Exhibit 99.1

 

[SEACHANGE LOGO]

 

NEWS RELEASE

 

 

For more information:  

Media:

John Coulbourn

SeaChange International

978/897-0100 x3098

johnc@schange.com

 

Investor Relations:

Martha Schaefer

SeaChange International

978/897-0100 x3030

mschaefer@schange.com

 

 

SEACHANGE INTERNATIONAL CONFIRMS

SECOND QUARTER FISCAL 2006 RESULTS

 

MAYNARD, Mass. (September 6, 2005) – SeaChange International, Inc. (Nasdaq: SEAC) today confirmed its financial results for its second quarter of fiscal 2006 ended July 31, 2005, which the Company had previously announced on August 23, 2005. These results follow the completion of its analysis with respect to its preferred equity investment into Casa Systems, Inc.

 

As previously reported, revenues for the quarter were $26.2 million compared to revenues of $43.0 million in the second quarter of fiscal 2005, a 39% decrease. The Company recorded a net loss of $6.6 million, or $0.23 per diluted share, for the second quarter of fiscal 2006 versus net income of $3.3 million, or $0.12 per diluted share, for the second quarter of fiscal 2005.

 

During the quarter, the Company invested $8.3 million in Casa Systems, Inc. representing a 19.8% ownership interest. SeaChange reviewed the financing agreements and the supply agreements with Casa and determined that while Casa was a Variable Interest Entity as defined by the accounting guidance of FIN No. 46R, the Company is not the primary beneficiary in Casa. Consequently, SeaChange accounted for this investment under the cost method of accounting. No charges for in-process research & development or other matters were required in connection with this investment.

 

The Company plans to file its Form 10-Q for the second quarter on or before Friday, September 9.

 

Safe Harbor Provision

 

Any statements contained in this press release that do not describe historical facts, including without limitation statements concerning expected future performance, product introductions and general market conditions, may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements contained herein are based on current expectations, but are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. The factors that could cause actual future results to differ materially from current

 

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expectations include the following: the continued growth, development and acceptance of the video-on-demand market; the loss of one of the Company’s large customers; the cancellation or deferral of purchases of the Company’s products; a decline in demand or average selling price for the Company’s broadband products; the Company’s ability to manage its growth; the Company’s ability to protect its intellectual property rights and the expenses that may be incurred by the Company to protect its intellectual property rights; an unfavorable result of current or future litigation, including the Company’s current patent litigation with C-COR (as successor to nCube Corp.); content providers limiting the scope of content licensed for use in the video-on-demand market; the Company’s ability to introduce new products or enhancements to existing products; the Company’s dependence on certain sole source suppliers and third-party manufacturers; the Company’s ability to compete in its marketplace; the Company’s ability to respond to changing technologies; the risks associated with international sales; changes in the regulatory environment; the performance of companies in which the Company has made equity investments, including the ON Demand Group Limited; the Company’s ability to hire and retain highly skilled employees; and increasing social and political turmoil.

 

Further information on factors that could cause actual results to differ from those anticipated is detailed in various publicly available documents made by the Company from time to time with the Securities and Exchange Commission, including but not limited to, those appearing under the caption “Certain Risk Factors That May Affect our Business” in the Company’s Annual Report on Form 10-K filed with the Commission on April 15, 2005. Any forward-looking statements should be considered in light of those factors. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak as of the date they are made. The Company disclaims any obligation to publicly update or revise any such statements to reflect any change in Company expectations or events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results may differ from those set forth in the forward-looking statements.

 

About SeaChange International, Inc.

 

SeaChange International, Inc. is a world leader in digital video systems, spanning broadcast and broadband. The Company creates powerful server and software systems that manage, store and distribute professional quality digital video. SeaChange’s innovative products are based on a scalable, distributed software architecture and standard technology components to continually deliver exponential improvements in digital video cost-performance. As a result, SeaChange enables broadband, broadcast, satellite and new media companies to streamline operations and reduce costs, allowing for expanded services, new applications and increased revenues. SeaChange is headquartered in Maynard, Massachusetts and has product development, support and sales offices throughout the world. Visit www.schange.com.

 

MediaCluster and SeaChange are registered trademarks of SeaChange International, Inc.

 

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SeaChange International, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

 

     Three months ended

    Six months ended

 
     July 31,     July 31,     July 31,     July 31,  
     2005

    2004

    2005

    2004

 

Revenues

   $ 26,195     $ 43,027     $ 57,707     $ 84,666  

Cost of revenues

     17,014       23,247       35,018       46,100  
    


 


 


 


Gross profit

     9,181       19,780       22,689       38,566  

Operating expenses:

                                

Research and development

     8,459       7,128       16,339       14,202  

Selling and marketing

     4,584       4,450       9,590       8,625  

General and administrative

     3,808       2,640       6,480       5,324  
    


 


 


 


       16,851       14,218       32,409       28,151  
    


 


 


 


Income (loss) from operations

     (7,670 )     5,562       (9,720 )     10,415  

Interest income, net

     522       383       1,083       905  
    


 


 


 


Income (loss) before income taxes and equity income (loss) in earnings of affiliates

     (7,148 )     5,945       (8,637 )     11,320  

Income tax (benefit) expense

     (544 )     2,378       (1,125 )     4,516  

Equity income (loss) in earnings of affiliates

     48       (223 )     378       (253 )
    


 


 


 


Net income (loss)

   $ (6,556 )   $ 3,344     $ (7,134 )   $ 6,551  
    


 


 


 


Basic income (loss) per share

   $ (0.23 )   $ 0.12     $ (0.25 )   $ 0.24  
    


 


 


 


Diluted income (loss) per share

   $ (0.23 )   $ 0.12     $ (0.25 )   $ 0.23  
    


 


 


 


Weighted average common shares outstanding-

                                

Basic

     28,286       27,490       28,232       27,415  
    


 


 


 


Diluted

     28,286       28,745       28,232       28,776  
    


 


 


 


 

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SeaChange International, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

     July 31,     January 31,  
     2005

    2005

 

Assets

                

Current assets:

                

Cash and cash equivalents

   $ 44,214     $ 93,561  

Marketable securities

     16,650       26,052  

Accounts receivable, net

     21,014       25,047  

Inventories

     22,953       19,458  

Prepaid expenses and other current assets

     10,235       9,750  
    


 


Total current assets

     115,066       173,868  

Property and equipment, net

     25,754       15,814  

Marketable securities

     20,840       14,299  

Investments in affiliates

     15,782       4,661  

Intangibles, net

     14,289       480  

Goodwill

     11,169       1,882  

Other assets

     5,056       1,301  
    


 


     $ 207,956     $ 212,305  
    


 


Liabilities and Stockholders’ Equity

                

Current liabilities:

                

Accounts payable and accrued expenses

   $ 22,077     $ 23,009  

Current portion of line of credit and obligations under capital leases

     —         209  

Customer deposits

     6,631       165  

Deferred revenue

     19,167       21,342  

Income taxes payable

     1,250       2,575  
    


 


Total current liabilities

     49,125       47,300  

Long-term debt and other long-term liabilities

     318       —    
    


 


Common stock and other equity

     175,496       174,737  

Accumulated deficit

     (16,589 )     (9,455 )

Accumulated other comprehensive loss

     (394 )     (277 )
    


 


Total stockholders’ equity

     158,513       165,005  
    


 


     $ 207,956     $ 212,305  
    


 


 

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