Contact:
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Jim Sheehan
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Martha Schaefer
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SeaChange PR
1-978-897-0100 x3064
jim.sheehan@schange.com
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SeaChange IR
1-978-897-0100 x3030
martha.schaefer@schange.com
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·
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First Quarter Revenues and non-GAAP EPS Both Exceeded Prior Guidance
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·
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Full Year non-GAAP EPS Guidance Raised to $0.66-$0.74
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·
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Continues to See Strength in Global Multi-Screen Software Deployments
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April 30, 2011
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January 31, 2011
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|||||||
Assets
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(unaudited)
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|||||||
Current assets:
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||||||||
Cash and cash equivalents
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$ | 79,161 | $ | 73,145 | ||||
Restricted cash
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1,200 | 1,332 | ||||||
Marketable securities
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9,118 | 7,340 | ||||||
Accounts receivable, net
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51,263 | 54,487 | ||||||
Inventories, net
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14,402 | 14,393 | ||||||
Prepaid expenses and other current assets
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8,014 | 7,148 | ||||||
Deferred tax asset
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3,756 | 3,775 | ||||||
Total current assets
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166,914 | 161,620 | ||||||
Property and equipment, net
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36,097 | 36,381 | ||||||
Marketable securities, long-term
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1,566 | 4,379 | ||||||
Investments in affiliates
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3,082 | 2,913 | ||||||
Intangible assets, net
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30,686 | 30,306 | ||||||
Goodwill
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68,502 | 65,273 | ||||||
Other assets
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4,351 | 4,319 | ||||||
Total assets
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$ | 311,198 | $ | 305,191 | ||||
Liabilities and Stockholders’ Equity
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||||||||
Current liabilities:
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||||||||
Accounts payable
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$ | 9,813 | $ | 11,249 | ||||
Other accrued expenses
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20,082 | 16,528 | ||||||
Customer deposits
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2,723 | 3,993 | ||||||
Deferred revenues
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38,064 | 37,039 | ||||||
Deferred tax liability
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210 | 183 | ||||||
Total current liabilities
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70,892 | 68,992 | ||||||
Deferred revenue, long-term
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6,861 | 6,930 | ||||||
Long term liabilities
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8,635 | 11,231 | ||||||
Distribution and losses in excess of investment
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1,233 | 1,161 | ||||||
Deferred tax liabilities and income taxes payable
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8,132 | 7,735 | ||||||
Total liabilities
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95,753 | 96,049 | ||||||
Stockholders’ equity:
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||||||||
Common stock
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322 | 319 | ||||||
Additional paid-in capital
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208,788 | 207,121 | ||||||
Treasury stock
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(1 | ) | (1 | ) | ||||
Accumulated income
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10,137 | 10,521 | ||||||
Accumulated other comprehensive loss
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(3,801 | ) | (8,818 | ) | ||||
Total stockholders’ equity
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215,445 | 209,142 | ||||||
Total liabilities and stockholders’ equity
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$ | 311,198 | $ | 305,191 |
Three Months Ended
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April 30, 2011
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April 30, 2010
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Revenues
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$ | 52,060 | $ | 54,588 | ||||
Cost of revenues
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27,176 | 27,210 | ||||||
Gross profit
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24,884 | 27,378 | ||||||
Operating expenses:
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||||||||
Research and development
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11,067 | 13,564 | ||||||
Selling and marketing
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7,352 | 6,384 | ||||||
General and administrative
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6,492 | 6,801 | ||||||
Amortization of intangibles
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825 | 868 | ||||||
Restructuring
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- | 4,312 | ||||||
25,736 | 31,929 | |||||||
Loss from operations
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(852 | ) | (4,551 | ) | ||||
Gain on sale of investment in affiliate
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- | 25,188 | ||||||
Other income (expense), net
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375 | (569 | ) | |||||
(Loss) income before income taxes and equity income (loss) in earnings of affiliates
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(477 | ) | 20,068 | |||||
Income tax provision (benefit)
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1 | (342 | ) | |||||
Equity income/(loss) in earnings of affiliates, net of tax
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94 | (112 | ) | |||||
Net (loss) income
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$ | (384 | ) | $ | 20,298 | |||
