x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
04-3197974
|
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification
No.)
|
Large
accelerated filer ¨
|
Accelerated
filer x
|
Non-accelerated
filer ¨
|
Smaller
reporting company ¨
|
Page
|
||
PART
I. FINANCIAL INFORMATION
|
||
Item 1.
|
Unaudited
Financial Statements
|
|
Consolidated
Balance Sheets at October 31, 2010 and January 31, 2010
|
3
|
|
Consolidated
Statements of Operations for the three and nine months ended October 31,
2010 and October 31, 2009
|
4
|
|
Consolidated
Statements of Cash Flows for the nine months ended October 31, 2010 and
October 31, 2009
|
5
|
|
Notes
to Consolidated Financial Statements
|
6-18
|
|
Item 2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
18-36
|
Item 3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
36
|
Item 4.
|
Controls
and Procedures
|
36
|
PART II.
OTHER INFORMATION
|
||
Item 1.
|
Legal
Proceedings
|
37
|
Item 1A.
|
Risk
Factors
|
37
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
37
|
Item 6.
|
Exhibits
|
38
|
SIGNATURES
|
39
|
October 31,
|
January 31,
|
|||||||
2010
|
2010
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 61,417 | $ | 37,647 | ||||
Restricted
cash
|
1,335 | 73 | ||||||
Marketable
securities
|
5,077 | 2,114 | ||||||
Accounts
receivable, net of allowance for doubtful accounts of $995 and $852,
respectively
|
44,458 | 50,337 | ||||||
Unbilled
receivables
|
5,145 | 3,941 | ||||||
Inventories,
net
|
15,489 | 17,830 | ||||||
Prepaid
expenses and other current assets
|
5,465 | 7,253 | ||||||
Deferred
tax assets
|
4,326 | 2,474 | ||||||
Total
current assets
|
142,712 | 121,669 | ||||||
Property
and equipment, net
|
37,808 | 39,682 | ||||||
Marketable
securities, long-term
|
7,205 | 8,688 | ||||||
Investments
in affiliates
|
4,799 | 13,697 | ||||||
Intangible
assets, net
|
32,251 | 26,264 | ||||||
Goodwill
|
67,002 | 55,876 | ||||||
Other
assets
|
3,328 | 1,271 | ||||||
Total
assets
|
$ | 295,105 | $ | 267,147 | ||||
Liabilities
and Stockholders’ Equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 11,070 | $ | 10,371 | ||||
Other
accrued expenses
|
14,938 | 11,174 | ||||||
Customer
deposits
|
3,259 | 4,279 | ||||||
Deferred
revenues
|
32,521 | 34,158 | ||||||
Deferred
tax liabilities
|
717 | 800 | ||||||
Total
current liabilities
|
62,505 | 60,782 | ||||||
Deferred
revenue, long-term
|
12,864 | 12,635 | ||||||
Other
liabilities, long-term
|
11,087 | 6,574 | ||||||
Distribution
and losses in excess of investment
|
1,836 | 1,469 | ||||||
Deferred
tax liabilities
|
7,516 | 7,765 | ||||||
Total
liabilities
|
95,808 | 89,225 | ||||||
Stockholders
Equity:
|
||||||||
Convertible
preferred stock, $0.01 par value, 5,000,000 shares authorized, none issued
or outstanding
|
— | — | ||||||
Common
stock, $0.01 par value;100,000,000 shares authorized; 31,596,084 and
32,563,063 shares issued; 31,556,300 and 31,216,267 shares outstanding
respectively
|
316 | 326 | ||||||
Additional
paid-in capital
|
205,487 | 211,504 | ||||||
Treasury
stock, at cost 39,784 and 1,346,796 common shares,
respectively
|
(1 | ) | (8,757 | ) | ||||
Accumulated
earnings (deficit)
|
1,166 | (17,450 | ) | |||||
Accumulated
other comprehensive loss
|
(7,671 | ) | (7,701 | ) | ||||
Total
stockholders’ equity
|
199,297 | 177,922 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 295,105 | $ | 267,147 |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
October 31,
|
