Exhibit 99.1
NEWS RELEASE
| Contact: | Jim Sheehan | Martha Schaefer | ||||
| SeaChange PR | SeaChange IR | |||||
| 1-978-897-0100 x3064 | 1-978-897-0100 x3030 | |||||
| jim.sheehan@schange.com | martha.schaefer@schange.com |
SEACHANGE INTERNATIONAL ANNOUNCES
SECOND QUARTER FISCAL 2009 RESULTS
| • | Total revenues 15% higher year-over-year |
| • | Fourth consecutive quarter of profitability |
| • | $4 million in shares repurchased during the second quarter |
| • | Reiterated Guidance of FY ‘09 revenue growth of 10% |
ACTON, Mass. (Sept. 4, 2008) – SeaChange International, Inc. (NASDAQ: SEAC), a leading provider of software and hardware solutions for video-on-demand (VOD) television, announced financial results for its fiscal 2009 second quarter ended July 31, 2008. Total revenues for the quarter were $50.7 million which was $6.5 million or 15% higher than total revenues of $44.2 million for the second quarter of fiscal 2008. Net income for the second quarter was $1.5 million or $0.05 per share compared with a net loss of $7.9 million, or $0.27 per share for the same period last year. Last year’s second quarter net loss included $6.0 million, or $0.20 per share, of expenses related to severance charges in connection with selected headcount reductions and impairment charges related primarily to capitalized software licenses.
Total revenues for the first six months of fiscal 2009, ended July 31, 2008, were $96.1 million, which was $13.1 million or 16% higher than total revenues of $83.0 million for the first six months of fiscal 2008. Net income for the first half of fiscal 2009 was $1.8 million, or $0.06 per share compared with a net loss of $12.4 million, or $0.42 per share for the same period last year. The net loss for the first six months of fiscal 2008 included $6.0 million, or $0.20 per share, of expenses in connection with the previously mentioned cost reduction initiatives implemented in the second quarter of last year.
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SeaChange Q2 FY09 Earnings/Page 2
The Company ended the second quarter of fiscal 2009 with cash, cash equivalents and marketable securities of $78.1 million and no debt compared with $79.0 million and no debt at the end of the first quarter of fiscal 2009. Net income and non-cash expenses of $4.6 million along with improvements in working capital were offset by capital expenditures of $7.2 million in the second quarter. The capital expenditures related principally to a facility purchase for the Company’s Media Services operation. In addition, the Company repurchased 551,000 shares of common stock at a cost of $4.0 million under the Company’s previously disclosed stock buyback program.
Total revenues in the second quarter of fiscal 2009 from the Company’s Software segment were $32.0 million, which was $4.6 million or 17% higher than comparable revenues in the second quarter of last year. Year-over-year revenue growth in the Software segment was driven primarily by higher Advertising Insertion revenue from North American service providers, the result of increased high-definition television channel requirements. In addition, higher SeaChange Axiom software-related license and maintenance revenue, derived primarily from North American cable and telephone customers, contributed to the increase in Software segment revenue between quarters.
The Servers and Storage segment generated $14.9 million in revenue for the second quarter of fiscal 2009, which was $2.5 million or 20% higher than revenue for the second quarter of fiscal 2008. The growth in revenue was mainly due to increased VOD server shipments to several domestic customers and higher installation and maintenance revenues related to increased year-over-year server deployments.
The Media Services operating segment’s revenue for the second quarter of fiscal 2009 of $3.9 million was $0.6 million lower than comparable revenue from last year’s second quarter. The decrease in Media Services revenue between years was due primarily to non-recurring professional services revenue generated in last year’s second quarter.
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SeaChange Q2 FY09 Earnings/Page 3
“We are very pleased with our financial performance for the second quarter which builds on the strong start for fiscal 2009,” commented Bill Styslinger, President and CEO, SeaChange International. “We exceeded $50 million in quarterly revenue for the first time in the Company’s history on continued strong North American service provider spending for VOD server and software products. We’re particularly pleased that the first commercial deployment of flash memory servers by two of our largest North American cable television customers significantly contributed to our VOD server revenue this quarter.”
Styslinger continued, “Solid, top-line performance, improved margins and control of operating expense growth all contributed to the Company’s fourth consecutive quarter of profitability. We aggressively redeployed cash generated during the second quarter by repurchasing $4 million of the Company’s stock, in addition to the facility purchase. Our cash position at the end of the second quarter, however, was essentially unchanged from the first quarter demonstrating the cash generation power of our business.”
Commenting on guidance for the remainder of fiscal 2009, Styslinger noted, “We continue to expect that revenue for all of fiscal 2009 will be approximately 10% higher than fiscal 2008 revenue and that we will be profitable for the second half of the year. Our confidence in our financial expectations for the rest of fiscal 2009 lies in continued strong spending on VOD and Advertising Insertion software-related products by our core North American cable and telephone customers, as well as continued focus on controlling our selling, general and administrative expenses.”
