to $10.2 million in the third quarter of 2010. Total booked sales for the third quarter were $12.2 million, an increase from $11.4 million in the third quarter of 2010. Adjusted EBITDA was ($455,000) in the third quarter of 2011 compared to $197,000 in the third quarter of 2010. Net loss in the third quarter of 2011 was ($1.2) million, or ($0.07) per share, compared to a net loss of ($825,000), or ($0.04) per share, in the third quarter of 2010.
“We are pleased with the progress we’re making in the business. For the first time in a year and a half, we saw an increase in total booked sales with growth coming from our core K-12 and consumer businesses,” said Andy Myers, Chief Executive Officer. “Our new on demand platform is showing early signs of success with nearly 400 schools deployed, and we continue to see an increased number of K-12 transactions with our new flexible per student pricing. We also recently launched our first iPad app, the first in our KinderSpark series, which will be made available first as individual apps and later combined into a more comprehensive program for use in pre-K to first grade classrooms. This app entitled Eddy’s Number Party! rose to as high as the fifth most popular paid Education app for the iPad during its first week after release. As we look to the next couple of quarters, we remain focused on our strategic objectives of delivering new content to our key markets, building our recurring revenue base and advancing the success of our customers and learners.”
Booked sales and Adjusted EBITDA are both non-GAAP measures. Additional information on these non-GAAP measures and reconciliations are included at the end of this earnings release and in the investor information section of our website, www.scientificlearning.com.
Conference Call Information
A conference call to discuss third quarter 2011 financial results is scheduled for today, November 3, 2011 at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time. Investors and analysts interested in participating in the call are invited to dial (866) 652-3154 (domestic) or (706) 634-7311 (international), Conference ID # 16848151, approximately 10 minutes prior to the start of the call. The conference call will be available live on the Investor Information portion of the Company’s website at http://www.scilearn.com/investorinfo. A replay of this teleconference will be made available on the Scientific Learning website approximately two hours following the conclusion of the call. To hear the replay by phone, please call (855)859-2056 (domestic) and (404) 537-3406 (international) and enter Conference ID # 16848151.
About Scientific Learning Corporation
We accelerate learning by applying proven research on how the brain learns. Scientific Learning’s results are demonstrated in over 200 research studies and protected by over 55 patents. Learners can realize achievement gains of 1 - 2 years in as little as 8 - 12 weeks and maintain an accelerated rate of learning even after the programs end.
Today, learners have used nearly 3 million Scientific Learning software products, which apply “Brain Fitness” principles to the areas of English language and reading. We provide our offerings directly to parents, K–12 schools and learning centers, and in more than 40 countries around the world. For more information, visit http://www.scilearn.com/ or call toll-free (888) 358-0212.
Forward-Looking Statements
This press release contains forward-looking statements that are subject to the safe harbor created by the federal securities laws. Such statements include, among others, statements relating to trends in and growth expectations for our sales, the acceptance of our new offerings, our recurring revenue business model and our product development plans. Such statements are subject to substantial risks and uncertainties. Actual events or results may differ materially as a result of many factors, including but not limited to: general economic and financial conditions (including current adverse conditions in government budgets and the general economy); availability of funding to purchase the Company's products and generally available to schools, including the expiration of federal stimulus funding; unexpected challenges in product development; the acceptance of new products and product changes in existing and new markets; acceptance of subscription and other recurring offerings; seasonality and sales cycles in Scientific Learning's markets; competition; the extent to which the Company's marketing, sales and implementation strategies are successful; personnel changes; the Company's ability to continue to demonstrate the efficacy of its products, and other risks detailed in the Company's SEC reports, including but not limited to the Report on Form 10-Q for the quarter ended June 30, 2011 (Part II, Item 1A, Risk Factors), filed August 12, 2011. The Company disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events, or otherwise.
