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8-K - 8-K - SEACHANGE INTERNATIONAL INCd594436d8k.htm

Exhibit 99.1

 

LOGO

NEWS RELEASE

 

Contact:    Press    Investors
   Jim Sheehan    Monica Gould
   SeaChange    The Blueshirt Group
   1-978-897-0100 x3064    1-212-871-3927
   jim.sheehan@schange.com    monica@blueshirtgroup.com

SEACHANGE INTERNATIONAL REPORTS

SECOND QUARTER FISCAL 2014 RESULTS

 

    Product Revenue of $16.2 Million Increased by 20% Year over Year

 

    Non-GAAP Operating Income of $3.4 Million Increased by 189% Year over Year

 

    GAAP Operating Income of $0.5 Million, Compared to $7.5 Million GAAP Operating Loss in Prior Year

 

    GAAP Gross Margins Exceed 57%

 

    Up to $25 Million Share Repurchase Authorized

ACTON, Mass. (Sept. 5, 2013) – SeaChange International, Inc. (NASDAQ: SEAC), a leading global multi-screen video software innovator, today reported second quarter fiscal 2014 revenue of $37.4 million and non-GAAP operating income of $3.4 million, or $0.10 per fully diluted share, from continuing operations. In comparison, second quarter fiscal 2013 revenue was $36.7 million and non-GAAP operating income was $1.2 million, or $0.04 per fully diluted share, from continuing operations. The Company posted a U.S. GAAP operating income of $0.5 million, or $0.01 per diluted share for the second quarter of fiscal 2014, compared to a U.S. GAAP operating loss for the second quarter of fiscal 2013 of $7.5 million, or $0.23 per basic share. The Company’s U.S. GAAP second quarter fiscal 2014 results include charges of $2.9 million that are excluded from our non-GAAP results, which consisted primarily of stock-based compensation and amortization of intangible assets from prior acquisitions.

For the first six months of fiscal 2014, the Company posted revenues of $72.9 million and non-GAAP operating income of $4.6 million compared to revenues of $73.4 million and non-GAAP operating income of $3.5 million in the same prior period. The Company posted a GAAP operating loss for the first six months of fiscal 2014 of approximately $1.3 million compared to GAAP operating loss of $8.7 million for the same prior period.

 

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SeaChange Q2 FY14 Results/Page 2

 

“We are pleased that, in the second quarter, we achieved sequential and year over year increases in revenues and operating income and substantial growth in gross margins, which exceeded 57 percent,” said Raghu Rau, Chief Executive Officer, SeaChange. “Our results would have been even better but for delays in receiving timely acceptance within the quarter for some of our new generation software products because of ongoing custom integrations with third-party products. We continued to make significant market progress including an Adrenalin rollout with one of the largest U.S. cable television operators, and Adrenalin and VOD advertising acceptance by a large European telco. We have also announced a large number of deployments, domestically and internationally, for our market-leading content management solutions. And we continued our Nucleus gateway software momentum with two more design wins.”

Commenting on the Company’s outlook, Anthony Dias, Chief Financial Officer, stated, “We continue to respond to strong demand for our new products and focus on optimizing our cost structure, and we anticipate solid performance in our second half. We expect third quarter revenues to be sequentially higher than the second quarter, and fourth quarter revenues to be sequentially higher than the third quarter. However, due to the uncertainty of timing in customer acceptance of new products, the Company expects its full year revenues to be at the lower end of its previously provided guidance of $165 million to $175 million. The Company continues to expect that its full fiscal 2014 non-GAAP operating income will be in the range of $0.53 to $0.71 per fully diluted share, as previously guided.”

SeaChange ended the second quarter of fiscal 2014 with cash, cash equivalents and marketable securities of $126.5 million, compared to $122.3 million for the previous quarter. The Company also announced that its Board of Directors has authorized the repurchase of up to $25 million of its shares through January 31, 2015 by means of open market purchases, privately negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934. Depending on market conditions and other factors, the repurchase may be commenced or suspended at any time, or from time to time, without prior notice.

