SeaChange International Announces Fourth Quarter Fiscal 2005 Results;

    Business Editors/High-Tech Editors

    MAYNARD, Mass.--(BUSINESS WIRE)--March 8, 2005--SeaChange International, Inc. (Nasdaq: SEAC) today announced financial results for its fourth quarter of fiscal 2005 ended January 31, 2005. Revenues for the quarter were $30.0 million compared to revenues of $38.9 million in the fourth quarter of fiscal 2004, a 23% decrease. The Company recorded a net loss of $2.2 million, or $0.08 per diluted share, for the fourth quarter of fiscal 2005 versus net income of $2.6 million, or $0.09 per diluted share, for the fourth quarter of fiscal 2004. Revenues and the net loss per share for the fourth quarter of fiscal 2005 were in line with the guidance that the Company had previously provided in its press release dated February 3, 2005.
    For the fiscal year ended January 31, 2005, revenues were a record $157.3 million compared to revenues of $148.2 million in the prior fiscal year. The Company recorded net income of $9.9 million, or $0.34 per diluted share, for the fiscal year ended January 31, 2005 versus net income of $5.6 million, or $0.20 per diluted share, for the fiscal year ended January 31, 2004, an increase of 79%.
    In the fourth quarter of fiscal 2005, Video-on-Demand (VOD) systems revenues were $12.7 million. Total systems revenues for the quarter were $18.8 million, which, in addition to VOD, included revenues of $3.4 million from advertising systems and $2.7 million from broadcast systems. Service revenues for the quarter were $11.2 million.
    The Company's cash and marketable securities balance was $134.9 million at January 31, 2005 compared to $122.0 million at January 31, 2004.
    For the quarter ending April 30, 2005, the Company expects total revenues of approximately $40.0 million and net income of $0.03 per share.
    "In this fiscal year, SeaChange's net income grew by 79% and our revenues reached a record $157 million," said Bill Styslinger, president and CEO, SeaChange International. "SeaChange significantly extended its leadership in on-demand television and today is responsible for more commercial deployments than any other VOD provider. We've shipped 1.4 million VOD streams, far more than our nearest competitor; however, our true differentiation is marked by our core competencies in storage, software and systems integration.
    "In the course of the year, many of our cable customers in North America have expanded the depth and breadth of their VOD services, and SeaChange systems are some of the first to provide new utilities for our customers such as High-Definition TV on-demand and recording of broadcast programs," said Styslinger.
    "Over the past year, SeaChange has broadened its markets," said Styslinger. "A year ago we had one telco customer; today we have eight, including such companies as Verizon and Japan's NTT. Our international cable customers are in Asia, Europe and Latin America and have increased from two to 14. We have successfully broadened our opportunities and intend to build on our competitive advantages in software and media storage for the wide range of service providers, broadcasters and other content sources worldwide."

Potential subscribers in systems planned for SeaChange VOD (estimates)

SeaChange Total On-Demand Customers Worldwide

OPERATORS ESTIMATED OPERATORS ESTIMATED AS OF JAN. CUSTOMER BASE AS OF JAN. CUSTOMER '05 AS OF JAN. '05 '04 BASE AS OF JAN. '04 -------------- ------------- --------------- ------------ ------------ N. American Cable 18 28,677,000 11 24,010,000 -------------- ------------- --------------- ------------ ------------ International Cable 14 15,195,000 2 6,340,000 -------------- ------------- --------------- ------------ ------------ Worldwide Telcos 8 9,530,000 1 650,000 -------------- ------------- --------------- ------------ ------------ TOTAL 40 53,402,000 14 31,000,000 -------------- ------------- --------------- ------------ ------------

Worldwide Telcos

ESTIMATED ESTIMATED COUNTRIES/REGIONS SUBSCRIBERS SUBSCRIBERS AS OF JAN. 05 AS OF JAN. '05 AS OF JAN. '04 ------------------------ --------------------------- ----------------- Canada (2) 750,000 650,000 ------------------------ --------------------------- ----------------- Asia (3) 4,965,000 0 ------------------------ --------------------------- ----------------- U.S. (2) 3,100,000 0 ------------------------ --------------------------- ----------------- South Am. (1) 715,000 0 ------------------------ --------------------------- ----------------- TOTAL 9,530,000 650,000 (8 OPERATORS) (1 OPERATOR) ------------------------ --------------------------- -----------------