October 31,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Revenues:
|
||||||||||||||||
Products
|
$ | 18,378 | $ | 27,349 | $ | 64,993 | $ | 76,317 | ||||||||
Services
|
30,757 | 25,941 | 90,367 | 72,356 | ||||||||||||
Total
revenues
|
49,135 | 53,290 | 155,360 | 148,673 | ||||||||||||
Cost
of revenues:
|
||||||||||||||||
Products
|
7,299 | 10,046 | 26,082 | 27,804 | ||||||||||||
Services
|
18,595 | 15,687 | 53,799 | 44,580 | ||||||||||||
Total
cost of revenues
|
25,894 | 25,733 | 79,881 | 72,384 | ||||||||||||
Gross
profit
|
23,241 | 27,557 | 75,479 | 76,289 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Research
and development
|
11,570 | 13,353 | 37,351 | 37,433 | ||||||||||||
Selling
and marketing
|
5,726 | 7,067 | 18,315 | 19,582 | ||||||||||||
General
and administrative
|
6,112 | 5,986 | 18,089 | 16,036 | ||||||||||||
Amortization
of intangibles
|
805 | 571 | 2,512 | 1,844 | ||||||||||||
Restructuring
|
2,435 | - | 6,944 | - | ||||||||||||
Total
operating expenses
|
26,648 | 26,977 | 83,211 | 74,895 | ||||||||||||
(Loss)
income from operations
|
(3,407 | ) | 580 | (7,732 | ) | 1,394 | ||||||||||
Gain
on sale of investment in affiliate
|
- | - | 25,188 | - | ||||||||||||
Other
income (expense), net
|
173 | 455 | (257 | ) | 739 | |||||||||||
(Loss)
income before income taxes and equity loss in earnings of
affiliates
|
(3,234 | ) | 1,035 | 17,199 | 2,133 | |||||||||||
Income
tax provision (benefit)
|
1,942 | 105 | (1,700 | ) | 337 | |||||||||||
Equity
loss in earnings of affiliates, net of tax
|
(39 | ) | (273 | ) | (284 | ) | (517 | ) | ||||||||
Net
(loss) income
|
$ | (5,215 | ) | $ | 657 | $ | 18,615 | $ | 1,279 | |||||||
(Loss)
earnings per share:
|
||||||||||||||||
Basic
|
$ | (0.17 | ) | $ | 0.02 | $ | 0.59 | $ | 0.04 | |||||||
Diluted
|
$ | (0.17 | ) | $ | 0.02 | $ | 0.58 | $ | 0.04 | |||||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
|
31,496 | 30,871 | 31,409 | 30,838 | ||||||||||||
Diluted
|
31,496 | 31,659 | 31,929 | 31,407 |
Nine Months Ended
October 31,
|
||||||||
2010
|
2009
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 18,615 | $ | 1,279 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
|
6,288 | 5,893 | ||||||
Amortization
of intangibles and capitalized software
|
3,916 | 2,393 | ||||||
Disposal
of fixed assets
|
1,283 | - | ||||||
Inventory
valuation charge
|
404 | 434 | ||||||
Provision
for doubtful accounts receivable
|
2 | 75 | ||||||
Discounts
earned and amortization of premiums on marketable
securities
|
49 | 108 | ||||||
Equity
loss in earnings of affiliates
|
284 | 517 | ||||||
Gain
on sale of investment in affiliate
|
(25,188 | ) | - | |||||
Stock-based
compensation expense
|
1,258 | 2,365 | ||||||
Deferred
income taxes
|
(5,903 | ) | (422 | ) | ||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
8,803 | 8,254 | ||||||
Unbilled
receivables
|
(1,204 | ) | 1,023 | |||||
Inventories
|
38 | (4,385 | ) | |||||
Prepaid
expenses and other assets
|
1,469 | (3,583 | ) | |||||
Accounts
payable
|
461 | (4,170 | ) | |||||
Accrued
expenses
|
3,894 | (594 | ) | |||||
Customer
deposits
|
(1,020 | ) | 1,140 | |||||
Deferred
revenues
|
(3,903 | ) | (143 | ) | ||||
Other
|
(120 | ) | 165 | |||||
Net
cash provided by operating activities
|
9,426 | 10,349 | ||||||
Cash
flows from investing activities:
|
||||||||
Purchases
of property and equipment
|
(3,525 | ) | (6,823 | ) | ||||
Purchases
of marketable securities
|
(7,818 | ) | (28,932 | ) | ||||