The Company will discuss its financial results and business outlook in more detail today during its webcast conference call at 5:00 p.m. ET, which will be available live and archived at www.schange.com/IR/.
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SeaChange Q2 FY09 Earnings/Page 4
About SeaChange International
SeaChange International, Inc. is a world leader in digital video systems, spanning broadcast and broadband. Its powerful server and software systems enable television operators to provide new On Demand services and to gain greater efficiencies in advertising and content delivery. With its Emmy-winning MediaCluster® technology, thousands of SeaChange systems are helping broadband, broadcast and satellite television companies to streamline operations, expand services and increase revenues. SeaChange is headquartered in Acton, Massachusetts and has product development, support and sales offices throughout the world. Visit www.schange.com.
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 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 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 in any future litigation; 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; the performance of companies in which the Company has made equity investments, including Casa Systems and On Demand Deutschland GmBH & Co. KG; the ability of the Company to integrate businesses acquired by the Company; changes in the regulatory environment; the Company’s ability to hire and retain highly skilled employees; our current ineligibility to use a registration statement on Form S-3; any weaknesses over internal controls over financial reporting; any additional tax liabilities that the Company may be subject to; and system errors, failures or disruptions.
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 at Item 1A under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the Commission on April 14, 2008. 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.
# # #
*SeaChange and MediaCluster are registered trademarks of SeaChange International, Inc. SeaChange Axiom is a trademark of SeaChange International, Inc.
SeaChange Q2 FY09 Earnings/Page 5
SeaChange International, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share data)
| July 31, 2008 | January 31, 2008 | |||||||
| (unaudited) | ||||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 56,886 | $ | 63,359 | ||||
| Marketable securities |
14,530 | 19,266 | ||||||
| Accounts receivable, net |
47,693 | 35,743 | ||||||
| Inventories, net |
15,605 | 14,315 | ||||||
| Prepaid expenses and other current assets |
3,244 | 2,656 | ||||||
| Total current assets |
137,958 | 135,339 | ||||||
| Property and equipment, net |
34,691 | 28,066 | ||||||
| Marketable securities |
6,673 | 5,272 | ||||||
| Investments in affiliates |
13,043 | 12,668 | ||||||
| Intangible assets, net |
5,828 | 6,809 | ||||||
| Goodwill |
29,384 | 29,471 | ||||||
| Other assets |
364 | 271 | ||||||
| Total assets |
$ | 227,941 | $ | 217,896 | ||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 12,026 | $ | 9,636 | ||||
| Income taxes payable |
570 | 1,625 | ||||||
| Other accrued expenses |
8,561 | 17,387 | ||||||
| Customer deposits |
3,914 | 1,259 | ||||||
| Deferred revenues |
26,888 | 19,103 | ||||||
| Deferred tax liabilities |
92 | 93 | ||||||
| Total current liabilities |
52,051 | 49,103 | ||||||
| Distribution and losses in excess of investment |
1,874 | 1,458 | ||||||
| Deferred tax liabilities and income taxes payable |
2,075 | 1,933 | ||||||
| Total liabilities |
56,000 | 52,494 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock, $0.01 par value; 30,476,835 and 29,904,311 shares outstanding at July 31, 2008 and January 31, 2008, respectively |
313 | 299 | ||||||
| Additional paid-in capital |
202,796 | 191,627 | ||||||
| Accumulated deficit |
(26,917 | ) | (28,747 | ) | ||||
| Accumulated other comprehensive gain |
1,738 | 2,223 | ||||||
| Treasury stock, at cost; 873,381 and 39,784 shares at July 31, 2008 and January 31, 2008, respectively |
(5,989 | ) | — | |||||
| Total stockholders’ equity |
171,941 | 165,402 | ||||||
| Total liabilities and stockholders’ equity |
$ | 227,941 | $ | 217,896 | ||||
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SeaChange Q2 FY09 Earnings/Page 6
SeaChange International, Inc.
