Contact:
|
Jim Sheehan
SeaChange PR
1-978-897-0100
x3064
jim.sheehan@schange.com
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Martha Schaefer
SeaChange IR
1-978-897-0100 x3030
martha.schaefer@schange.com
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·
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14%
non-GAAP revenue growth driven by Software acquisitions and Media
Services
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Signed
multi-year Advertising Product agreement with major U.S.
telco
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Renewed
multi-year VOD product and services agreements with top U.S.
MSO
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Revising
current year (non-GAAP) revenue guidance to $215-220 million, due to lower
server shipments and software customer launch
delays
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SeaChange
International, Inc.
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||||||||
Condensed
Consolidated Balance Sheets
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||||||||
(in
thousands, except share data)
|
||||||||
July
31, 2010
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January
31, 2010
|
|||||||
Assets
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(unaudited)
|
|||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 61,196 | $ | 37,647 | ||||
Restricted
cash
|
1,337 | 73 | ||||||
Marketable
securities
|
6,602 | 2,114 | ||||||
Accounts
receivable, net
|
48,079 | 54,278 | ||||||
Inventories,
net
|
14,782 | 17,830 | ||||||
Prepaid
expenses and other current assets
|
7,877 | 7,253 | ||||||
Deferred
tax asset
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3,848 | 2,474 | ||||||
Total
current assets
|
143,721 | 121,669 | ||||||
Property
and equipment, net
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39,372 | 39,682 | ||||||
Marketable
securities, long-term
|
7,213 | 8,688 | ||||||
Investments
in affiliates
|
4,799 | 13,697 | ||||||
Intangible
assets, net
|
32,164 | 26,264 | ||||||
Goodwill
|
63,603 | 55,876 | ||||||
Deferred
tax asset, long term
|
5,133 | - | ||||||
Other
assets
|
3,218 | 1,271 | ||||||
Total
assets
|
$ | 299,223 | $ | 267,147 | ||||
Liabilities
and Stockholders’ Equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
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$ | 6,132 | $ | 10,371 | ||||
Other
accrued expenses
|
13,251 | 11,174 | ||||||
Customer
deposits
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2,368 | 4,279 | ||||||
Deferred
revenues
|
36,433 | 34,158 | ||||||
Deferred
tax liability
|
756 | 800 | ||||||
Total
current liabilities
|
58,940 | 60,782 | ||||||
Deferred
revenue, long-term
|
11,745 | 12,635 | ||||||
Long
term liabilities
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15,574 | 6,574 | ||||||
Distribution
and losses in excess of investment
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1,720 | 1,469 | ||||||
Deferred
tax liabilities
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11,041 | 7,765 | ||||||
Total
liabilities
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99,020 | 89,225 | ||||||
Stockholders’
equity:
|
||||||||
Common
stock
|
330 | 326 | ||||||
Additional
paid-in capital
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214,610 | 211,504 | ||||||
Treasury
stock
|
(10,192 | ) | (8,757 | ) | ||||
Accumulated
earning (deficit)
|
6,381 | (17,450 | ) | |||||
Accumulated
other comprehensive loss
|
(10,926 | ) | (7,701 | ) | ||||
Total
stockholders’ equity
|
200,203 | 177,922 | ||||||
Total
liabilities and stockholders’ equity
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$ | 299,223 | $ | 267,147 |
SeaChange
International, Inc.
