UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): September 4, 2014

 

 

SEACHANGE INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

DELAWARE   0-21393   04-3197974

(State or Other Jurisdiction of

Incorporation or Organization)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

50 Nagog Park, Acton, MA   01720
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number including area code: (978) 897-0100

No change since last report

(Former Name or Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02. Results of Operations and Financial Condition.

Attached as Exhibit 99.1, and incorporated by reference, is a copy of the press release issued by SeaChange International, Inc. (“SeaChange”) dated September 4, 2014, reporting SeaChange’s financial results for the fiscal quarter ended July 31, 2014.

The information contained in this Item 2.02 and Exhibit 99.1 attached and incorporated herein by reference is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. This information shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by SeaChange, whether made before or after the date hereof, regardless of any general incorporation language in such filings.

 

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

The following Exhibit is attached to this report:

 

Exhibit
No.

  

Description

99.1    Press release issued by SeaChange International, Inc. dated September 4, 2014.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

SEACHANGE INTERNATIONAL, INC.
By:  

/s/ Raghu Rau

  Raghu Rau
  Chief Executive Officer

Dated: September 4, 2014


EXHIBIT INDEX

 

Exhibit
No.

  

Description

99.1    Press release issued by SeaChange International, Inc. dated September 4, 2014.

EX-99.1

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 2015 RESULTS

 

    Second Quarter Revenue of $29.8 Million at Higher End of Guidance

 

    Substantially Narrowed Operating Loss to $(0.15) GAAP and $(0.08) Non-GAAP

 

    Signed Multi-Million Dollar Contract with European Service Provider for Adrenalin and Nucleus

 

    Signed First Cloud Adrenalin OTT Contract with BBC Worldwide

ACTON, Mass. (Sept. 4, 2014) – SeaChange International, Inc. (NASDAQ: SEAC), a leading global multi-screen video software innovator, today reported second quarter fiscal 2015 revenue of $29.8 million and a non-GAAP operating loss of $2.8 million, or $0.08 per basic share, from continuing operations. In comparison, second quarter fiscal 2014 revenue was $37.4 million and non-GAAP operating income was $3.4 million, or $0.10 per fully diluted share, from continuing operations. The Company posted a U.S. GAAP operating loss of $5.2 million, or $0.15 per basic share for the second quarter of fiscal 2015, compared to a U.S. GAAP income from operations for the second quarter of fiscal 2014 of $0.5 million, or $0.01 per fully diluted share. The Company’s U.S. GAAP second quarter fiscal 2015 results include non-GAAP charges of $2.4 million, which consisted primarily of stock-based compensation and amortization of intangible assets from prior acquisitions.

For the first six months of fiscal 2015, the Company posted revenue of $54.2 million and a non-GAAP operating loss of $10.0 million, compared to revenue of $72.9 million and non-GAAP operating income of $4.6 million in the same prior period. The Company posted a U.S. GAAP loss from operations for the first six months of fiscal 2015 of approximately $15.3 million, compared to a U.S. GAAP loss from operations of $1.3 million for the same prior period.

 

 

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SeaChange Q2 FY15 Results/Page 2

 

“We’re pleased to have achieved second quarter revenues at the high end of our guidance and to have significantly lowered our non-GAAP operating loss to $0.08 per share,” said Raghu Rau, Chief Executive Officer, SeaChange. “Notably, we received the signed contract for one of our European design wins with the goal of launching both Adrenalin and Nucleus by the third quarter of 2015. Also, a large multi-country service provider began the field trial of its new Nucleus-based video gateway platform and is on track for commercial launch later this year. Our results were also fueled by upgrades of existing Adrenalin deployments for large service providers in North America, Latin America and Asia Pacific. We also delivered our Infusion linear advertising products to three of the largest U.S. cable and telco video service providers in the second quarter.”

“As SeaChange announced earlier today, we signed a contract during the third quarter to deploy and manage our SeaChange Cloud Adrenalin service for BBC Worldwide’s online BBC Store,” Rau continued. “The BBC Store will make this television provider’s programs available online to consumers on the multi-screen devices they choose. We’re very pleased to make SeaChange’s first cloud OTT deployment with this prestigious customer and we anticipate initial revenue recognition in early 2015.”