International Cable Operators

ESTIMATED ESTIMATED OPERATORS BASIC SUBSCRIBERS SUBSCRIBERS AS OF AS AS OF JAN. '05 AS OF JAN. '05 OF JAN. '04 ---------------------- ------------------------- --------------------- Guandong CATV China 6,000,000 6,000,000 ---------------------- ------------------------- --------------------- HOT (3): Golden Channels, MATAV, Tevel Israel 1,000,000 0 ---------------------- ------------------------- --------------------- Intercable Venezuela 340,000 340,000 ---------------------- ------------------------- --------------------- Ntl United Kingdom 2,400,000 0 ---------------------- ------------------------- --------------------- QRIX So. Korea 450,000 0 ---------------------- ------------------------- --------------------- Telewest 1,770,000 0 ---------------------- ------------------------- --------------------- Unannounced 3,235,000 0 ---------------------- ------------------------- --------------------- TOTAL 15,195,000 6,340,000 (14 OPERATORS) (2 OPERATORS) ---------------------- ------------------------- ---------------------

North American Cable Operators

ESTIMATED ESTIMATED OPERATORS BASIC SUBSCRIBERS SUBSCRIBERS AS OF JAN. '05 AS OF JAN. '05 AS OF JAN. '04 ------------------------ -------------------------- ------------------ Adelphia 1,877,000 1,877,000 ------------------------ -------------------------- ------------------ Cablevision 2,952,000 2,952,000 ------------------------ -------------------------- ------------------ Comcast 15,240,000 11,300,000 ------------------------ -------------------------- ------------------ Cox 724,000 576,000 ------------------------ -------------------------- ------------------ Insight 1,270,000 1,156,000 ------------------------ -------------------------- ------------------ Mediacom 282,000 282,000 ------------------------ -------------------------- ------------------ Rogers 2,000,000 1,400,000 ------------------------ -------------------------- ------------------ Time Warner & Bright House 3,590,000 3,581,000 ------------------------ -------------------------- ------------------ Other 742,000 886,000 ------------------------ -------------------------- ------------------ TOTAL 28,677,000 24,010,000 (18 OPERATORS) (11 OPERATORS) ------------------------ -------------------------- ------------------
    The Company will discuss its financial results and business outlook in more detail today during its webcast conference call at 5:00 p.m. EDT, which will be available live and archived at www.schange.com.

    Safe Harbor Provision

    Any statements contained in this press release that do not describe historical facts, including without limitation statements concerning expected revenues, earnings, product introductions and general market conditions, may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements contained herein are based on current expectations, but are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. The factors that could cause actual future results to differ materially from current expectations include the following: the continued growth, development and acceptance of the video-on-demand market; the loss of one of the Company's large customers; the cancellation or deferral of purchases of the Company's products; a decline in demand or average selling price for the Company's broadband products; the Company's ability to manage its growth; the Company's ability to protect its intellectual property rights and the expenses that may be incurred by the Company to protect its intellectual property rights; an unfavorable result of current or future litigation, including the Company's current patent litigation with C-COR (as successor to nCube Corp.); content providers limiting the scope of content licensed for use in the video- on-demand market; the Company's ability to introduce new products or enhancements to existing products; the Company's dependence on certain sole source suppliers and third-party manufacturers; the Company's ability to compete in its marketplace; the Company's ability to respond to changing technologies; the risks associated with international sales; changes in the regulatory environment; the performance of companies in which the Company has made equity investments, including the ON Demand Group Limited; the Company's ability to hire and retain highly skilled employees; and increasing social and political turmoil.
    Further information on factors that could cause actual results to differ from those anticipated is detailed in various publicly available documents made by the Company from time to time with the Securities and Exchange Commission, including but not limited to, those appearing under the caption "Certain Risk Factors" in the Company's Annual Report on Form 10-K filed with the Commission on April 14, 2004 and those appearing under the caption "Factors That May Affect Future Results" in the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on December 15, 2004. Any forward-looking statements should be considered in light of those factors. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak as of the date they are made. The Company disclaims any obligation to publicly update or revise any such statements to reflect any change in Company expectations or events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results may differ from those set forth in the forward-looking statements.