The Company will host a conference call to discuss its second quarter fiscal 2014 results at 5:00 p.m. ET today, Thursday, September 5. The call may be accessed at 877-407-8037 (U.S.) and 201-689-8037 (international) and via live webcast at www.schange.com/IR. For those unable to listen to the live conference call, a replay will be available through September 19, 2013 and may be accessed by dialing 877-660-6853 (U.S.) or 201-612-7415 (international). Callers will be prompted for replay conference ID number 419491. An archived version of the webcast will also be available on the investor relations section of the Company’s website at www.schange.com/IR.

 

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SeaChange Q2 FY14 Results/Page 3

 

About SeaChange International

Ranked among the top 250 software companies in the world, SeaChange International (NASDAQ: SEAC) enables transformative multi-screen video services through an open, cloud-based, intelligent software platform trusted by cable, IPTV and mobile operators globally. Personalized and fully monetized video experiences anytime on any device, in the home and everywhere, are the product of the Company’s superior video back office platform, advertising and in-home gateway offerings.

SeaChange’s hundreds of customers are many of the world’s most powerful media brands including all major cable operators in the Americas and Europe, and the largest telecom companies in the world. Headquartered in Acton, Massachusetts, SeaChange is TL 9000 certified and has product development, support and sales offices around 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 regarding future financial performance and the repurchase of the Company’s shares, are neither promises nor guarantees and 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 assumptions and expectations, but are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. Factors that could cause actual future results to differ materially from current expectations include the following: the continued spending by the Company’s customers on video systems and services; the continued development of the multi-screen video market; the Company’s ability to successfully introduce new products or enhancements to existing products including its next generation products scheduled for release in fiscal year 2014; worldwide economic cycles; steps taken to address the variability in the market for our products and services; uncertainties introduced by our prior evaluation of strategic alternatives; the Company’s transition to being a company that primarily provides software solutions; the loss of one of the Company’s large customers; the cancellation or deferral of purchases of the Company’s products; the length of the Company’s sales cycles; the timing of revenue recognition of new products due to customer integration and acceptance requirements; any decline in demand or average selling prices for our products; the Company’s ability to manage its growth; the risks associated with international operations; compliance with conflict minerals regulations; foreign currency fluctuation; 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; content providers limiting the scope of content licensed for use in the video-on-demand market or other limitations in materials we use to provide our products and services; the Company’s ability to compete in its marketplace; the Company’s ability to respond to changing technologies; the impact of acquisitions or divestitures made by the Company; changes in the regulatory environment; the Company’s ability to hire and retain highly skilled employees; and the effectiveness of the Company’s disclosure controls and procedures and internal controls over financial reporting.

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” in the Company’s Annual Report on Form 10-K filed on April 10, 2013. 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.

 

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SeaChange Q2 FY14 Results/Page 4

 

SeaChange International, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, amounts in thousands)

 

     July 31,      January 31,  
     2013      2013  

Assets

     

Cash and cash equivalents

   $ 113,405       $ 106,721   

Marketable securities and restricted cash

     13,087         14,211   

Accounts and other receivables, net

     36,465         40,103   

Inventories, net

     7,946         7,372   

Prepaid expenses and other current assets

     5,320         11,332   

Assets held for sale

     465         465   

Property and equipment, net

     18,557         18,399   

Goodwill and intangible assets, net

     59,575         62,617   

Other assets

     2,421         4,909   
  

 

 

    

 

 

 

Total assets

   $ 257,241       $ 266,129   
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Accounts payable and other current liabilities

   $ 21,241       $ 27,962   

Deferred revenues

     29,275         30,603   

Other long term liabilities

     272         325   

Deferred tax liabilities and income taxes payable

     4,880         5,038   
  

 

 

    

 

 

 

Total liabilities

     55,668         63,928   
  

 

 

    

 

 

 

Total stockholders’ equity

     201,573         202,201   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 257,241       $ 266,129   
  

 

 

    

 

 

 

 

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SeaChange Q2 FY14 Results/Page 5

 

SeaChange International, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited, amounts in thousands, except per share data)

 

     Three Months Ended     Six Months Ended  
     July 31,     July 31,  
     2013     2012     2013     2012  

Revenues:

      

Products

   $ 16,179      $ 13,541      $ 30,987      $ 25,468   

Services

     21,201        23,197        41,945        47,896   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     37,380        36,738        72,932        73,364   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

      