Commenting on the Company’s outlook, Anthony Dias, Chief Financial Officer, SeaChange, stated, “While there has been a significant improvement in the anticipated receipt of customer acceptances for our new products, shifts in the timing of deployments planned for the second half of the year, along with some residual acceptance delays, will result in a more back-end loaded year. As such, we expect our third quarter fiscal 2015 revenues to be in the range of $29 million to $32 million and non-GAAP operating loss to be between $0.05 and $0.09 per basic share. For the full fiscal year 2015, SeaChange is narrowing revenue guidance to a range of $125 million to $130 million, and non-GAAP operating results to a range of a loss of $0.12 per share to operating income of $0.02 per share.”

SeaChange ended the second quarter of fiscal 2015 with cash, cash equivalents and marketable securities of $110.9 million and no debt outstanding, compared to $116.6 million at the close of the first quarter of fiscal 2015. During the second quarter, the Company repurchased $2.0 million of its outstanding shares under its $40 million stock buyback authorization.

 

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SeaChange Q2 FY15 Results/Page 3

 

The Company will host a conference call to discuss its second quarter fiscal 2015 results at 5:00 p.m. ET today, Thursday, September 4, 2014. 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. A replay of the conference call will be available by phone through September 18, 2014 at 877-660-6853 (U.S.) or 201-612-7415 (international), conference ID 1358-7652. The webcast will be archived on the investor relations section of the Company’s website at www.schange.com/IR.

About SeaChange International

Ranked among the top 250 software companies in the world, SeaChange International, Inc. (NASDAQ: SEAC) enables transformative multi-screen video services through an open, cloud-based, intelligent software platform trusted by cable, telco 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 multi-screen, advertising and video gateway software products.

SeaChange’s customers include 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.

 

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SeaChange Q2 FY15 Results/Page 4

 

Safe Harbor Provision

Any statements contained in this press release that do not describe historical facts, including without limitation statements regarding future financial performance, next generation products and customer upgrades, 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 and the rate of decline in revenue attributable to our legacy products; worldwide economic cycles; measures 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; the ability of the Company and its intermediaries to comply with the Foreign Corrupt Practices Act; 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 risks associated with purchasing material components from sole suppliers and using a limited number of third-party manufacturers; the Company’s ability to obtain necessary licenses or distribution rights for third-party technology; the Company’s ability to compete in its marketplace; the Company’s ability to respond to changing technologies; the impact of acquisitions, divestitures or investments made by the Company; the impact of changes in the market on the value of our investments; changes in the regulatory environment; the Company’s ability to hire and retain highly skilled employees; the ability of the Company to manage and oversee the outsourcing of engineering work; the security measures of the Company are breached and customer data or our data is obtained unlawfully; service interruptions or delays from our third-party data center hosting facilities; 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 4, 2014. 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 FY15 Results/Page 5

 

SeaChange International, Inc.

Condensed Consolidated Balance Sheets

(Amounts in thousands)

 

     July 31,
2014
     January 31,
2014
 
     (Unaudited)         

Assets

     

Cash and cash equivalents

   $ 96,555       $ 115,734   

Marketable securities

     14,317         12,369   

Accounts and other receivables, net

     31,650         35,714   

Inventories, net

     4,881         6,632   

Prepaid expenses and other current assets

     6,422         5,449   

Property and equipment, net

     16,979         18,530   

Goodwill and intangible assets, net

     55,472         58,005   

Other assets

     3,631         1,887   
  

 

 

    

 

 

 

Total assets

   $ 229,907       $ 254,320   
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Accounts payable and other current liabilities

   $ 14,871       $ 19,179   

Deferred revenues

     24,763         25,628   

Other long term liabilities

     966         936   

Deferred tax liabilities and income taxes payable

     4,104         4,136   
  

 

 

    

 

 

 

Total liabilities

     44,704         49,879   
  

 

 

    

 

 

 

Total stockholders’ equity

     185,203         204,441   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 229,907       $ 254,320   
  

 

 

    

 

 

 

 

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SeaChange Q2 FY15 Results/Page 6

 

SeaChange International, Inc.