Proceeds
from sale and maturity of marketable securities
|
6,258 | 28,816 | ||||||
Payments
for acquisitions, net of cash acquired
|
(9,870 | ) | (34,734 | ) | ||||
Payments
of contingent consideration
|
(4,751 | ) | - | |||||
Investment
in affiliates
|
(720 | ) | (1,402 | ) | ||||
Gross
proceeds from sale of investment in affiliate
|
34,086 | - | ||||||
(Increase)
release of restricted cash
|
(54 | ) | 1,511 | |||||
Net
cash provided (used) by investing activities
|
13,606 | (41,564 | ) | |||||
Cash
flows from financing activities:
|
||||||||
Purchases
of treasury stock
|
(1,435 | ) | (1,720 | ) | ||||
Excess
tax benefit related to share based compensation expense
|
4 | 159 | ||||||
Proceeds
from issuance of common stock relating to the stock plans
|
2,286 | 1,120 | ||||||
Net
cash provided (used) in financing activities
|
855 | (441 | ) | |||||
Effect
of exchange rate changes on cash and cash equivalents
|
(117 | ) | 710 | |||||
Net
increase (decrease) in cash and cash equivalents
|
23,770 | (30,946 | ) | |||||
Cash
and cash equivalents, beginning of period
|
37,647 | 62,458 | ||||||
Cash
and cash equivalents, end of period
|
$ | 61,417 | $ | 31,512 | ||||
Supplemental
disclosure of cash flow activities:
|
||||||||
Income
taxes paid
|
$ | 3,114 | $ | - | ||||
Supplemental
disclosure of non-cash activities:
|
||||||||
Transfer
of items originally classified as inventories to equipment
|
$ | 1,914 | $ | 2,349 | ||||
Issuance
of equity for eventIS accrued consideration
|
$ | 614 | $ | - |
October 31,
|
Fair Value Measurements Using
|
|||||||||||||||
2010
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Financial
assets:
|
||||||||||||||||
Money
market accounts (a)
|
$ | 6,052 | $ | 6,052 | $ | - | $ | - | ||||||||
U.S.
government agency issues (a)
|
12,031 | 12,031 | - | - | ||||||||||||
Certificate
of deposit (a)
|
251 | 251 | - | - | ||||||||||||
Total
assets
|
$ | 18,334 | $ | 18,334 | $ | - | $ | - | ||||||||
Other
liabilities:
|
||||||||||||||||
Acquisition-related
consideration (b)
|
$ | 12,582 | $ | - | $ | - | $ | 12,582 |
Level 3
|
||||
Accrued Contingent
|
||||
Consideration
|
||||
(in thousands)
|
||||
Ending
balance July 31, 2010
|
$ | 16,037 | ||
Change
in fair value of contingent consideration
|
105 | |||
Increase
in contingent consideration
|
83 | |||
Contingency
payment
|
(4,751 | ) | ||
Translation
adjustment
|
1,108 | |||
Ending
balance October 31, 2010
|
$ | 12,582 |
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair Value
|
|||||||||||||
(in thousands)
|
||||||||||||||||
October
31, 2010:
|
||||||||||||||||
Cash
|
$ | 55,365 | $ | - | $ | - | $ | 55,365 | ||||||||
Cash
equivalents
|
6,052 | - | - | 6,052 | ||||||||||||
Cash
and cash equivalents
|
61,417 | - | - | 61,417 | ||||||||||||
U.S.
government agency issues
|
- | - | - | |||||||||||||
Marketable
securities—short-term
|
5,005 | 72 | - | 5,077 | ||||||||||||
U.S.
government agency issues
|
6,819 | 135 | - | 6,954 | ||||||||||||
Corporate
debt securities
|
250 | 1 | - | 251 | ||||||||||||
Marketable
securities—long-term
|
7,069 | 136 | - | 7,205 | ||||||||||||
Total
cash, cash equivalents, and marketable securities
|
$ | 73,491 | $ | 208 | $ | - | $ | 73,699 | ||||||||
January 31,
2010:
|
||||||||||||||||
Cash
|
$ | 32,725 | $ | - | $ | - | $ | 32,725 | ||||||||
Cash
equivalents
|
4,922 | - | - | 4,922 | ||||||||||||
Cash
and cash equivalents
|
37,647 | - | - | 37,647 | ||||||||||||
U.S.