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||||||||||||||||
Condensed
Consolidated Statement of Operations - Unaudited
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||||||||||||||||
(in
thousands, except per share data)
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||||||||||||||||
Three
Months Ended
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Six
Months Ended
|
|||||||||||||||
July
31, 2010
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July
31, 2009
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July
31, 2010
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July
31, 2009
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|||||||||||||
Revenues
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$ | 51,636 | $ | 46,507 | $ | 106,225 | $ | 95,383 | ||||||||
Cost
of revenues
|
26,777 | 22,793 | 53,988 | 46,651 | ||||||||||||
Gross
profit
|
24,859 | 23,714 | 52,237 | 48,732 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Research
and development
|
12,217 | 11,976 | 25,781 | 24,080 | ||||||||||||
Selling
and marketing
|
6,205 | 6,251 | 12,589 | 12,515 | ||||||||||||
General
and administrative
|
5,176 | 5,183 | 11,977 | 10,050 | ||||||||||||
Amortization
of intangibles
|
838 | 794 | 1,707 | 1,273 | ||||||||||||
Restructuring
|
198 | - | 4,509 | - | ||||||||||||
24,634 | 24,204 | 56,563 | 47,918 | |||||||||||||
Income
(loss) from operations
|
225 | (490 | ) | (4,326 | ) | 814 | ||||||||||
Gain
on sale of investment in affiliate
|
- | - | 25,188 | - | ||||||||||||
Other
income (expense), net
|
139 | 149 | (430 | ) | 284 | |||||||||||
Income
(loss) before income taxes and equity loss in earnings of
affiliates
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364 | (341 | ) | 20,432 | 1,098 | |||||||||||
Income
tax benefit (provision)
|
3,301 | 12 | 3,643 | (232 | ) | |||||||||||
Equity
loss in earnings of affiliates
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(131 | ) | (47 | ) | (245 | ) | (244 | ) | ||||||||
Net
income (loss)
|
$ | 3,534 | $ | (376 | ) | $ | 23,830 | $ | 622 | |||||||
Basic
income (loss) per share
|
$ | 0.11 | $ | (0.01 | ) | $ | 0.76 | $ | 0.02 | |||||||
Diluted
income (loss) per share
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$ | 0.11 | $ | (0.01 | ) | $ | 0.75 | $ | 0.02 | |||||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
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31,456 | 30,795 | 31,364 | 30,821 | ||||||||||||
Diluted
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32,018 | 30,795 | 31,864 | 31,289 |
SeaChange
International, Inc.
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Condensed
Consolidated Operating Segments - Unaudited
|
||||||||||||||||
(in
thousands)
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||||||||||||||||
Three
Months Ended
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Six
Months Ended
|
|||||||||||||||
July
31, 2010
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July
31, 2009
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July
31, 2010
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July
31, 2009
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Software
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||||||||||||||||
Revenue:
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||||||||||||||||
Products
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$ | 15,037 | $ | 14,424 | $ | 36,169 | $ | 30,709 | ||||||||
Services
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19,158 | 15,636 | 39,496 | 29,969 | ||||||||||||
Total
revenue
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34,195 | 30,060 | 75,665 | 60,678 | ||||||||||||
Gross
profit
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18,387 | 18,208 | 40,958 | 35,938 | ||||||||||||
Operating
expenses:
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||||||||||||||||
Research
and development
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9,444 | 9,318 | 19,860 | 18,796 | ||||||||||||
Selling
and marketing
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4,203 | 4,004 | 8,853 | 7,682 | ||||||||||||
General
and administrative
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341 | - | 515 | - | ||||||||||||
Amortization
of intangibles