Condensed Consolidated Statements of Operations

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

 

     Three Months Ended     Six Months Ended  
     July 31,     July 31,  
     2014     2013     2014     2013  

Revenues:

        

Product

   $ 8,740      $ 16,179      $ 13,798      $ 30,987   

Service

     21,109        21,201        40,388        41,945   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     29,849        37,380        54,186        72,932   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

        

Product

     1,865        1,821        3,409        4,479   

Service

     12,281        13,813        23,876        27,256   

Amortization of intangible assets

     267        314        537        627   

Stock-based compensation expense

     49        70        86        124   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     14,462        16,018        27,908        32,486   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     15,387        21,362        26,278        40,446   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Research and development

     10,869        10,103        21,797        19,795   

Selling and marketing

     3,624        3,733        7,062        7,335   

General and administrative

     4,038        4,513        8,054        9,480   

Amortization of intangible assets

     822        834        2,331        1,670   

Stock-based compensation expense

     752        587        1,311        1,646   

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

     —          14        —          34   

Professional fees - other

     251        426        353        921   

Severance and other restructuring costs

     218        617        692        846   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     20,574        20,827        41,600        41,727   
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations

     (5,187     535        (15,322     (1,281

Other (expenses) income, net

     (333     (312     82        (777
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income before income taxes and equity income in earnings of affiliates

     (5,520     223        (15,240     (2,058

Income tax provision (benefit)

     167        (120     (67     (361

Equity income in earnings of affiliates, net of tax

     —          —          19        20   
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from continuing operations

     (5,687     343        (15,154     (1,677
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from discontinued operations, net of tax

     119        (558     119        (523
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (5,568   $ (215   $ (15,035   $ (2,200
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share:

        

Basic loss per share

   $ (0.17   $ (0.01   $ (0.46   $ (0.07
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted loss per share

   $ (0.17   $ (0.01   $ (0.46   $ (0.07
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income per share from continuing operations:

        

Basic (loss) income per share

   $ (0.17   $ 0.01      $ (0.46   $ (0.05
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted (loss) income per share

   $ (0.17   $ 0.01      $ (0.46   $ (0.05
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share from discontinued operations:

        

Basic income (loss) per share

   $ 0.00      $ (0.02   $ 0.00      $ (0.02
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted income (loss) per share

   $ 0.00      $ (0.02   $ 0.00      $ (0.02
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding:

        

Basic

     32,806        32,584        32,902        32,547   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     32,806        32,584        32,902        32,547   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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SeaChange Q2 FY15 Results/Page 7

 

SeaChange International, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

 

     Six Months Ended  
     July 31,  
     2014     2013  

Cash flows from operating activities:

    

Net loss

   $ (15,035   $ (2,200

Net (income) loss from discontinued operations

     (119     523   

Adjustments to reconcile net loss to net cash (used in) provided by operating activities from continuing operations:

    

Depreciation of property and equipment

     1,918        2,303   

Amortization of intangible assets

     2,868        2,297   

Stock-based compensation expense

     1,397        1,770   

Other

     334        432   

Changes in operating assets and liabilities:

    

Accounts receivable

     3,568        1,664   

Unbilled receivables

     299        (2,155

Inventories

     1,235        (995

Prepaid expenses and other assets

     (981     7,924   

Accounts payable

     (1,070     (273

Accrued expenses

     (3,278     (4,806

Deferred revenues

     (784     (1,140

Other

     (59     (64
  

 

 

   

 

 

 

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

     (9,707     5,280   

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

     119        (523
  

 

 

   

 

 

 

Total cash (used in) provided by operating activities

     (9,588     4,757   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of property and equipment