government agency issues
|
2,023 | 91 | - | 2,114 | ||||||||||||
Marketable
securities—short-term
|
2,023 | 91 | - | 2,114 | ||||||||||||
U.S.
government agency issues
|
8,276 | 161 | - | 8,437 | ||||||||||||
Corporate
debt securities
|
250 | 1 | - | 251 | ||||||||||||
Marketable
securities—long-term
|
8,526 | 162 | - | 8,688 | ||||||||||||
Total
cash, cash equivalents, and marketable securities
|
$ | 48,196 | $ | 253 | $ | - | $ | 48,449 |
October 31,
|
January 31,
|
|||||||
2010
|
2010
|
|||||||
(in
thousands)
|
||||||||
Investment
Maturities:
|
||||||||
Less
than 1 year
|
$ | 5,077 | $ | 2,114 | ||||
One
to three years
|
7,205 | 8,688 | ||||||
$ | 12,282 | $ | 10,802 |
October 31,
|
January 31,
|
|||||||
2010
|
2010
|
|||||||
(in
thousands)
|
||||||||
Components
and assemblies
|
$ | 8,124 | $ | 11,316 | ||||
Finished
products
|
7,366 | 6,514 | ||||||
Total
inventory, net
|
$ | 15,489 | $ | 17,830 |
February 1, 2010
|
||||
(in thousands)
|
||||
Payment
of cash to VividLogic shareholders
|
$ | 15,470 | ||
Acquisition-related
deferred consideration
|
8,388 | |||
Total
acquisition-date fair value
|
$ | 23,858 | ||
Cash
and cash equivalents
|
$ | 5,932 | ||
Accounts
receivable
|
2,917 | |||
Other
assets
|
1,739 | |||
Deferred
tax assets
|
1,250 | |||
Intangible
assets
|
9,900 | |||
Total
identifiable assets acquired
|
21,738 | |||
Accounts
payable and other liabilities
|
(1,740 | ) | ||
Deferred
tax liabilities
|
(3,665 | ) | ||
Deferred
revenue
|
(2,500 | ) | ||
Total
liabilities assumed
|
(7,905 | ) | ||
Goodwill
|
10,025 | |||
Net
assets acquired
|
$ | 23,858 |
Useful life
|
Fair Value
|
|||||
(in thousands)
|
||||||
Existing
technology
|
5-9
years
|
$ | 2,200 | |||
Non-compete
agreements
|
5
years
|
700 | ||||
Customer
contracts
|
9
years
|
6,200 | ||||
Trade
name
|
indefinite
|
200 | ||||
Backlog
|
1
year
|
600 | ||||
Total
intangible assets
|
$ | 9,900 |
Goodwill
|
||||||||||||||||
Software
|
Servers & Storage
|
Media Services
|
Total
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Balance
at January 31, 2010
|
$ | 35,536 | $ | 754 | $ | 19,586 | $ | 55,876 | ||||||||
Acquisition
of VividLogic
|
10,025 | - | - | 10,025 | ||||||||||||
Equity
investment goodwill
|
881 | - | - | 881 | ||||||||||||
Cumulative
translation adjustment
|
155 | - | 65 | 220 | ||||||||||||
Balance
at October 31, 2010
|
$ | 46,597 | $ | 754 | $ | 19,651 | $ | 67,002 |
October 31, 2010
|
January 31, 2010
|
|||||||||||||||||||||||||
Useful Life
|
Gross
|
Accumulated
Amortization
|
Net
|
Gross
|
Accumulated
Amortization
|
Net
|
||||||||||||||||||||
(in thousands)
|
(in thousands)
|
|||||||||||||||||||||||||
Finite-lived
intangible assets:
|
||||||||||||||||||||||||||
Customer
contracts
|
1-
10 years
|
$ | 34,933 | $ | (13,746 | ) | $ | 21,187 | $ | 28,643 | $ | (11,984 | ) | $ | 16,659 | |||||||||||
Non-compete
agreements
|
2-3
years
|
2,793 | (919 | ) | 1,874 | 2,487 | (290 | ) | 2,197 | |||||||||||||||||
Completed
technology
|
4 -
9 years
|
12,147 | (4,432 | ) | 7,715 | 9,904 | (3,250 | ) | 6,654 | |||||||||||||||||
Trademarks
and other
|
5
years
|
2,402 | (1,685 | ) | 717 | 1,391 | (1,191 | ) | 200 | |||||||||||||||||
Total
finite-lived intangible assets
|
$ | 52,275 | $ | (20,782 | ) | $ | 31,493 | $ | 42,425 | $ | (16,715 | ) | $ | 25,710 | ||||||||||||
Infinite-lived
intangible assets:
|
||||||||||||||||||||||||||
Trade
names
|
$ | 200 | $ | - | $ | 200 | $ | - | $ | - | $ | - | ||||||||||||||
In-process
research and development
|
558 | - | 558 | 554 | - | 554 | ||||||||||||||||||||
Total
infinite-lived intangible assets
|
$ | 758 | $ | - | $ | 758 | $ | 554 | $ | - | $ | 554 | ||||||||||||||
Total
intangible assets
|
