SeaChange International Reports First Quarter Fiscal 2014 Results

SeaChange International, Inc. logo

  • Revenue of $35.6 Million at High End of Guidance
  • Non-GAAP Operating Income of $1.2 Million
  • GAAP Operating Loss of $1.8 Million
  • New Product Revenue Growth of 70% Year Over Year

ACTON, Mass., June 6, 2013 (GLOBE NEWSWIRE) -- SeaChange International, Inc. (Nasdaq:SEAC), a leading global multi-screen video software innovator, today reported first quarter fiscal 2014 revenue of $35.6 million and non-GAAP operating income of $1.2 million, or $0.04 per fully diluted share, from continuing operations. In comparison, first quarter fiscal 2013 revenue was $36.6 million and non-GAAP operating income was $2.3 million, or $0.07 per fully diluted share, from continuing operations. The Company posted a U.S. GAAP operating loss of $1.8 million, or $0.05 per basic share for the first quarter of fiscal 2014, compared to a U.S. GAAP loss from operations for the first quarter of fiscal 2013 of $1.2 million, or $0.04 per basic share. The Company's U.S. GAAP first quarter fiscal 2014 results include non-GAAP charges of $3.0 million, which consisted primarily of stock-based compensation and amortization of intangible assets from prior acquisitions.

"We're pleased to have achieved the high end of our guidance for the first quarter chiefly through new product contribution and increased product licensing revenue, which boosted gross margins," said Raghu Rau, Chief Executive Officer, SeaChange. "The results reflect the market traction SeaChange continues to achieve with our new generation of software, which drove new product revenue growth of 70 percent over last year's first quarter."

Rau continued, "SeaChange is showcasing its new technologies at the NCTA's Cable Show next week in Washington, D.C. and senior executives of the world's largest service providers are expected to witness how our software product strategy – with advancements such as our Adrenalin multi-screen video platform, Infusion advertising platform and Nucleus Soft Box gateway – is enabling our customers to deliver innovative revenue generating services."

Commenting on the Company's outlook, Anthony Dias, Interim Chief Financial Officer, stated, "We anticipate that our second quarter fiscal 2014 revenue will be in the range of $37 million to $40 million and non-GAAP operating income, on a fully diluted share basis, will be in the range of $0.07 to $0.10 per share. Our guidance on a full year basis for fiscal 2014 remains unchanged with revenue expected to be in the range of $165 million to $175 million and non-GAAP operating income, on a fully diluted share basis, expected to be in the range of $0.53 to $0.71 per share."

SeaChange generated $3.1 million in cash from continuing operations and ended the first quarter of fiscal 2014 with cash, cash equivalents and marketable securities of $122.3 million.

The Company will host a conference call to discuss its first quarter fiscal 2014 results at 5:00 p.m. ET today, Thursday, June 6. 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 June 21, 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 414410. 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.

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, 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; 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.

