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Press Release
FOR IMMEDIATE RELEASE
Sento Clarifies Pro Forma Operating Results Reporting
AMERICAN FORK, Utah - April 22, 2004 - Sento Corporation (Nasdaq: SNTO - News), a leading provider of integrated, multi-channel customer support, provides additional information in response to questions raised by shareholders during its April 20 conference call about the effect of options previously granted to employees on the Company's financial results for its fourth fiscal quarter and year ended March 31, 2004.
The majority of the employee options in question were granted in connection with a repricing of stock options on April 23, 2003, at the then current market price. The options were granted to give incentive to our employees to grow revenues and improve profitability, thus increasing shareholder value. We believe that the Company's success in revenue growth and profitability, as shown in the 3rd and 4th quarter results, can be attributed in large part to this option grant. This Company success has caused the stock price to increase significantly. Thus, we believe that we have successfully aligned the interests of the Company's employees with the interests of the Company's shareholders to cause the price of the Company's stock to increase.
The Company is required under generally accepted accounting principles ("GAAP") to "mark to market" these employee options. This non-cash charge to earnings under GAAP is computed on a quarterly basis by taking the difference between the option's strike price and the current market price multiplied by the number of currently exercisable options. Sento's stock price moved from $4.55 on January 1, 2004, to $12.35 on March 31, 2004, the end of our 4 th quarter. This $7.80 increase in stock price during the quarter was the major factor that caused the large non-cash 4 th quarter charge to our results of operations on a GAAP basis. Thus as time elapses and more options become exercisable, and if there is a significant increase in stock price during the quarter, the charge to earnings increases-for example, the impact of this charge on the Company's earnings for the first three quarters of fiscal year 2004 was relatively minor compared to that of the fourth quarter. Conversely, if the stock price were to decrease in a quarter, such would have a positive impact on earnings. As these options are exercised this charge will diminish and will eventually be non-existent.
In part because of the volatility and variable impact on GAAP earnings of this option "mark to market" as described above, we believe that additionally reporting our results of operations on a non-GAAP pro forma basis most correctly presents the profitability of the Company. As we have previously discussed in our quarterly earnings releases, beginning with our July 24, 2003 earnings release, this expense under GAAP has not required and will never require a cash payment by the Company. We will continue to provide both GAAP and non-GAAP results of operations for the near future.
SENTO PROFILE
Sento Corporation (www.sento.com) is one of the industry's most innovative providers of outsourced customer support services. Sento employs right channeling to create custom solutions that integrate live support with the company's best-in-class software solutions. Sento's Customer Choice PlatformSM allows customers to make choices in communication channels from a range of web-enabled self-service options with live support available at every critical point. Sento focuses on the inter-relationship among voice, chat, email, self-service and web forums. Sento targets its customer acquisition, customer service and technical support solutions to a diversified portfolio of clients in multiple vertical segments. Sento's solutions can provide value-added customer support at significant cost reductions when compared to other, traditional outsourced models. With operations in the U.S., The Netherlands, and France, plus partnerships in India and other low-cost regions, Sento provides customer support in 19 languages.
FORWARD LOOKING STATEMENTS
Statements in this press release, which are not purely historical, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements encompass Sento's beliefs, expectations, goals, hopes or intentions regarding future events. Words such as "expects," "intends," "estimates," "believes," "anticipates," "should" and "likely" also identify forward-looking statements. All forward-looking statements included in this release are made as of the date hereof and are based on information available to Sento as of such date. Sento assumes no obligation to update any forward-looking statement. Actual results could differ materially from those anticipated for a number of reasons, including, among others: the Company's stock price has historically been volatile; difficulties encountered in post-acquisition integration and operation of the acquired assets including retaining existing clients of the acquired company; variations in market and economic conditions; the effect on the Company's earnings of the repricing of options; the Company's dependence on its limited number of key clients; failure to renew existing client contracts for continuation of services; reduction in services requested by the Company's clients resulting in lower revenues for the Company; the Company's ability to complete negotiations and execute client agreements; risk of emergency interruption of the Customer Contact Solutions operations; and other unanticipated factors. Risk factors, cautionary statements and other conditions, which could cause actual results to differ from the Company's current expectations, are contained in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-KSB, as amended.
Contact:
Patrick O'Neal
President, Chief Executive Officer and Director
Sento Corporation
801-772-1417
pat_oneal@sento.com
Anthony J. Sansone
Chief Finance Officer and Corporate Secretary
Sento Corporation
801-772-1410
tony_sansone@sento.com
Brokers and financial industry members
Laurie S. Roop
President, Shareholder Relations
435-652-3884
laurie@shareholder-relations.net
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