Digital Origin Reports Year-End Results; Company Delivers Strong Finish to First Full Year as
Digital Video Software Concern
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Nov. 4, 1999--Digital Origin, Inc.
(Nasdaq:DODV), formerly Radius, today announced financial results for the fourth quarter and
for the fiscal year ended Sept. 30, 1999.
For the fourth quarter of 1999, Digital Origin reported net revenues of $4.1M, operating income
of $104,000 and a net profit of $160,000 or $0.03 per diluted share. For the fourth quarter of
the prior fiscal year, the first quarter with a majority of revenue attributable to sales of video
editing software, the company reported revenues of $1.2 M, an operating loss of $1.8 M and a
net profit of $1.3 M or $0.24 diluted share. Non-operating income for the last quarter of the
prior fiscal year included $2.1 M due to the sale of certain assets.
Revenues for the year ended Sept. 30, 1999 were $13.4 M resulting in a net profit of $5.8 M or
$1.02 per diluted share. These results compare to the prior fiscal year ending Sept. 30, 1998 of
revenues of $15.7 M and a net profit of $8.7 M or $1.57 per diluted share. However, operating
results for the first three quarters of fiscal 1998 were predominantly related to sales of monitor
products that the company discontinued in August 1998. Results for 1998 include $12.4M of
non-operating income due to the sale of certain assets.
Mark Housley, chairman and CEO of Digital Origin, said, "I'm pleased to report the results of
our first full year of operations as a digital video software company. Digital Origin was the first
company to focus exclusively on digital camcorder-based software solutions and we are still the
only public company to put 100 percent of our focus on this market."
"Our goal in fiscal 1999 was to show that we could build a profitable, sustainable business
around such solutions. As the market for digital camcorders has grown -- annual camcorder
shipments in 1999 have more than doubled from 1.7M units to 3.8M units worldwide -- and
prices are now below $999 level, this single-minded focus has yielded gratifying results; Digital
Origin grew at almost twice the rate of the overall camcorder market. Total shipments of digital
video products were $4.1M this quarter, a 230 percent increase over the same time last year and
a 9 percent increase over the previous quarter."
"We have created great products with good value and a strong brand, and we have turned this
value for the customer into value for our shareholders," said Housley. "Gross margins showed
a substantial improvement year to year, increasing from 49 percent in the fourth quarter of fiscal
1998 to 66 percent this quarter. At the same time we maintained tight controls over spending,
increasing operating expenses less than 10 percent from Q4'98 to Q4'99. All of these
improvements are reflected in our balance sheet; over the year, cash and cash equivalents
increased to $3.6M from $0.6M, and shareholders' equity improved by $6.2M. We now have a
profitable, growing company that is a pure play' in the emerging market for digital camcorder
software solutions."
"Fiscal 1999 was also the year we rounded out our product portfolio by delivering a full suite of
products for all segments of the digital camcorder market: consumer, desktop, and
professional," Housley said. "Customers using MacOS, Windows 95, 98, and NT can produce
broadcast-quality video starting at a price as low as $249. I am very proud of the Digital Origin
executives and employees who continued to announce significant products, promote them, and
deliver them on time with incredible quality and tremendous price/performance."
Housley continued, "Fiscal 1999 was also dedicated to building and strengthening our channels
to deliver desktop video software solutions. In North America we both solidified and
strengthened our traditional computer distribution channels as well as established new channels
built around major camcorder suppliers. Outside the USA we have rebuilt our entire distribution
network from scratch. In Japan, we have a completely new lineup of partners and are beginning
to see revenue growth from that region. In Europe, we extended existing distribution and
established Canon Europe as our channel to the camcorder market. Despite earlier concerns
about potential seasonal weakness in Europe, our business in Europe grew substantially from
quarter-to-quarter and year-to-year. Fiscal 1999 was also the year that Digital Origin embraced
the internet. E-commerce sales grew almost 700 percent year to year; e-commerce and direct
sales accounted for 14 percent of total sales in fourth quarter of 1999."
Quarterly Highlights
The following highlights were announced or occurred after the Digital Origin earnings release
for the quarter ended July 3, 1999: -0- -- Introduced and shipped IntroDV 1.0 for Windows on
schedule. -- Announced and shipped MotoDV Mobile for Macintosh on schedule. -- Introduced
and shipped MotoDV European Edition on schedule,
supporting German and French versions of the software. -- Announced and demonstrated
EditDV 2.0 for Windows with
multi-Pentium III support, breaking the 4.0-second dissolve speed
barrier. -- Announced a broad co-marketing and promotion campaign for IntroDV
with JVC of North America. -- Implemented ESD (Electronic Software Delivery) sales, enabling
direct-paying customer downloads of product. -- Installed both a new Y2K compliant MIS
system and telephone
system for improved customer support and direct sales. -- Secured a $1.6M credit facility from
Transamerica for equipment
leasing and working capital needs. -0-
About Digital Origin
Digital Origin was founded in 1986; its products include leading-edge digital video software
solutions that are available through worldwide authorized resellers, system integrators, and
distributors and directly via the internet. Digital Origin may be reached at (650) 404-6300 or at
www.digitalorigin.com. "Digital Origin," "EditDV," "RotoDV," "MotoDV," "IntroDV," and
"PhotoDV" are trademarks of Digital Origin, Inc.
Special Note
This press release contains forward-looking statements that are subject to risks and uncertainties
including, among others, estimates of the growth of the DV camcorder market and quarterly
growth rate factors, the ability of the company to successfully market its digital video products,
continued growth of the digital video market, continued market acceptance of the company's
products, the ability of the company to compete, the ability of the company to increase revenues
and profitability, general economic conditions, and the other factors described in the company's
filings with the Securities and Exchange Commission. Actual results may differ materially from
those described herein due to such risks and uncertainties. -0-
DIGITAL ORIGIN, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
Sept 30, Sept 30,
1999 1998(1)
(unaudited) ASSETS: Current assets: Cash $ 3,627 $ 600 Accounts
receivable, net 1,995 364 Note receivable
from Korea Data
Systems America,
Inc -- 4,500 Inventories 211 803 Prepaid expenses and other current
assets 161 156
--------- ---------
Total current
assets 5,994 6,423 Property and equipment, net 726 133 Other assets 175 --
--------- ---------
$ 6,895 $ 6,556
========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY (Net capital
deficiency): Current liabilities: Accounts payable $ 2,791 $ 1,971 Accrued payroll
and related
expenses 551 324 Other accrued
liabilities 1,371 2,069 Deferred income -- 4,833 Accrued income
taxes 301 1,102 Short-term
borrowings -- 1,340
--------- ---------
Total current
liabilities 5,014 11,639 |