SeaChange International, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, amounts in thousands)
April 30,
2013
January 31,
2013
Assets
Cash and cash equivalents $ 109,189 $ 106,721
Marketable securities and restricted cash 13,129 14,211
Accounts and other receivables, net 37,100 40,103
Inventories, net 7,812 7,372
Prepaid expenses and other current assets 7,561 11,332
Assets held for sale 465 465
Property and equipment, net 19,052 19,762
Goodwill and intangible assets, net 60,248 62,617
Other assets 2,449 3,546
Total assets $ 257,005 $ 266,129
Liabilities and Stockholders' Equity
Accounts payable and other current liabilities $ 22,410 $ 28,287
Deferred revenues 28,983 30,603
Other long term liabilities 192 --
Deferred tax liabilities and income taxes payable 5,044 5,038
Total liabilities 56,629 63,928
Total stockholders' equity 200,376 202,201
Total liabilities and stockholders' equity $ 257,005 $ 266,129
SeaChange International, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited, amounts in thousands, except per share data)
Three Months Ended
April 30,
2013 2012
Revenues:
Products $ 14,808 $ 11,927
Services 20,744 24,699
Total revenues 35,552 36,626
Cost of revenues:
Products 2,658 3,497
Services 13,443 12,041
Amortization of intangible assets 313 525
Stock-based compensation expense 54 117
Total cost of revenues 16,468 16,180
Gross profit 19,084 20,446
Operating expenses:
Research and development 9,692 9,773
Selling and marketing 3,602 4,093
General and administrative 4,967 4,880
Amortization of intangible assets 836 978
Stock-based compensation expense 1,059 911
Earn-outs and change in fair value of earn-outs 20 60
Professional fees: acquisitions, divestitures, litigation, and strategic alternatives 495 950
Severance and other restructuring costs 229 (28)
Total operating expenses 20,900 21,617
Loss from operations (1,816) (1,171)
Other (expense) income, net (398) 45
(Loss) gain on sale of investment in affiliates (67) 814
Loss before income taxes and equity income in earnings of affiliates (2,281) (312)
Income tax (benefit) provision (241) 1
Equity income in earnings of affiliates, net of tax 20 26
Loss from continuing operations (2,020) (287)
Loss on sale of discontinued operations -- (16,995)
Income (loss) from discontinued operations, net of tax 35 (2,295)
Net loss $ (1,985) $ (19,577)
Net loss $ (1,985) $ (19,577)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment (1,040) 1,635
Unrealized gain (loss) on marketable securities 3 (13)
Comprehensive loss $ (3,022) $ (17,955)
Net loss per share:
Basic loss per share $ (0.06) $ (0.60)
Diluted loss per share $ (0.06) $ (0.60)
Net loss per share from continuing operations:
Basic loss per share $ (0.06) $ (0.01)
Diluted loss per share $ (0.06) $ (0.01)
Net loss per share from discontinued operations:
Basic loss per share $ (0.00) $ (0.59)
Diluted loss per share $ (0.00) $ (0.59)
Weighted average common shares outstanding:
Basic 32,513 32,544
Diluted 32,513 32,544
SeaChange International, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited, amounts in thousands)
For the Three Months Ended
April 30,
2013 2012
Cash flows from operating activities:
Net loss $ (1,985) $ (19,577)
Net (income) loss from discontinued operations (35) 19,290
Adjustments to reconcile net loss to net cash provided by operating activities from continuing operations:
Depreciation and amortization of fixed assets 1,180 1,353
Amortization of intangible assets 1,149 1,503
Gain on disposal of fixed assets (20) --
Inventory valuation charge (261) 101
Provision for doubtful accounts receivable 27 --
Discounts earned and amortization of premiums on marketable securities 32 28
Equity income in earnings of affiliates (20) (26)
Loss (gain) on sale of investment in affiliates 67 (814)
Stock-based compensation expense 1,113 1,028
Deferred income taxes (5) 224
Changes in contingent consideration related to acquisitions 20 60
Changes in operating assets and liabilities:
Accounts receivable 4,943 9,979
Unbilled receivables (2,850) 4,855
Inventories (322) (1,253)
Prepaid expenses and other assets 3,747 475
Accounts payable (831) (393)
Accrued expenses (1,336) (5,122)
Customer deposits 18 (179)
Deferred revenues (1,349) (7,307)
Other (214) (720)
Net cash provided by operating activities from continuing operations 3,068 3,505
Net cash provided by (used in) operating activities from discontinued operations 35 (478)
Total cash provided by operating activities 3,103 3,027
Cash flows from investing activities:
Purchases of property and equipment (507) (633)
Purchases of marketable securities (2,062) (6,951)
Proceeds from sale and maturity of marketable securities 3,116 8,101
Proceeds from sale of property and equipment 20 --
Additional proceeds from sale of equity investment -- 814
Acquisition of businesses and payment of contingent consideration, net of cash acquired (3,206) (1,476)
Increase in restricted cash (1) (500)
Net cash used in investing activities from continuing operations (2,640) (645)
Net cash provided by (used in) investing activities from discontinued operations 2,000 (250)
Total cash used in investing activities (640) (895)
Cash flows from financing activities:
Repurchases of our common stock -- (504)
Proceeds from issuance of common stock relating to stock option exercises 84 280
Total cash provided by (used in) financing activities 84 (224)
Effect of exchange rate changes on cash (79) 168
Net increase in cash and cash equivalents 2,468 2,076
Cash and cash equivalents, beginning of period 106,721 80,585
Cash and cash equivalents, end of period $ 109,189 $ 82,661
Supplemental disclosure of cash flow information:
Income taxes paid $ 17 $ 13
Supplemental disclosure of non-cash activities:
Transfer of items originally classified as inventories to equipment $ 46 $ 230

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.

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 or loss from operations to our adjusted EBITDA for the three months ended April 30, 2013 and 2012 and for each quarter of fiscal 2013:

SeaChange International, Inc.
Reconciliation of GAAP to Non-GAAP
(Unaudited, amounts in thousands)
Three Months Ended
April 30, 2013
Three Months Ended
April 30, 2012
GAAP
As Reported