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769 | 384 | 1,567 | 769 | ||||||||||||
Restructuring
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190 | - | 534 | - | ||||||||||||
14,947 | 13,706 | 31,329 | 27,247 | |||||||||||||
Income
from operations
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$ | 3,440 | $ | 4,502 | $ | 9,629 | $ | 8,691 | ||||||||
Servers
and Storage
|
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Revenue:
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Products
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$ | 6,944 | $ | 8,174 | $ | 10,446 | $ | 18,259 | ||||||||
Services
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3,367 | 3,657 | 6,615 | 7,625 | ||||||||||||
Total
revenue
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10,311 | 11,831 | 17,061 | 25,884 | ||||||||||||
Gross
profit
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4,860 | 5,256 | 8,058 | 12,154 | ||||||||||||
Operating
expenses:
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||||||||||||||||
Research
and development
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2,773 | 2,658 | 5,920 | 5,284 | ||||||||||||
Selling
and marketing
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2,002 | 2,247 | 3,736 | 4,833 | ||||||||||||
Restructuring
|
8 | - | 3,064 | - | ||||||||||||
4,783 | 4,905 | 12,720 | 10,117 | |||||||||||||
Income
(loss) from operations
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$ | 77 | $ | 351 | $ | (4,662 | ) | $ | 2,037 | |||||||
Media
Services
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Service
revenue
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$ | 7,131 | $ | 4,616 | $ | 13,499 | $ | 8,821 | ||||||||
Gross
profit
|
1,612 | 250 | 3,220 | 640 | ||||||||||||
Operating
expenses:
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||||||||||||||||
General
and administrative
|
827 | 604 | 1,706 | 1,423 | ||||||||||||
Amortization
of intangibles
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69 | 410 | 140 | 504 | ||||||||||||
896 | 1,014 | 1,846 | 1,927 | |||||||||||||
Income
(loss) from operations
|
$ | 716 | $ | (764 | ) | $ | 1,374 | $ | (1,287 | ) | ||||||
Unallocated
Corporate
|
||||||||||||||||
Operating
expenses:
|
||||||||||||||||
General
and administrative
|
$ | 4,008 | $ | 4,579 | $ | 9,756 | $ | 8,627 | ||||||||
Restructuring
|
- | - | 911 | - | ||||||||||||
Total
unallocated corporate expenses
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$ | 4,008 | $ | 4,579 | $ | 10,667 | $ | 8,627 | ||||||||
Consolidated
income (loss) from operations
|
$ | 225 | $ | (490 | ) | $ | (4,326 | ) | $ | 814 |
SeaChange
International, Inc.
|
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Reconciliation
of Selected GAAP Measures to Non-GAAP Measures - Unaudited
|
||||||||||||||||||||||||||||||||||||||||||||||||
(in
thousands)
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||||||||||||||||||||||||||||||||||||||||||||||||
Three
months Ended
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Three
months Ended
|
Six
Months Ended
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Six
Months Ended
|
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July
31, 2010
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July
31, 2009
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July
31, 2010
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July
31, 2009
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GAAP
|
Adjustment
|
Non-GAAP
|
GAAP
|
Adjustment
|
Non-GAAP
|
GAAP
|
Adjustment
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Non-GAAP
|
GAAP
|
Adjustment
|
Non-GAAP
|
|||||||||||||||||||||||||||||||||||||
Revenues
(1)
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$ | 51,636 | $ | 1,286 | $ | 52,922 | 46,507 | $ | - | $ | 46,507 | $ | 106,225 | $ | 3,103 | $ | 109,328 | $ | 95,383 | $ | - | $ | 95,383 | |||||||||||||||||||||||||
Operating
expenses
|
24,634 | 24,634 | 24,204 | 24,204 | 56,563 | 56,563 | 47,918 | 47,918 | ||||||||||||||||||||||||||||||||||||||||
Stock-based
compensation (2)
|
- | 347 | 347 | - | 734 | 734 | - | 845 | 845 | - | 1,495 | 1,495 | ||||||||||||||||||||||||||||||||||||
Amortization
of intangible assets (3)
|
- | 1,297 | 1,297 | - | 847 | 847 | - | 2,645 | 2,645 | - | 1,377 | 1,377 | ||||||||||||||||||||||||||||||||||||