| SCIENTIFIC LEARNING CORPORATION | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| September 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 2,304 | $ | 5,415 | ||||
| Short-term investments | 5,728 | 9,631 | ||||||
| Accounts receivable, net | 8,305 | 5,053 | ||||||
| Prepaid expenses and other current assets | 1,697 | 2,206 | ||||||
| Total current assets | 18,034 | 22,305 | ||||||
| Property and equipment, net | 3,336 | 2,497 | ||||||
| Goodwill | 4,568 | 4,568 | ||||||
| Other intangible assets, net | 648 | 1,034 | ||||||
| Other assets | 1,261 | 1,399 | ||||||
| Total assets | $ | 27,847 | $ | 31,803 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 746 | $ | 543 | ||||
| Accrued liabilities | 4,125 | 4,198 | ||||||
| Deferred revenue | 13,855 | 16,388 | ||||||
| Total current liabilities | 18,726 | 21,129 | ||||||
| Deferred revenue, long-term | 5,607 | 5,483 | ||||||
| Other liabilities | 831 | 857 | ||||||
| Total liabilities | 25,164 | 27,469 | ||||||
| Stockholders' equity: | ||||||||
| Common stock and additional paid in capital | 90,348 | 89,277 | ||||||
| Accumulated deficit | (87,665 | ) | (84,943 | ) | ||||
| Total stockholders' equity | 2,683 | 4,334 | ||||||
| Total liabilities and stockholders' equity | $ | 27,847 | $ | 31,803 | ||||
| SCIENTIFIC LEARNING CORPORATION | |||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||
| Revenues: | |||||||||||||||||
| Products | $ | 6,078 | $ | 5,049 | $ | 18,719 | $ | 17,773 | |||||||||
| Service and support | 4,458 | 5,185 |
14,649 |
15,833 | |||||||||||||
| Total revenues | 10,536 | 10,234 | 33,368 | 33,606 | |||||||||||||
| Cost of revenues: | |||||||||||||||||
| Cost of products | 504 | 534 | 1150 | 1,616 | |||||||||||||
| Cost of service and support | 2,273 | 2,270 | 6,603 | 6,996 | |||||||||||||
| Total cost of revenues | 2,777 | 2,804 | 7,753 | 8,612 | |||||||||||||
| Gross profit | 7,759 | 7,430 | 25,615 | 24,994 | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Sales and marketing | 4,682 | 4,763 | 14,075 | 16,563 | |||||||||||||
| Research and development | 2,347 | 1,945 | 7,801 | 5,808 | |||||||||||||
| General and administrative | 1,922 | 1,517 | 6,343 | 6,040 | |||||||||||||
| Total operating expenses | 8,951 | 8,225 | 28,219 | 28,411 | |||||||||||||
| Operating loss | (1,192 | ) | (795 | ) | (2,604 | ) | (3,417 | ) | |||||||||
| Interest and other income (expense), net | (5 | ) | 14 | 10 | 49 | ||||||||||||
| Loss before provision for income taxes | (1,197 | ) | (781 | ) | (2,594 | ) | (3,368 | ) | |||||||||
| Provision for income taxes | 46 | 44 | 128 | 136 | |||||||||||||
| Net loss | $ | (1,243 | ) | $ | (825 | ) | $ | (2,722 | ) | $ | (3,504 | ) | |||||
| Net loss per share: | |||||||||||||||||
| Basic net loss per share | $ | (0.07 | ) | $ | (0.04 | ) | $ | (0.14 | ) | $ | (0.19 | ) | |||||
| Diluted net loss per share | $ | (0.07 | ) | $ | (0.04 | ) | $ | (0.14 | ) | $ | (0.19 | ) | |||||
| Weighted average shares used in computation of per share data: | |||||||||||||||||
| Basic weighted average shares outstanding | 18,883 | 18,551 | 18,807 | 18,447 | |||||||||||||
| Diluted weighted average shares outstanding | 18,883 | 18,551 | 18,807 | 18,447 | |||||||||||||
| SCIENTIFIC LEARNING CORPORATION | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| Nine Months Ended September 30, | ||||||||
| 2011 | 2010 | |||||||
| Operating Activities: | ||||||||
| Net loss | $ | (2,722 | ) | $ | (3,504 | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities | ||||||||
| Depreciation and amortization | 1,389 | 1,919 | ||||||
| Stock-based compensation | 1,005 | 1,159 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (3,251 | ) | 1,800 | |||||
| Prepaid expenses and other current assets | 489 | 12 | ||||||
| Other assets | 69 | (121 | ) | |||||
| Accounts payable | 203 | (258 | ) | |||||
| Accrued liabilities | (73 | ) | (3,247 | ) | ||||
| Deferred revenue | (2,409 | ) | (367 | ) | ||||
| Other liabilities | (26 | ) | 76 | |||||
| Net cash used in operating activities | (5,326 | ) | (2,531 | ) | ||||
| Investing Activities: | ||||||||
| Purchases of property and equipment, net | (1,773 | ) | (1,371 | ) | ||||
| Purchases of short-term investments | (4,633 | ) | (11,920 | ) | ||||
| Maturities of short-term investments | 8,555 | 2,824 | ||||||
| Net cash provided by (used in) investing activities | 2,149 | (10,467 | ) | |||||
| Financing Activities: | ||||||||
| Proceeds from issuance of common stock | 177 | 386 | ||||||