Products

     1,916        4,658        4,574        8,155   

Services

     13,718        12,952        27,161        24,993   

Amortization of intangible assets

     314        503        627        1,028   

Stock-based compensation expense

     70        77        124        194   

Inventory write-down

     —          1,752        —          1,752   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     16,018        19,942        32,486        36,122   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     21,362        16,796        40,446        37,242   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

      

Research and development

     10,103        9,474        19,795        19,247   

Selling and marketing

     3,733        3,908        7,335        8,001   

General and administrative

     4,513        4,570        9,480        9,450   

Amortization of intangible assets

     834        944        1,670        1,922   

Stock-based compensation expense

     587        1,927        1,646        2,838   

Earn-outs and change in fair value of earn-outs

     14        1,543        34        1,603   

Professional fees: acquisitions, divestitures, litigation, and strategic alternatives

     426        469        921        1,419   

Severance and other restructuring costs

     617        1,470        846        1,442   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     20,827        24,305        41,727        45,922   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     535        (7,509     (1,281     (8,680

Other expense, net

     (41     (474     (439     (429

(Loss) gain on sale of investment in affiliates

     (271     —          (338     814   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     223        (7,983     (2,058     (8,295

Income tax (benefit) provision

     (120     115        (361     116   

Equity income in earnings of affiliates, net of tax

     —          —          20        26   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     343        (8,098     (1,677     (8,385
  

 

 

   

 

 

   

 

 

   

 

 

 

Gain (loss) on sale of discontinued operations, net of tax

     —          2,547        —          (14,448

Loss from discontinued operations, net of tax

     (558     (447     (523     (2,742
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (215   $ (5,998   $ (2,200   $ (25,575
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (215   $ (5,998   $ (2,200   $ (25,575

Other comprehensive income (loss), net of tax:

      

Foreign currency translation adjustment

     352        3,524        (688     5,159   

Unrealized (loss) gain on marketable securities

     (12     13        (9     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ 125      $ (2,461   $ (2,897   $ (20,416
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share:

      

Basic loss per share

   $ (0.01   $ (0.18   $ (0.07   $ (0.78
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted loss per share

   $ (0.01   $ (0.18   $ (0.07   $ (0.78
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share from continuing operations:

      

Basic income (loss) per share

   $ 0.01      $ (0.25   $ (0.05   $ (0.25
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted income (loss) per share

   $ 0.01      $ (0.25   $ (0.05   $ (0.25
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income per share from discontinued operations:

      

Basic (loss) income per share

   $ (0.02   $ 0.07      $ (0.02   $ (0.53
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted (loss) income per share

   $ (0.02   $ 0.07      $ (0.02   $ (0.53
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding:

        

Basic

     32,584        32,629        32,547        32,585   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     32,584        32,629        32,547        32,585   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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SeaChange Q2 FY14 Results/Page 6

 

SeaChange International, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

 

     Six Months Ended
July 31,
 
     2013     2012  

Cash flows from operating activities:

    

Net loss

   $ (2,200   $ (25,575

Net loss from discontinued operations

     523        17,190   

Adjustments to reconcile net loss to net cash provided by operating activities from continuing operations:

    

Depreciation and amortization of fixed assets

     2,303        2,307   

Amortization of intangible assets

     2,297        2,950   

Impairment of long-lived asset

     —          956   

Provision for inventory obsolescense

     —          188   

Loss (gain) on sale of investment in affiliates

     338        (814

Stock-based compensation expense

     1,770        3,032   

Changes in contingent consideration related to acquisitions

     34        1,603   

Other

     60        44   

Changes in operating assets and liabilities:

    

Accounts receivable

     1,664        1,839   

Unbilled receivables

     (2,155     2,898   

Inventories

     (995     1,494   

Prepaid expenses and other assets

     7,924        (4,316

Accounts payable

     (273     (1,433

Accrued expenses

     (694     923   

Customer deposits

     (4,112     (1,410

Deferred revenues

     (1,140     (8,824

Other

     (64     184   
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities from continuing operations

     5,280        (6,764

Net cash (used in) provided by operating activities from discontinued operations

     (523     559   
  

 

 

   

 

 

 

Total cash provided by (used in) operating activities

     4,757        (6,205
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of property and equipment