Adjustments

Non-GAAP
GAAP
As Reported

Adjustments

Non-GAAP
Revenues:
Products $ 14,808 $ -- $ 14,808 $ 11,927 $ -- $ 11,927
Services 20,744 -- 20,744 24,699 -- 24,699
Total revenues 35,552 -- 35,552 36,626 -- 36,626
Cost of revenues:
Products 2,658 -- 2,658 3,497 -- 3,497
Services 13,443 -- 13,443 12,041 -- 12,041
Amortization of intangible assets 313 (313) -- 525 (525) --
Stock-based compensation 54 (54) -- 117 (117) --
Total cost of revenues 16,468 (367) 16,101 16,180 (642) 15,538
Gross profit 19,084 367 19,451 20,446 642 21,088
Gross profit percentage 53.7% 1.0% 54.7% 55.8% 1.8% 57.6%
Operating expenses:
Research and development 9,692 -- 9,692 9,773 -- 9,773
Selling and marketing 3,602 -- 3,602 4,093 -- 4,093
General and administrative 4,967 -- 4,967 4,880 -- 4,880
Amortization of intangible assets 836 (836) -- 978 (978) --
Stock-based compensation expense 1,059 (1,059) -- 911 (911) --
Earn-outs and change in fair value of earn-outs 20 (20) -- 60 (60) --
Professional fees: acquisitions, divestitures, litigation and strategic alternatives 495 (495) -- 950 (950) --
Severance and other restructuring costs 229 (229) -- (28) 28 --
Total operating expenses 20,900 (2,639) 18,261 21,617 (2,871) 18,746
(Loss) income from operations $ (1,816) $ 3,006 $ 1,190 $ (1,171) $ 3,513 $ 2,342
(Loss) income from operations percentage (5.1%) 8.4% 3.3% (3.2%) 9.6% 6.4%
Weighted average common shares outstanding:
Basic 32,513 32,513 32,513 32,544 32,544 32,544
Diluted 32,513 33,169 33,169 32,544 32,982 32,982
Non-GAAP operating (loss) income per share:
Basic $ (0.05) $ 0.09 $ 0.04 $ (0.04) $ 0.11 $ 0.07
Diluted $ (0.05) $ 0.09 $ 0.04 $ (0.04) $ 0.11 $ 0.07
Adjusted EBITDA:
Loss from operations $ (1,816) $ (1,171)
Depreciation expense 1,180 1,353
Amortization of intangible assets 1,149 1,503
Stock-based compensation expense 1,113 1,028
Earn-outs and changes in fair value 20 60
Professional fees: acquisitions, divestitures, etc. 495 950
Severance and other restructuring 229 (28)
Adjusted EBITDA $ 2,370 $ 3,695
Adjusted EBITDA % 6.7% 10.1%
SeaChange International, Inc.
Reconciliation of GAAP to Non-GAAP ((Loss) Income from Operations Only) and Calculation of Adjusted EBITDA
(Unaudited, amounts in thousands, except per share and percentage data)
Three Months Ended
April 30, 2012
Three Months Ended
July 31, 2012
Three Months Ended
October 31, 2012
Three Months Ended
January 31, 2013
For the Fiscal Year Ended
January 31, 2013
GAAP
As Reported (1)


Adjust-
ments


Non-GAAP
GAAP
As Reported (1)


Adjust-
ments


Non-GAAP
GAAP
As Reported (1)


Adjust-
ments


Non-GAAP
GAAP
As Reported (1)


Adjust-
ments


Non-GAAP
GAAP
As Reported (1)