$ | 53,033 | $ | (20,782 | ) | $ | 32,251 | $ | 42,979 | $ | (16,715 | ) | $ | 26,264 |
Fiscal Year
|
(in thousands)
|
|||
2011
(for the remaining three months ending January 31, 2011)
|
$ | 1,293 | ||
2012
|
6,178 | |||
2013
|
5,872 | |||
2014
|
4,703 | |||
2015
and thereafter
|
13,447 | |||
Total
|
$ | 31,493 |
(in thousands)
|
Severance
|
|||
Accrual
balance as of July 31, 2010
|
$ | 494 | ||
Amount
charged to expense
|
1,152 | |||
Severance
costs paid
|
(300 | ) | ||
Accrual
balance as of October 31, 2010
|
$ | 1,346 |
|
·
|
Software
segment includes product revenues from the Company’s Advertising, VOD,
Middleware and Broadcast software, related services such as professional
services, installation, training, project management, product maintenance,
technical support and software development for those software products,
and operating expenses relating to the Software segment such as research
and development, selling and marketing, and amortization of intangibles.
The Software
segment includes the results of eventIS from the date of the acquisition
on September 1, 2009 and the results of VividLogic from the date of
acquisition on February 1, 2010.
|
|
·
|
Servers
and Storage segment includes product revenues from the VOD and Broadcast
server product lines and related services such as professional services,
installation, training, project management, product maintenance, and
technical support for those products and operating expenses relating to
the Servers and Storage segment, such as research and development and
selling and marketing.
|
|
·
|
Media
Services segment includes the operations of ODG, including Mobix
Interactive, activities which include content acquisition and preparation
services for television and wireless service providers and related operating
expenses.
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
October
31,
|
October
31,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
(in
thousands)
|
(in
thousands)
|
||||||||||||||
Software
|
||||||||||||||||
Revenue:
|
||||||||||||||||
Products
|
$ | 15,543 | $ | 19,167 | $ | 51,712 | $ | 49,876 | ||||||||
Services
|
19,293 | 16,578 | 58,789 | 46,547 | ||||||||||||
Total
revenue
|
34,836 | 35,745 | 110,501 | 96,423 | ||||||||||||
Gross
profit
|
18,940 | 22,416 | 59,902 | 58,354 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Research
and development
|
9,074 | 10,437 | 28,934 | 29,233 | ||||||||||||
Selling
and marketing
|
4,395 | 4,868 | 13,241 | 12,550 | ||||||||||||
General
and administrative
|
421 | 173 | 935 | 173 | ||||||||||||
Amortization
of intangibles
|
733 | 635 | 2,300 | 1,404 | ||||||||||||
Restructuring
|
344 | - | 878 | - | ||||||||||||
14,967 | 16,113 | 46,288 | 43,360 | |||||||||||||
Income
from operations
|
$ | 3,973 | $ | 6,303 | $ | 13,614 | $ | 14,994 | ||||||||
Servers
and Storage
|
||||||||||||||||
Revenue:
|
||||||||||||||||
Products
|
$ | 2,835 | $ | 8,182 | $ | 13,281 | $ | 26,441 | ||||||||
Services
|
3,358 | 4,179 | 9,973 | 11,804 | ||||||||||||
Total
revenue
|
6,193 | 12,361 | 23,254 | 38,245 | ||||||||||||
Gross
profit
|
3,089 | 4,238 | 11,147 | 16,392 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Research
and development
|
2,497 | 2,916 | 8,417 | 8,200 | ||||||||||||
Selling
and marketing
|
1,331 | 2,199 | 5,074 | 7,032 | ||||||||||||
Restructuring
|
2,090 | - | 5,155 | - | ||||||||||||
5,918 | 5,115 | 18,646 | 15,232 | |||||||||||||
(Loss)
income from operations
|
$ | (2,829 | ) | $ | (877 | ) | $ | (7,499 | ) | $ | 1,160 | |||||
Media
Services
|
||||||||||||||||
Service
revenue
|
$ | 8,106 | $ | 5,184 | $ | 21,605 | $ | 14,005 | ||||||||
Gross
profit
|
1,213 | 903 | 4,431 | 1,543 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