Basic income per share
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$ | (0.01 | ) | $ | 0.65 | |||
Diluted income per share
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$ | (0.01 | ) | $ | 0.64 | |||
Weighted average common shares outstanding:
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||||||||
Basic
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31,934 | 31,270 | ||||||
Diluted
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31,934 | 31,732 |
Three Months Ended
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April 30, 2011
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April 30, 2010
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Software
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Revenue:
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Products
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$ | 14,214 | $ | 20,126 | ||||
Services
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21,317 | 19,955 | ||||||
Total revenue
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35,531 | 40,081 | ||||||
Gross profit
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20,425 | 22,086 | ||||||
Operating expenses:
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||||||||
Research and development
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9,070 | 10,169 | ||||||
Selling and marketing
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6,218 | 4,328 | ||||||
General and administrative
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417 | 176 | ||||||
Amortization of intangibles
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790 | 797 | ||||||
Restructuring
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- | 345 | ||||||
16,495 | 15,815 | |||||||
Income from operations
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$ | 3,930 | $ | 6,271 | ||||
Servers and Storage
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Revenue:
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Products
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$ | 4,771 | $ | 4,508 | ||||
Services
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2,851 | 3,631 | ||||||
Total revenue
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7,622 | 8,139 | ||||||
Gross profit
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3,161 | 3,684 | ||||||
Operating expenses:
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||||||||
Research and development
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1,997 | 3,395 | ||||||
Selling and marketing
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1,134 | 2,056 | ||||||
Restructuring
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- | 3,056 | ||||||
3,131 | 8,507 | |||||||
Income (loss) from operations
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$ | 30 | $ | (4,823 | ) | |||
Media Services
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Service revenue
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$ | 8,907 | $ | 6,368 | ||||
Gross profit
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1,298 | 1,608 | ||||||
Operating expenses:
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General and administrative
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987 | 879 | ||||||
Amortization of intangibles
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35 | 71 | ||||||
1,022 | 950 | |||||||
Income from operations
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$ | 276 | $ | 658 | ||||
Unallocated Corporate
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Operating expenses:
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General and administrative
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$ | 5,088 | $ | 5,746 | ||||
Restructuring
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$ | - | $ | 911 | ||||
Total unallocated corporate expenses
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$ | 5,088 | $ | 6,657 | ||||
Consolidated loss from operations
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$ | (852 | ) | $ | (4,551 | ) |
Three Months Ended
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Three Months Ended
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April 30, 2011
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April 30, 2010
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GAAP
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Adjustment
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Non-GAAP
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GAAP
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Adjustment
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Non-GAAP
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Revenues (1)
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$ | 52,060 | 2 | $ | 52,062 | $ | 54,588 | 1,817 | $ | 56,405 | ||||||||||||||
Operating expenses
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25,736 | - | 25,736 | 31,929 | - | 31,929 | ||||||||||||||||||
Stock-based compensation (2)
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- | 1,544 | 1,544 | - | 498 | 498 | ||||||||||||||||||
Amortization of intangible assets (3)
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- | 1,344 | 1,344 | - | 1,348 | 1,348 | ||||||||||||||||||
Restructuring (4)
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- | - | - | - | 4,312 | 4,312 | ||||||||||||||||||
Acquisition related costs (5)
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- | - | - | - | 826 | 826 | ||||||||||||||||||
25,736 | 2,888 | 22,848 | 31,929 | 6,984 | 24,945 | |||||||||||||||||||
(Loss) income from operations
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(852 | ) | 2,890 | 2,038 | (4,551 | ) | 8,801 | 4,250 | ||||||||||||||||
Income from sale of investments in affiliates (6)
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- | - | - | 25,188 | (25,188 | ) | - | |||||||||||||||||
Income tax impact expense (benefit) (7)
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1 | 421 | 422 | (342 | ) | 802 | 460 | |||||||||||||||||
Net (loss) income
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$ | (384 | ) | $ | 2,469 | $ | 2,085 | $ | 20,298 | $ | (17,189 | ) | $ | 3,109 | ||||||||||
Diluted (loss)income per share
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$ | (0.01 | ) | $ | 0.07 | 0.06 | $ | 0.64 | $ | (0.54 | ) | $ | 0.10 | |||||||||||
Diluted weighted average common shares outstanding
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31,934 | 32,478 | 32,478 | 31,732 | 31,732 | 31,732 |
(1)
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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 have otherwise been recorded subsequent to our acquisition of eventIS Group B.V. and VividLogic, Inc.