Restructuring
(4)
|
- | 198 | 198 | - | - | - | - | 4,509 | 4,509 | - | - | - | ||||||||||||||||||||||||||||||||||||
Acquisition
related costs (5)
|
- | 138 | 138 | - | 632 | 632 | - | 1,029 | 1,029 | - | 632 | 632 | ||||||||||||||||||||||||||||||||||||
24,634 | 1,980 | 22,654 | 24,204 | 2,213 | 21,991 | 56,563 | 9,028 | 47,535 | 47,918 | 3,504 | 44,414 | |||||||||||||||||||||||||||||||||||||
Income
(loss) from operations
|
225 | 3,266 | 3,491 | (490 | ) | 2,213 | 1,723 | (4,326 | ) | 12,131 | 7,805 | 814 | 3,504 | 4,318 | ||||||||||||||||||||||||||||||||||
Income
from sale of investment in affiliate (6)
|
- | - | - | - | - | - | 25,188 | (25,188 | ) | - | - | - | - | |||||||||||||||||||||||||||||||||||
Income
tax benefit (provision) impact (7)
|
3,301 | (3,609 | ) | (308 | ) | 12 | (194 | ) | (182 | ) | 3,643 | (4,270 | ) | (627 | ) | (232 | ) | (204 | ) | (436 | ) | |||||||||||||||||||||||||||
Net
income (loss)
|
3,534 | $ | (343 | ) | $ | 3,191 | $ | (376 | ) | $ | 2,019 | $ | 1,643 | $ | 23,830 | $ | (17,327 | ) | $ | 6,503 | $ | 622 | $ | 3,300 | $ | 3,922 | ||||||||||||||||||||||
Diluted
income per share
|
$ | 0.11 | $ | (0.01 | ) | $ | 0.10 | $ | (0.01 | ) | $ | 0.06 | $ | 0.05 | $ | 0.75 | $ | (0.54 | ) | $ | 0.21 | $ | 0.02 | $ | 0.11 | $ | 0.13 | |||||||||||||||||||||
Diluted
weighted average common shares outstanding
|
32,018 | 32,018 | 32,018 | 30,795 | 30,795 | 30,795 | 31,864 | 31,864 | 31,864 | 31,289 | 31,289 | 31,289 |
(1)
|
Business
combination accounting rules require us to account for the fair value of
deferred revenue assumed in connection with an acquisition.
This
non-GAAP adjustment reflects the full amount of software contract revenue
that would otherwise been recorded subsequent to our
acquisitions
of eventIS Group B.V. and VividLogic Inc.
|
||||||||||||||
(2)
|
For
GAAP purposes, stock-based compensation is included in the following
expense
categories:
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
July
31, 2010
|
July
31, 2009
|
July
31, 2010
|
July
31, 2009
|
|||||||||||||
Cost
of revenues
|
$ | 53 | $ | 153 | $ | 120 | $ | 311 | ||||||||
Research
and development
|
96 | 174 | 231 | 389 | ||||||||||||
Selling
and marketing
|
93 | 193 | 198 | 291 | ||||||||||||
General
and administrative
|
105 | 214 | 296 | 504 | ||||||||||||
Total
stock-based compensation
|
$ | 347 | $ | 734 | $ | 845 | $ | 1,495 |
(3)
|
The
intangible assets recorded at fair value as a result of our acquisitions
are amortized over the estimated useful life of the related asset.
Amortization expense related to intangible assets is included in the
following expense categories:
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
July
31, 2010
|
July
31, 2009
|
July
31, 2010
|
July
31, 2009
|
|||||||||||||
Cost
of revenues:
|
$ | 459 | $ | 53 | $ | 938 | $ | 104 | ||||||||
Operating
expenses:
|
838 | 794 | 1,707 | 1,273 | ||||||||||||
Total
amortization of intangibles
|
$ | 1,297 | $ | 847 | $ | 2,645 | $ | 1,377 |
(4)
|
We
incurred severance costs in connection with selected headcount reductions
that impacted all but the Media Services segment.
We also incurred charges to reflect the write-down of inventory to net
realizable value reflecting the discontinuance of
certain inventory components within the Servers and Storage segment due to
technology changes. These expenses would not have otherwise
occurred in the periods presented as part of our operating
expenses.
|
||||||||||||
|
|||||||||||||
(5)
|
We
incurred expenses in connection with our acquisition of VividLogic Inc.
which would not have otherwise occurred in
the periods presented as part of our operating expenses and the change in
the fair value of the contingent consideration.
|
||||||||||||
|
|||||||||||||
(6)
|
Reflects
the gain on the sale of the equity investment in Casa
Systems.
|
||||||||||||
(7)
|
The
non-GAAP income tax adjustment reflects the effective income tax rate in
which the non-GAAP adjustment occurs and excludes
any changes in the tax valuation allowance arising from the gain on the
sale of the equity investment in Casa Systems,
Inc.
|
·
|
Telephone:
866-322-1550 (U.S.) and 973-200-3380
(International)
|
·
|
Conference
ID: 924 16 873
|
·
|
Webcast:
www.schange.com/IR
(An archived webcast will be available at this
site.)
|