General
and administrative
|
1,408 | 824 | 3,114 | 2,247 | ||||||||||||
Amortization
of intangibles
|
73 | (64 | ) | 213 | 440 | |||||||||||
1,481 | 760 | 3,327 | 2,687 | |||||||||||||
(Loss)
income from operations
|
$ | (268 | ) | $ | 143 | $ | 1,104 | $ | (1,144 | ) | ||||||
Unallocated
Corporate
|
||||||||||||||||
Operating
expenses:
|
||||||||||||||||
General
and administrative
|
$ | 4,283 | $ | 4,989 | $ | 14,039 | $ | 13,616 | ||||||||
Restructuring
|
$ | - | $ | - | $ | 912 | $ | - | ||||||||
Total
unallocated corporate expenses
|
$ | 4,283 | $ | 4,989 | $ | 14,951 | $ | 13,616 | ||||||||
Consolidated
(loss) income from operations
|
$ | (3,407 | ) | $ | 580 | $ | (7,732 | ) | $ | 1,394 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||||||||||||||||||
October
31,
|
October
31,
|
|||||||||||||||||||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||||||||||||||||||
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
|||||||||||||||||||||||||
|
(in
thousands, except percentages)
|
(in
thousands, except percentages)
|
||||||||||||||||||||||||||||||
Revenues
by customers' geographic locations:
|
||||||||||||||||||||||||||||||||
North
America
|
$ | 27,323 | 55 | % | $ | 37,701 | 71 | % | $ | 90,045 | 58 | % | $ | 103,664 | 70 | % | ||||||||||||||||
Europe
and Middle East
|
16,176 | 33 | % | 11,881 | 22 | % | 46,864 | 30 | % | 30,060 | 20 | % | ||||||||||||||||||||
Latin
America
|
1,392 | 3 | % | 2,322 | 4 | % | 7,430 | 5 | % | 8,985 | 6 | % | ||||||||||||||||||||
Asia
Pacific and other international locations
|
4,244 | 9 | % | 1,386 | 3 | % | 11,021 | 7 | % | 5,964 | 4 | % | ||||||||||||||||||||
Total
|
$ | 49,135 | $ | 53,290 | $ | 155,360 | $ | 148,673 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
October
31,
|
October
31,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Customer
A
|
18 | % | 38 | % | 24 | % | 28 | % | ||||||||
Customer
B
|
12 | % | 11 | % | 12 | % | 10 | % | ||||||||
Customer
C
|
11 | % | 11 | % | * | * | ||||||||||
Customer
D
|
* | * | * | 11 | % |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
October 31,
|
October 31,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(in
thousands)
|
(in
thousands)
|
|||||||||||||||
Net
income (loss)
|
$ | (5,215 | ) | $ | 657 | $ | 18,615 | $ | 1,279 | |||||||
Other
comprehensive income:
|
||||||||||||||||
Foreign
currency translation adjustment
|
3,269 | 1,257 | 60 | 5,714 | ||||||||||||
Unrealized
(loss) gain on marketable securities, net of tax
|
(14 | ) | 4 | (30 | ) | (104 | ) | |||||||||
Other
comprehensive income, net of tax
|
3,255 | 1,261 | 30 | 5,610 | ||||||||||||
Comprehensive
income (loss)
|
$ | (1,960 | ) | $ | 1,918 | $ | 18,645 | $ | 6,889 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
October 31,
|
October 31,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(in
thousands)
|
(in
thousands)
|
|||||||||||||||
Weighted
average shares used in calculating earnings per
share—Basic
|
31,496 | 30,871 | 31,409 | 30,838 | ||||||||||||
Dilutive
common stock equivalents
|
- | 788 | 520 | 569 | ||||||||||||
Weighted
average shares used in calculating earnings per
share—Diluted
|
31,496 | 31,659 | 31,929 | 31,407 |
ITEM 2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
·
|
Software
segment includes product revenues from the Company’s Advertising, VOD,
Middleware and Broadcast software, related services such as professional
services, installation, training, project management, product maintenance,
technical support and software development for those software products,
and operating expenses relating to the Software segment such as research
and development, selling and marketing, and amortization of intangibles.