| Net settlement of common stock | (111 | ) | - | |||||
| Net cash provided by financing activities | 66 | 386 | ||||||
| Decrease in cash and cash equivalents | (3,111 | ) | (12,612 | ) | ||||
| Cash and cash equivalents at beginning of period | 5,415 | 20,679 | ||||||
| Cash and cash equivalents at end of period | $ | 2,304 | $ | 8,067 | ||||
| Scientific Learning Corporation | ||||||||||||||||||||||
| Supplemental Information | ||||||||||||||||||||||
| Reconciliation of Booked Sales, Revenue and Change in Deferred Revenue | ||||||||||||||||||||||
| $s in thousands | ||||||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
| Booked sales | $ | 12,166 | $ | 11,399 | $ | 30,367 | $ | 31,460 | ||||||||||||||
| Less: revenue | 10,536 | 10,234 | 33,368 | 33,606 | ||||||||||||||||||
| Other adjustments | 69 | 145 | 592 | 1,779 | ||||||||||||||||||
| Net decrease in current and long-term deferred revenue | $ | 1,699 | $ | 1,310 | $ | (2,409 | ) | $ | (367 | ) | ||||||||||||
| Beginning balance in current and long-term deferred revenue | $ | 17,763 | $ | 20,553 | $ | 21,871 | $ | 22,230 | ||||||||||||||
| Ending balance in current and long-term deferred revenue | $ | 19,462 | $ | 21,863 | $ | 19,462 | $ | 21,863 | ||||||||||||||
| Booked sales is a non-GAAP financial measure that we believe to be a useful measure of the current level of business activity both for management and for investors. Booked sales equals the total value (net of allowances) of software and services invoiced in the period. Because a significant portion of our revenue is recognized over a period of months, booked sales is a good indicator of current activity. The table above shows the reconciliation of booked sales, revenue, and changes in deferred revenue. | ||||||||||||||||||||||
| Reconciliation of Net Loss to Adjusted EBITDA | ||||||||||||||||||||||
| $s in thousands | ||||||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
| Net loss | $ | (1,243 | ) | $ | (825 | ) | $ | (2,722 | ) | $ | (3,504 | ) | ||||||||||
| Adjustments to reconcile to Adjusted EBITDA: | ||||||||||||||||||||||
| Provision for income taxes | 46 | 44 | 128 | 136 | ||||||||||||||||||
| Interest (income) expense, net | (3 | ) | (13 | ) | 9 | (40 | ) | |||||||||||||||
| Depreciation and amortization | 479 | 650 | 1,394 | 1,919 | ||||||||||||||||||
| Stock-based compensation expense | 266 | 341 | 1,006 | 1,159 | ||||||||||||||||||
| Adjusted EBITDA | $ | (455 | ) | $ | 197 | $ | (185 | ) | $ | (330 | ) | |||||||||||
| Earnings before interest, taxes, depreciation, amortization and stock-based compensation expense (Adjusted EBITDA) is a non-GAAP financial measure we believe to be a useful measure of the resources available to the Company in the current period. We also believe that Adjusted EBITDA will be useful in allowing investors to compare our performance with that of other companies. The table above shows a reconciliation of Adjusted EBITDA to net loss, the closest GAAP measure. | ||||||||||||||||||||||
| Non-Cash Charges | ||||||||||||||||||||||
| $s in thousands | Three months ended September 30, 2011 | Nine months ended September 30, 2011 | ||||||||||||||||||||
|
Depreciation & |
Stock-based |
Total |
Depreciation & |
Stock-based |
Total | |||||||||||||||||
| Included in: | ||||||||||||||||||||||
| Cost of products | $ | 141 | $ | 1 | $ | 142 | $ | 419 | $ | 1 | $ | 420 | ||||||||||
| Cost of service and support | - | 10 | 10 | - | 30 | 30 | ||||||||||||||||
| Operating expenses | 339 | 255 | 594 | 976 | 975 | 1,951 | ||||||||||||||||
| Total | $ | 480 | $ | 266 | $ | 746 | $ | 1,395 | $ | 1,006 | $ | 2,401 | ||||||||||
| $s in thousands | Three months ended September 30, 2010 | Nine months ended September 30, 2010 | ||||||||||||||||||||
|
Depreciation & |
Stock-based |
Total |
Depreciation & |
Stock-based |
Total | |||||||||||||||||
| Included in: | ||||||||||||||||||||||
| Cost of Products | $ | 265 | $ | - | $ | 265 | $ | 790 | $ | - | $ | 790 | ||||||||||
| Cost of Service and Support | 41 | 27 | 68 | 126 | 90 | 216 | ||||||||||||||||
| Operating Expenses | 344 | 313 | 657 | 1,003 | 1,068 | 2,071 | ||||||||||||||||
| Total | $ | 650 | $ | 340 | $ | 990 | $ | 1,919 | $ | 1,158 | $ | 3,077 | ||||||||||
CONTACT:
Media Contact:
Scientific Learning Corporation
Jessica
Lindl, 510-625-6784
Vice President of Marketing and
Product
Management
jlindl@scilearn.com
or
Investor Contact:
The
Blueshirt Group
Stacie Bosinoff, 415-217-7722
investorrelations@scilearn.com
stacie@blueshirtgroup.com