     (1,449     (980

Purchases of marketable securities

     (4,093     (10,526

Proceeds from sale and maturity of marketable securities

     5,141        9,109   

Additional proceeds from sale of equity investment

     1,128        814   

Acquisition of businesses and payment of contingent consideration, net of cash acquired

     (3,206     (4,530

Other

     21        —     
  

 

 

   

 

 

 

Net cash used in investing activities from continuing operations

     (2,458     (6,113

Net cash provided by investing activities from discontinued operations

     4,000        23,811   
  

 

 

   

 

 

 

Total cash provided by investing activities

     1,542        17,698   
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Repurchases of our common stock

     —          (504

Proceeds from issuance of common stock relating to stock option exercises

     499        530   
  

 

 

   

 

 

 

Net cash provided by financing activities from continuing operations

     499        26   

Net cash provided by financing activities from discontinued operations

     —          872   
  

 

 

   

 

 

 

Total cash provided by financing activities

     499        898   
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     (114     (406
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     6,684        11,985   
  

 

 

   

 

 

 

Cash and cash equivalents, beginning of period

     106,721        80,585   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 113,405      $ 92,570   
  

 

 

   

 

 

 

Supplemental disclosure of cash flow information:

    

Income taxes paid

   $ 472      $ 1,267   

Supplemental disclosure of non-cash activities:

    

Transfer of items originally classified as inventories to equipment

   $ 417      $ 394   

 

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SeaChange Q2 FY14 Results/Page 7

 

Use of Non-GAAP Financial Information

We define non-GAAP income from operations as U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) operating income or loss plus stock-based compensation expenses, amortization of intangible assets, inventory write-downs, if any, earn-outs and change in fair value of earn-outs, professional fees associated with acquisitions and divestitures, litigation and strategic alternatives and severance and other restructuring costs. We define adjusted EBITDA as U.S. GAAP operating income or loss before depreciation expense, amortization of intangible assets, stock-based compensation expense, inventory write-downs, if any, earn-outs and change in fair value of earn-outs, professional fees associated with acquisitions, divestitures, litigation and strategic alternatives, severance and other restructuring costs. We discuss non-GAAP income from operations in our quarterly earnings releases and certain other communications as we believe non-GAAP income from operations and adjusted EBITDA are both important measures that are not calculated according to U.S. GAAP. We use non-GAAP income from operations and adjusted EBITDA in internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to our Board of Directors, determining a component of bonus compensation for executive officers and other key employees based on operating performance and evaluating short-term and long-term operating trends in our operations. We believe that non-GAAP income from operations and adjusted EBITDA financial measures assist in providing an enhanced understanding of our underlying operational measures to manage the business, to evaluate performance compared to prior periods and the marketplace, and to establish operational goals. We believe that these non-GAAP financial adjustments are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in our financial and operational decision-making.

Non-GAAP income from operations and adjusted EBITDA are non-GAAP financial measures and should not be considered in isolation or as a substitute for financial information provided in accordance with U.S. GAAP. These non-GAAP financial measures may not be computed in the same manner as similarly titled measures used by other companies. We expect to continue to incur expenses similar to the non-GAAP income from operations and adjusted EBITDA financial adjustments described above, and investors should not infer from our presentation of this non-GAAP financial measure that these costs are unusual, infrequent or non-recurring.

In managing and reviewing our business performance, we exclude a number of items required by U.S. GAAP. Management believes that excluding these items is useful in understanding the trends and managing our operations. We provide these supplemental non-GAAP measures in order to assist the investment community to see SeaChange through the “eyes of management,” and therefore enhance the understanding of SeaChange’s operating performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative to, our reported results prepared in accordance with U.S. GAAP. Our non-GAAP financial measures reflect adjustments based on the following items:

Amortization of Intangible Assets. We incur amortization expense of intangibles related to various acquisitions that have been made in recent years. These intangible assets are valued at the time of acquisition, are then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management after the acquisition. We believe that exclusion of these expenses allows comparisons of operating results that are consistent over time for both the Company’s newly-acquired and long-held businesses.