    About SeaChange

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

    MediaCluster is a patent and trademark of SeaChange International, Inc.

SeaChange International, Inc. Condensed Consolidated Statements of Operations (In thousands, except per share data)

Three months Twelve months ended ended ----------------- ------------------- Jan. 31, Jan. 31, Jan. 31, Jan. 31, 2005 2004 2005 2004 -------- -------- --------- ---------

Revenues $30,042 $38,888 $157,303 $148,166 Cost of revenues 18,054 22,198 85,846 87,574 -------- -------- --------- --------- Gross profit 11,988 16,690 71,457 60,592

Operating expenses:

Research and development 7,653 6,674 29,424 26,030 Selling and marketing 5,174 4,122 18,053 16,653 General and administrative 2,948 2,383 11,656 10,737 -------- -------- --------- --------- 15,775 13,179 59,133 53,420 -------- -------- --------- ---------

Income (loss) from operations (3,787) 3,511 12,324 7,172

Interest income, net 426 499 962 1,734 Other expense -- -- -- (313) -------- -------- --------- ---------

Income before income taxes and equity income (loss) in earnings of affiliates (3,361) 4,010 13,286 8,593 Income tax (benefit) expense (1,203) 1,603 3,200 3,169 Equity income (loss) in earnings of affiliates (5) 186 (148) 137 -------- -------- --------- ---------

Net income (loss) $(2,163) $2,593 $9,938 $5,561 ======== ======== ========= =========

Basic income (loss) per share $(0.08) $0.10 $0.36 $0.21 ======== ======== ========= ========= Diluted income (loss) per share $(0.08) $0.09 $0.34 $0.20 ======== ======== ========= ========= Weighted average common shares outstanding- Basic 28,076 27,201 27,640 26,969 ======== ======== ========= ========= Diluted 28,076 28,612 29,053 27,905 ======== ======== ========= =========

SeaChange International, Inc. Condensed Consolidated Balance Sheets (in thousands)

Jan. 31, Jan. 31, 2005 2004 --------- ---------

Assets Current assets: Cash and cash equivalents $100,661 $87,597 Marketable securities 13,852 1,677 Accounts receivable, net 25,047 16,572 Inventories 19,458 19,738 Prepaid expenses and other current assets 4,665 3,640 --------- --------- Total current assets 163,683 129,224

Property and equipment, net 15,814 14,757 Marketable securities 20,399 32,769 Investments in affiliates 4,661 3,809 Intangibles, net 480 1,293 Goodwill 1,882 253 Other assets 1,301 151

--------- --------- $208,220 $182,256 ========= =========

Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses $23,359 $17,587 Current portion of line of credit and obligations under capital leases 209 399 Customer deposits 165 401 Deferred revenue 21,342 16,437 Income taxes payable (1,878) 1,336 --------- --------- Total current liabilities 43,197 36,160

Long-term debt and other long-term liabilities -- 209 --------- ---------

Common stock and other equity 174,755 165,683 Accumulated deficit (9,455) (19,393) Accumulated other comprehensive loss (277) (403) --------- --------- Total stockholders' equity 165,023 145,887 --------- --------- $208,220 $182,256 ========= =========

--30--JO/bo*

CONTACT: SeaChange International Media: John Coulbourn, 978-897-0100 x3098 johnc@schange.com Investor Relations: Martha Schaefer, 978-897-0100 x3030 mschaefer@schange.com

KEYWORD: MASSACHUSETTS INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS TELEVISION/RADIO CABLE TELECOMMUNICATIONS SOFTWARE EARNINGS CONFERENCE CALLS SOURCE: SeaChange International, Inc.

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