     (686     (1,449

Purchases of marketable securities

     (5,591     (4,093

Proceeds from sale and maturity of marketable securities

     3,575        5,141   

Proceeds from sale of equity investments

     239        1,128   

Investment in affiliate

     (2,000     —     

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

     —          (3,206

Other investing activities, net

     —          21   
  

 

 

   

 

 

 

Net cash used in investing activities from continuing operations

     (4,463     (2,458

Net cash provided by investing activities from discontinued operations

     —          4,000   
  

 

 

   

 

 

 

Total cash (used in) provided by investing activities

     (4,463     1,542   
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Repurchases of our common stock

     (5,504     —     

Proceeds from issuance of common stock relating to stock option exercises

     —          499   
  

 

 

   

 

 

 

Total cash (used in) provided by financing activities

     (5,504     499   
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     376        (114
  

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (19,179     6,684   
  

 

 

   

 

 

 

Cash and cash equivalents, beginning of period

     115,734        106,721   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 96,555      $ 113,405   
  

 

 

   

 

 

 

 

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SeaChange Q2 FY15 Results/Page 8

 

Use of Non-GAAP Financial Information

We define non-GAAP (loss) income from operations as U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) operating (loss) income plus stock-based compensation expenses, amortization of intangible assets, earn-outs and change in fair value of earn-outs, professional fees associated with acquisitions, divestitures, litigation and strategic alternatives and severance and other restructuring costs. We discuss non-GAAP (loss) income from operations in our quarterly earnings releases and certain other communications as we believe non-GAAP (loss) income from operations is an important measure that is not calculated according to U.S. GAAP. We use non-GAAP (loss) income from operations 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 (loss) income from operations assists 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 (loss) income from operations is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with U.S. GAAP. This non-GAAP financial measure 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 (loss) income from operations 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 intangible assets 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, the expense varies in amount from period to period, and is 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 FY15 Results/Page 9

 

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 - Other. We have excluded the effect of legal and other professional fees associated with our acquisitions, divestitures, litigation and strategic alternatives because the amounts are largely considered to be significant non-operating expenses.

Severance and Other Restructuring. We incur 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.

 

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SeaChange Q2 FY15 Results/Page 10

 

The following table reconciles the Company’s U.S. GAAP (loss) income from operations to the Company’s non-GAAP (loss) income from operations:

SeaChange International, Inc.

Reconciliation of GAAP to Non-GAAP

(Unaudited, amounts in thousands)

 

     Three Months Ended     Three Months Ended  
     July 31, 2014     July 31, 2013  
     GAAP                 GAAP              
     As Reported     Adjustments     Non-GAAP     As Reported     Adjustments     Non-GAAP  

Revenues:

            

Products

   $ 8,740      $ —        $ 8,740      $ 16,179      $ —        $ 16,179   

Services

     21,109        —          21,109        21,201        —          21,201   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     29,849        —          29,849        37,380        —          37,380   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

            

Products

     1,865        —          1,865        1,821        —          1,821   

Services

     12,281        —          12,281        13,813        —          13,813   

Amortization of intangible assets

     267        (267     —          314        (314     —     

Stock-based compensation

     49        (49     —          70        (70     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     14,462        (316     14,146        16,018        (384     15,634   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     15,387        316        15,703        21,362        384        21,746   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit percentage

     51.5     1.1     52.6     57.1     1.0     58.2

Operating expenses:

            

Research and development

     10,869        —          10,869        10,103        —          10,103   

Selling and marketing

     3,624        —          3,624        3,733        —          3,733   

General and administrative

     4,038        —          4,038        4,513        —          4,513   

Amortization of intangible assets

     822        (822     —          834        (834     —     

Stock-based compensation expense

     752        (752     —          587        (587     —     

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

     —          —          —          14        (14     —     

Professional fees - other

     251        (251     —          426        (426     —     

Severance and other restructuring costs

     218        (218     —          617        (617     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     20,574        (2,043     18,531        20,827        (2,478     18,349   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations

   $ (5,187   $ 2,359      $ (2,828   $ 535      $ 2,862      $ 3,397   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations percentage