Stock-based Compensation Expense. We incur expenses related to stock-based compensation included in our U.S. GAAP presentation of cost of revenues, selling, general and administrative expense and research and development expense. Although stock-based compensation is an expense we incur and is viewed as a form of compensation, these expenses vary in amount from period to period, and are affected by market forces that are difficult to predict and are not within the control of management, such as the market price and volatility of our shares, risk-free interest rates and the expected term and forfeiture rates of the awards.

 

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SeaChange Q2 FY14 Results/Page 8

 

Inventory Write-down. We incur inventory write-downs of our legacy product lines as we end of life certain product lines to focus on selling our new products being developed.

Earn-outs and Change in Fair Value of Earn-outs. Earn-outs and the change in the fair value of the earn-outs are considered by management to be non-recurring expenses to the former shareholders of the businesses we acquire. We also incur expense due to changes in fair value related to contingent consideration that we believe would otherwise impair comparability among periods.

Professional Fees: Acquisitions, Divestitures, Litigation and Strategic Alternatives. We have excluded the effect of professional fees associated with our acquisitions and divestitures, litigation and strategic alternatives because the amount and timing of these expenses are largely non-recurring.

Severance and Other Restructuring. We incurred charges due to the restructuring of our business, including severance charges and facility reductions resulting from our restructuring and streamlining efforts and any changes due to revised estimates, which we generally would not have otherwise incurred in the periods presented as part of our continuing operations. We also incurred charges for the hiring and appointment of the Chief Executive Officer.

Depreciation Expense. We incur depreciation expense related to capital assets purchased to support the ongoing operations of the business. These assets are recorded at cost and are depreciated using the straight-line method over the useful life of the asset. Purchases of such assets may vary significantly from period to period and without any correlation to underlying operating performance. Management believes that exclusion of depreciation expense allows comparisons of operating results that are consistent across past, present and future periods.

The following tables reconcile the Company’s income (loss) from operations, the most directly comparable U.S. GAAP financial measure, to the Company’s non-GAAP income from operations and the reconciliation of our U.S. GAAP income (loss) from operations to our adjusted EBITDA for the three and six months ended July 31, 2013 and 2012:

 

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SeaChange Q2 FY14 Results/Page 9

 

SeaChange International, Inc.

Reconciliation of GAAP to Non-GAAP

(Unaudited, amounts in thousands)

 

     Three Months Ended     Three Months Ended  
     July 31, 2013     July 31, 2012  
     GAAP                 GAAP              
     As Reported     Adjustments     Non-GAAP     As Reported     Adjustments     Non-GAAP  

Revenues:

            

Products

   $ 16,179      $ —        $ 16,179      $ 13,541      $ —        $ 13,541   

Services

     21,201        —          21,201        23,197        —          23,197   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     37,380        —          37,380        36,738        —          36,738   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

            

Products

     1,916        —          1,916        4,658        —          4,658   

Services

     13,718        —          13,718        12,952        —          12,952   

Amortization of intangible assets

     314        (314     —          503        (503     —     

Stock-based compensation

     70        (70     —          77        (77     —     

Inventory write-down

     —          —          —          1,752        (1,752     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     16,018        (384     15,634        19,942        (2,332     17,610   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     21,362        384        21,746        16,796        2,332        19,128   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit percentage

     57.1     1.0     58.2     45.7     6.3     52.1

Operating expenses:

            

Research and development

     10,103        —          10,103        9,474        —          9,474   

Selling and marketing

     3,733        —          3,733        3,908        —          3,908   

General and administrative

     4,513        —          4,513        4,570        —          4,570   

Amortization of intangible assets

     834        (834     —          944        (944     —     

Stock-based compensation expense

     587        (587     —          1,927        (1,927     —     

Earn-outs and change in fair value of earn-outs

     14        (14     —          1,543        (1,543     —     

Professional fees: acquisitions, divestitures, litigation and strategic alternatives

     426        (426     —          469        (469     —     

Severance and other restructuring costs

     617        (617     —          1,470        (1,470     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     20,827        (2,478     18,349        24,305        (6,353     17,952   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

   $ 535      $ 2,862      $ 3,397      $ (7,509   $ 8,685      $ 1,176   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations percentage

     1.4     7.6     9.1     (20.4 %)      23.6     3.2

Weighted average common shares outstanding:

            