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(2)
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For GAAP purposes, stock-based compensation is included in the following expense categories:
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Three Months Ended
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April 30, 2011
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April 30, 2010
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Cost of revenues
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$ | 151 | $ | 67 | ||||
Research and development
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225 | 135 | ||||||
Selling and marketing
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426 | 105 | ||||||
General and administrative
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742 | 191 | ||||||
Total stock-based compensation
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$ | 1,544 | $ | 498 |
(3)
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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:
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Three Months Ended
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April 30, 2011
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April 30, 2010
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Cost of revenues:
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$ | 519 | $ | 480 | ||||
Operating expenses:
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825 | 868 | ||||||
Total amortization of intangibles
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$ | 1,344 | $ | 1,348 |
(4)
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We incurred severance costs in connection with selected headcount reductions that impacted all but the Media Servicessegment. We also incurred charges during the quarter 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.
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(5)
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We incurred expenses in connection with our acquisitions which would not have otherwise occurredin the periods presented as part of our operating expenses.
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(6)
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Reflects the gain on the sale of the equity investment in Casa Systems.
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(7)
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The non-GAAP income tax adjustment reflects the effective income tax rate in which the non-GAAP adjustment occurs and anyexclusion of changes in the tax valuation allowance.
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1.
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launched an iPad deployment with a large North American operator that uses Adrenalin and streaming products.
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2.
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won two new North American multi-screen customers for which contracts are expected to be finalized this quarter.
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3.
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was selected for a multi-screen video trial in Latin America.
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4.
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debuted Nitro™, a consistent user interface for multiple screens, with features such as multi-room DVR, virtual channels and social media recommendations. A major multiple system operator (MSO) is the first Nitro customer with an initial deployment planned for later this year.
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5.
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added a new customer for the AssetFlow content workflow management software, with more opportunities in the pipeline for AdFlow, the advertising version of the software.
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6.
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continued to expand its next generation product offerings in software with the introduction of the Infusion Advanced Advertising Platform.
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7.
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was selected by a major U.S. operator for a trial of home gateway software.
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8.
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renewed two North American VOD software subscription customers, furthering its recurring revenue.
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9.
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won another North American back office software competitive replacement, planned for a switch-out within the fiscal year.
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10.
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renewed a managed VOD service contract.
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11.
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won its first multi-year, VOD managed services deal in Europe.
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12.
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won a schedule management software deal in the U.K. for an over-the-top video service provider.
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13.
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expanded its software platform to include the new Business Management Suite at a large multi-country operator in Europe and a large German operator.
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14.
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went live with VOD services at INEA in Poland.
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15.
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expanded its system at Turk Telekom to include a recording system.
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16.
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added a linear broadcast system at Digicable.
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17.
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added linear broadcast systems in India and Vietnam.
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18.
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installed our new Universal Media Library play-to-air systems in Mauritius Broadcasting Corporation, Idaho Public Television, and West Virginia Public Television.
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19.
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expanded high definition playout in three Korean systems.
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20.
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launched Media Services in Serbia and Slovenia.
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21.
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launched VOD services for Germany’s EWE Tel through its On Demand Deutschland joint venture.
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22.
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had subscription growth across OTE in Greece, SFR in France and du in the Middle East.
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Actual Q1 FY12
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Gross Margin
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58%
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R&D
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26%
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Sales and Marketing
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18%
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G&A
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13%
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Amortization
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2%
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Operating Margin – non-GAAP
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7%
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