     (17.4 %)      7.8     (9.5 %)      1.4     7.6     9.1

Weighted average common shares outstanding:

            

Basic

     32,806        32,806        32,806        32,584        32,584        32,584   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     32,806        33,000        32,806        33,304        33,304        33,304   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss) income per share:

            

Basic

   $ (0.15   $ 0.07      $ (0.08   $ 0.01      $ 0.09      $ 0.10   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.15   $ 0.07      $ (0.08   $ 0.01      $ 0.09      $ 0.10   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA:

            

Loss from operations

       $ (5,187       $ 535   

Depreciation expense

         922            1,123   

Amortization of intangible assets

         1,089            1,148   

Stock-based compensation expense

         801            657   

Earn-outs and changes in fair value

         —              14   

Professional fees - other

         251            426   

Severance and other restructuring

         218            617   
      

 

 

       

 

 

 

Adjusted EBITDA

       $ (1,906       $ 4,520   
      

 

 

       

 

 

 

Adjusted EBITDA %

         (6.4 %)          12.1

 

-more-


SeaChange Q2 FY15 Results/Page 11

 

SeaChange International, Inc.

Reconciliation of GAAP to Non-GAAP

(Unaudited, amounts in thousands)

 

     Six Months Ended     Six Months Ended  
     July 31, 2014     July 31, 2013  
     GAAP                 GAAP              
     As Reported     Adjustments     Non-GAAP     As Reported     Adjustments     Non-GAAP  

Revenues:

            

Products

   $ 13,798      $ —        $ 13,798      $ 30,987      $ —        $ 30,987   

Services

     40,388        —          40,388        41,945        —          41,945   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     54,186        —          54,186        72,932        —          72,932   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

            

Products

     3,409        —          3,409        4,479        —          4,479   

Services

     23,876        —          23,876        27,256        —          27,256   

Amortization of intangible assets

     537        (537     —          627        (627     —     

Stock-based compensation

     86        (86     —          124        (124     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     27,908        (623     27,285        32,486        (751     31,735   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     26,278        623        26,901        40,446        751        41,197   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit percentage

     48.5     1.1     49.6     55.5     1.0     56.5

Operating expenses:

            

Research and development

     21,797        —          21,797        19,795        —          19,795   

Selling and marketing

     7,062        —          7,062        7,335        —          7,335   

General and administrative

     8,054        —          8,054        9,480        —          9,480   

Amortization of intangible assets

     2,331        (2,331     —          1,670        (1,670     —     

Stock-based compensation expense

     1,311        (1,311     —          1,646        (1,646     —     

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

     —          —          —          34        (34     —     

Professional fees - other

     353        (353     —          921        (921     —     

Severance and other restructuring costs

     692        (692     —          846        (846     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     41,600        (4,687     36,913        41,727        (5,117     36,610   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations

   $ (15,322   $ 5,310      $ (10,012   $ (1,281   $ 5,868      $ 4,587   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations percentage

     (28.3 %)      9.7     (18.5 %)      (1.8 %)      8.0     6.3

Weighted average common shares outstanding:

            

Basic

     32,902        32,902        32,902        32,547        32,547        32,547   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     32,902        33,140        32,902        32,547        33,312        33,312   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss) income per share:

            

Basic

   $ (0.46   $ 0.16      $ (0.30   $ (0.04   $ 0.18      $ 0.14   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.46   $ 0.16      $ (0.30   $ (0.04   $ 0.18      $ 0.14   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA:

            

Loss from operations

       $ (15,322       $ (1,281

Depreciation expense

         1,918            2,303   

Amortization of intangible assets

         2,868            2,297   

Stock-based compensation expense

         1,397            1,770   

Earn-outs and changes in fair value

         —              34   

Professional fees - other

         353            921   

Severance and other restructuring

         692            846   
      

 

 

       

 

 

 

Adjusted EBITDA

       $ (8,094       $ 6,890   
      

 

 

       

 

 

 

Adjusted EBITDA %

         (14.9 %)          9.4

 

 

—end press release and tables—