The Software
segment includes the results of eventIS from the date of the acquisition
on September 1, 2009 and the results of VividLogic from the date of
acquisition on February 1, 2010.
|
|
·
|
Servers
and Storage segment includes product revenues from the VOD and Broadcast
server product lines and related services such as professional services,
installation, training, project management, product maintenance, and
technical support for those products and operating expenses relating to
the Servers and Storage segment, such as research and development and
selling and marketing.
|
|
·
|
Media
Services segment includes the operations of ODG, including Mobix
Interactive, activities which include content acquisition and preparation
services for television and wireless service providers and related operating
expenses.
|
|
•
|
the
customer’s receipt of authorized signatures on their purchase
orders;
|
|
•
|
the
budgetary approvals within the customer’s company for capital purchases;
and
|
|
•
|
the
ability to process the purchase order within the customer’s organization
in a timely manner.
|
|
•
|
the
availability of material to produce the
product;
|
|
•
|
the
time required to produce and test the product before delivery;
and
|
|
•
|
the
customer’s required delivery date.
|
|
•
|
market
acceptance of the products and services offered by our customers and
increased subscriber usage and demand for these products and
services;
|
|
•
|
selection
by our customers of our products and services versus the products and
services being offered by our
competitors;
|
|
•
|
our
ability to introduce new products to the market in a timely manner and to
meet the demands of the market for new products and product
enhancements;
|
|
•
|
our
ability to maintain gross margins from the sale of our products and
services at a level that will provide us with cash to fund our operations
given the pricing pressures within the market and the costs of materials
to manufacture our products;
|
|
•
|
our
ability to control operating costs given the fluctuations that we have
experienced with revenues from quarter to quarter;
and
|
|
•
|
our
ability to successfully integrate businesses acquired by us, including
eventIS, Mobix Interactive, and
VividLogic.
|
Three
Months Ended
|
||||||||
October 31,
|
||||||||
2010
|
2009
|
|||||||
(in
thousands)
|
||||||||
Revenues:
|
||||||||
Products
|
$ | 18,378 | $ | 27,349 | ||||
Services
|
30,757 | 25,941 | ||||||
49,135 | 53,290 | |||||||
Costs
and expenses:
|
||||||||
Cost
of product revenues
|
7,299 | 10,046 | ||||||
Cost
of services revenues
|
18,595 | 15,687 | ||||||
Research
and development
|
11,570 | 13,353 | ||||||
Selling
and marketing
|
5,726 | 7,067 | ||||||
General
and administrative
|
6,112 | 5,986 | ||||||
Amortization
of intangibles
|
805 | 571 | ||||||
Restructuring
|
2,435 | - | ||||||
(Loss)
income from operations
|
(3,407 | ) | 580 | |||||
Other
income, net
|
173 | 455 | ||||||
(Loss)
income before income taxes and equity loss in earnings of
affiliates
|
(3,234 | ) | 1,035 | |||||
Income
tax provision
|
1,942 | 105 | ||||||
Equity
loss in earnings of affiliates, net of tax
|
(39 | ) | (273 | ) | ||||
Net
(loss) income
|
$ | (5,215 | ) | $ | 657 |
Three
Months Ended
|
||||||||||||
October 31,
|
||||||||||||
2010
|
2009
|
%
|
||||||||||
(in
thousands, except for percentage data)
|
||||||||||||
Software
revenues:
|
||||||||||||
Products
|
$ | 15,543 | $ | 19,167 | (19 | )% | ||||||
Services
|
19,293 | 16,578 | 16 | % | ||||||||
Total
Software revenues
|
34,836 | 35,745 | (3 | )% | ||||||||
Servers
and Storage revenues:
|
||||||||||||
Products
|
2,835 | 8,182 | (65 | )% | ||||||||