Condensed Consolidated Statement of Operations—Unaudited
(in thousands, except per share data)
| Three months ended | Six months ended | |||||||||||||||
| July 31, 2008 |
July 31, 2007 |
July 31, 2008 |
July 31, 2007 |
|||||||||||||
| Revenues |
$ | 50,705 | $ | 44,194 | $ | 96,089 | $ | 83,038 | ||||||||
| Cost of revenues |
26,065 | 29,049 | 48,687 | 50,076 | ||||||||||||
| Gross profit |
24,640 | 15,145 | 47,402 | 32,962 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
11,047 | 11,474 | 21,523 | 21,811 | ||||||||||||
| Selling and marketing |
7,265 | 5,895 | 13,688 | 11,680 | ||||||||||||
| General and administrative |
4,755 | 5,520 | 9,866 | 10,423 | ||||||||||||
| Amortization of intangibles |
397 | 802 | 793 | 1,599 | ||||||||||||
| 23,464 | 23,691 | 45,870 | 45,513 | |||||||||||||
| Income (loss) from operations |
1,176 | (8,546 | ) | 1,532 | (12,551 | ) | ||||||||||
| Interest income and gains on sales of marketable securities, net |
633 | 430 | 1,328 | 897 | ||||||||||||
| Income (loss) before income taxes and equity income in earnings of affiliates |
1,809 | (8,116 | ) | 2,860 | (11,654 | ) | ||||||||||
| Income tax provision |
(208 | ) | (95 | ) | (633 | ) | (1,358 | ) | ||||||||
| Equity (loss) income in earnings of affiliates |
(114 | ) | 361 | (397 | ) | 579 | ||||||||||
| Net income (loss) |
$ | 1,487 | $ | (7,850 | ) | $ | 1,830 | $ | (12,433 | ) | ||||||
| Basic income (loss) per share |
$ | 0.05 | $ | (0.27 | ) | $ | 0.06 | $ | (0.42 | ) | ||||||
| Diluted income (loss) per share |
$ | 0.05 | $ | (0.27 | ) | $ | 0.06 | $ | (0.42 | ) | ||||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
30,684 | 29,539 | 30,837 | 29,466 | ||||||||||||
| Diluted |
31,148 | 29,539 | 31,255 | 29,466 | ||||||||||||
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SeaChange Q2 FY09 Earnings/Page 7
SeaChange International, Inc.
Condensed Consolidated Operating Segments—Unaudited
(in thousands)
| Three months ended | Six months ended | |||||||||||||||
| July 31, 2008 |
July 31, 2007 |
July 31, 2008 |
July 31, 2007 |
|||||||||||||
| Software |
||||||||||||||||
| Revenue: |
||||||||||||||||
| Products |
$ | 18,906 | $ | 17,221 | $ | 38,059 | $ | 32,558 | ||||||||
| Services |
13,005 | 10,151 | 23,915 | 20,642 | ||||||||||||
| Total revenue |
31,911 | 27,372 | 61,974 | 53,200 | ||||||||||||
| Gross profit |
17,507 | 10,398 | 34,003 | 24,485 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
8,668 | 7,849 | 16,855 | 14,891 | ||||||||||||
| Selling and marketing |
4,522 | 3,506 | 8,242 | 6,714 | ||||||||||||
| Amortization of intangibles |
364 | 536 | 728 | 1,073 | ||||||||||||
| 13,554 | 11,891 | 25,825 | 22,678 | |||||||||||||
| Income (loss) from operations |
$ | 3,953 | $ | (1,493 | ) | $ | 8,178 | $ | 1,807 | |||||||
| Servers and Storage |
||||||||||||||||
| Revenue: |
||||||||||||||||
| Products |
$ | 10,580 | $ | 9,367 | $ | 18,421 | $ | 14,958 | ||||||||
| Services |
4,320 | 2,987 | 7,786 | 6,029 | ||||||||||||
| Total revenue |
14,900 | 12,354 | 26,207 | 20,987 | ||||||||||||
| Gross profit |
6,650 | 3,676 | 12,249 | 6,772 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
2,379 | 3,625 | 4,668 | 6,920 | ||||||||||||
| Selling and marketing |
2,742 | 2,384 | 5,415 | 4,900 | ||||||||||||
| 5,121 | 6,009 | 10,083 | 11,820 | |||||||||||||
| Income (loss) from operations |
$ | 1,529 | $ | (2,333 | ) | $ | 2,166 | $ | (5,048 | ) | ||||||
| Media Services |
||||||||||||||||
| Service revenue |
$ | 3,894 | $ | 4,468 | $ | 7,908 | $ | 8,851 | ||||||||
| Gross profit |
483 | 1,071 | 1,150 | 1,705 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Selling and marketing |
1 | 5 | 31 | 66 | ||||||||||||
| General and administrative |
796 | 982 | 1,611 | 1,567 | ||||||||||||
| Amortization of intangibles |
33 | 266 | 65 | 526 | ||||||||||||
| 830 | 1,253 | 1,707 | 2,159 | |||||||||||||
| Loss from operations |
$ | (347 | ) | $ | (182 | ) | $ | (557 | ) | $ | (454 | ) | ||||
| Unallocated Corporate |
||||||||||||||||
| Operating expenses: |
||||||||||||||||
| General and administrative |
$ | 3,959 | $ | 4,538 | $ | 8,255 | $ | 8,856 | ||||||||
| Total unallocated corporate expenses |
$ | 3,959 | $ | 4,538 | $ | 8,255 | $ | 8,856 | ||||||||
| Consolidated income (loss) from operations |
$ | 1,176 | $ | (8,546 | ) | $ | 1,532 | $ | (12,551 | ) | ||||||
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