Adjust-
ments


Non-GAAP
Revenues:
Products $ 11,927 $ -- $ 11,927 $ 13,541 $ -- $ 13,541 $ 15,213 $ -- $ 15,213 $ 23,593 $ -- $ 23,593 $ 64,274 $ -- $ 64,274
Services 24,699 -- 24,699 23,197 -- 23,197 24,036 -- 24,036 20,982 -- 20,982 92,914 -- 92,914
Total revenues 36,626 -- 36,626 36,738 -- 36,738 39,249 -- 39,249 44,575 -- 44,575 157,188 -- 157,188
Cost of revenues:
Products 3,497 -- 3,497 4,658 -- 4,658 5,453 -- 5,453 3,812 -- 3,812 17,421 -- 17,421
Services 12,041 -- 12,041 12,952 -- 12,952 13,557 -- 13,557 13,802 -- 13,802 52,352 -- 52,352
Amortization of intangible assets 525 (525) -- 503 (503) -- 520 (520) -- 881 (881) -- 2,429 (2,429) --
Stock-based compensation 117 (117) -- 77 (77) -- (85) 85 -- 48 (48) -- 157 (157) --
Inventory write-down -- -- -- 1,752 (1,752) -- -- -- -- -- -- -- 1,752 (1,752) --
Total cost of revenues 16,180 (642) 15,538 19,942 (2,332) 17,610 19,445 (435) 19,010 18,543 (929) 17,614 74,111 (4,338) 69,773
Gross profit 20,446 642 21,088 16,796 2,332 19,128 19,804 435 20,239 26,032 929 26,961 83,077 4,338 87,415
Gross profit percentage 55.8% 1.8% 57.6% 45.7% 6.3% 52.1% 50.5% 1.1% 51.6% 58.4% 2.1% 60.5% 52.9% 2.8% 55.6%
Operating expenses:
Research and development 9,773 -- 9,773 9,474 -- 9,474 9,203 -- 9,203 10,382 -- 10,382 38,832 -- 38,832
Selling and marketing 4,093 -- 4,093 3,908 -- 3,908 3,859 -- 3,859 3,583 -- 3,583 15,443 -- 15,443
General and administrative 4,880 -- 4,880 4,570 -- 4,570 4,295 -- 4,295 3,506 -- 3,506 17,250 -- 17,250
Amortization of intangible assets 978 (978) -- 944 (944) -- 969 (969) -- 1,075 (1,075) -- 3,966 (3,966) --
Stock-based compensation expense 911 (911) -- 1,223 (1,223) -- 813 (813) -- 997 (997) -- 3,944 (3,944) --
Earn-outs and change in fair value of earn-outs 60 (60) -- 1,543 (1,543) -- 64 (64) -- 768 (768) -- 2,435 (2,435) --
Professional fees: acquisitions, divestitures, litigation and strategic alternatives 950 (950) -- 469 (469) -- 26 (26) -- 174 (174) -- 1,619 (1,619) --
Severance and other restructuring costs (28) 28 -- 1,470 (1,470) -- 1,476 (1,476) -- 188 (188) -- 3,106 (3,106) --
Total operating expenses 21,617 (2,871) 18,746 23,601 (5,649) 17,952 20,705 (3,348) 17,357 20,673 (3,202) 17,471 86,595 (15,070) 71,525
(Loss) income from operations $ (1,171) $ 3,513 $ 2,342 $ (6,805) $ 7,981 $ 1,176 $ (901) $ 3,783 $ 2,882 $ 5,359 $ 4,131 $ 9,490 $ (3,518) $ 19,408 $ 15,890
(Loss) income from operations percentage (3.2%) 9.6% 6.4% (18.5%) 21.7% 3.2% (2.3%) 9.6% 7.3% 12.0% 9.3% 21.3% (2.2%) 12.3% 10.1%
Weighted average common shares outstanding:
Basic 32,544 32,544 32,544 32,629 32,629 32,629 32,474 32,474 32,474 32,274 32,274 32,274 32,494 32,494 32,494
Diluted 32,544 32,544 32,544 32,629 32,629 32,629 32,474 33,013 33,013 32,922 32,922 32,922 32,494 32,989 32,989
Non-GAAP operating (loss) income per share:
Basic $ (0.04) $ 0.11 $ 0.07 $ (0.21) $ 0.25 $ 0.04 $ (0.03) $ 0.12 $ 0.09 $ 0.17 $ 0.12 $ 0.29 $ (0.11) $ 0.60 $ 0.49
Diluted $ (0.04) $ 0.11 $ 0.07 $ (0.21) $ 0.25 $ 0.04 $ (0.03) $ 0.12 $ 0.09 $ 0.17 $ 0.11 $ 0.28 $ (0.11) $ 0.59 $ 0.48
Adjusted EBITDA:
(Loss) income from operations $ (1,171) $ (6,805) $ (901) $ 5,359 $ (3,518)
Depreciation expense 1,353 954 1,034 1,330 4,671
Amortization of intangible assets 1,503 1,447 1,489 1,956 6,395
Stock-based compensation expense 1,028 1,300 728 1,045 4,101
Earn-outs and changes in fair value 60 1,543 64 768 2,435
Professional fees: acquisitions, divestitures, etc. 950 469 26 174 1,619
Inventory write-down -- 1,752 -- -- 1,752
Severance and other restructuring (28) 1,470 1,476 188 3,106
Adjusted EBITDA $ 3,695 $ 2,130 $ 3,916 $ 10,820 $ 20,561
Adjusted EBITDA % 10.1% 5.8% 10.0% 24.3% 13.1%
(1) Effective February 1, 2013, as a result of a change in how we review our business, certain information technology costs which were formerly allocated out of general and administrative expenses remained in general and administrative expenses. Prior fiscal year balances were adjusted to conform to this presentation. The reclassification in fiscal 2013 for all periods presented above is as follows:

Three Months Ended
April 30, 2012

Three Months Ended
July 31, 2012

Three Months Ended
October 31, 2012

Three Months Ended
January 31, 2013
Fiscal Year Ended
January 31, 2013
Cost of revenues - products $ (54) $ (58) $ (51) $ (43) $ (205)
Cost of revenues - services (239) (248) (250) (213) (950)
Research and development expenses (182) (190) (220) (203) (795)
Selling and marketing expenses (40) (41) (46) (36) (163)
General and administrative expenses 515 537 567 495 2,113
Total effect on non-GAAP loss from operations $ -- $ -- $ -- $ -- $ --

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

Source:SeaChange International, Inc.