Basic

     32,584        32,584        32,584        32,629        32,629        32,629   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     33,265        33,265        33,265        32,629        33,163        33,163   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating income (loss) per share:

            

Basic

   $ 0.01      $ 0.09      $ 0.10      $ (0.23   $ 0.27      $ 0.04   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.01      $ 0.09      $ 0.10      $ (0.23   $ 0.27      $ 0.04   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA:

            

Income (loss) from operations

       $ 535          $ (7,509

Depreciation expense

         1,123            954   

Amortization of intangible assets

         1,148            1,447   

Stock-based compensation expense

         657            2,004   

Earn-outs and changes in fair value

         14            1,543   

Professional fees: acquisitions, divestitures, etc.

         426            469   

Inventory write-down

         —              1,752   

Severance and other restructuring

         617            1,470   
      

 

 

       

 

 

 

Adjusted EBITDA

       $ 4,520          $ 2,130   
      

 

 

       

 

 

 

Adjusted EBITDA %

         12.1         5.8

 

-more-


SeaChange Q2 FY14 Results/Page 10

 

SeaChange International, Inc.

Reconciliation of GAAP to Non-GAAP

(Unaudited, amounts in thousands)

 

     Six Months Ended     Six Months Ended  
     July 31, 2013     July 31, 2012  
     GAAP                 GAAP              
     As Reported     Adjustments     Non-GAAP     As Reported     Adjustments     Non-GAAP  

Revenues:

            

Products

   $ 30,987      $ —        $ 30,987      $ 25,468      $ —        $ 25,468   

Services

     41,945        —          41,945        47,896        —          47,896   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     72,932        —          72,932        73,364        —          73,364   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

            

Products

     4,574        —          4,574        8,155        —          8,155   

Services

     27,161        —          27,161        24,993        —          24,993   

Amortization of intangible assets

     627        (627     —          1,028        (1,028     —     

Stock-based compensation

     124        (124     —          194        (194     —     

Inventory write-down

     —          —          —          1,752        (1,752     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     32,486        (751     31,735        36,122        (2,974     33,148   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     40,446        751        41,197        37,242        2,974        40,216   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit percentage

     55.5     1.0     56.5     50.8     4.1     54.8

Operating expenses:

            

Research and development

     19,795        —          19,795        19,247        —          19,247   

Selling and marketing

     7,335        —          7,335        8,001        —          8,001   

General and administrative

     9,480        —          9,480        9,450        —          9,450   

Amortization of intangible assets

     1,670        (1,670     —          1,922        (1,922     —     

Stock-based compensation expense

     1,646        (1,646     —          2,838        (2,838     —     

Earn-outs and change in fair value of earn-outs

     34        (34     —          1,603        (1,603     —     

Professional fees: acquisitions, divestitures, litigation and strategic alternatives

     921        (921     —          1,419        (1,419     —     

Severance and other restructuring costs

     846        (846     —          1,442        (1,442     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     41,727        (5,117     36,610        45,922        (9,224     36,698   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations

   $ (1,281   $ 5,868      $ 4,587      $ (8,680   $ 12,198      $ 3,518   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations percentage

     (1.8 %)      8.0     6.3     (11.8 %)      16.6     4.8

Weighted average common shares outstanding:

            

Basic

     32,547        32,547        32,547        32,585        32,585        32,585   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     32,547        32,254        32,254        32,585        33,092        33,092   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating (loss) income per share:

            

Basic

   $ (0.04   $ 0.18      $ 0.14      $ (0.27   $ 0.38      $ 0.11   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.04   $ 0.18      $ 0.14      $ (0.27   $ 0.37      $ 0.10   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA:

            

Loss from operations

       $ (1,281       $ (8,680

Depreciation expense

         2,303            2,307   

Amortization of intangible assets

         2,297            2,950   

Stock-based compensation expense

         1,770            3,032   

Earn-outs and changes in fair value

         34            1,603   

Professional fees: acquisitions, divestitures, etc.

         921            1,419   

Inventory write-down

         —              1,752   

Severance and other restructuring

         846            1,442   
      

 

 

       

 

 

 

Adjusted EBITDA

       $ 6,890          $ 5,825   
      

 

 

       

 

 

 

Adjusted EBITDA %

         9.4         7.9

---end press release and tables---