Exhibit 99.2
![]() | Pinnacle Systems, Inc. | |
Corporate Office 280 N. Bernardo Avenue Mountain View, CA 94043 Tel: 650-526-1600 Fax: 650-526-1601 www.pinnaclesys.com |
Media Contact
Paulien Ruijssenaars
(650) 237-1648
paulien@pinnaclesys.com
PINNACLE SYSTEMS REPORTS RESULTS FOR THE
FOURTH QUARTER OF FISCAL YEAR 2004
MOUNTAIN VIEW, Calif., July 27th, 2004—Pinnacle Systems®, Inc. (NASDAQ: PCLE) today announced financial results for its fourth quarter of fiscal 2004, ended June 30, 2004.
Net sales for the fourth quarter of fiscal 2004 were $86.5 million compared to net sales of $89.3 million in the fourth quarter of fiscal 2003. The GAAP net loss for the fourth quarter of fiscal 2004 was $11.1 million or $0.16 per share. The pro forma non-GAAP net income for the fourth quarter of fiscal 2004 was $2.9 million or $0.04 per share. This pro forma non-GAAP net income excludes $1.5 million of amortization of acquisition-related intangible assets, $6.4 million of impaired goodwill, $6.6 million related to the loss from discontinued operations of Jungle KK, and a $0.4 million difference between GAAP and non-GAAP income tax expense. The reconciliation of the GAAP to non-GAAP measurements for net income and earnings per share for the fourth quarter of fiscal 2004 is set forth below with Pinnacle Systems’ financial statements.
“In the fourth quarter of fiscal 2004, the Pinnacle Systems’ team executed and delivered a solid quarter,” said Patti S. Hart, Pinnacle Systems’ Chairman of the Board and Chief Executive Officer. “We took a number of actions during the fiscal year to improve margins, execution and operational efficiency and have made good progress. These areas will continue to be our primary focus going forward with the aim of fully capitalizing on our vast market opportunities and delivering superior shareholder value.”
During the fourth quarter of fiscal 2004, the Company sold its interest in Jungle KK. The sale furthered Pinnacle Systems’ restructuring efforts towards simplifying business operations and improving bottom line performance. The sale resulted in a one-time loss on discontinued operations of $6.6 million. Concurrent with the sale, the Company entered into a distribution agreement with Jungle KK to continue to localize,
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promote and sell Pinnacle Systems’ consumer software products into the Japanese market and will, in return, receive a percentage of net sales of Pinnacle Systems’ products sold by Jungle KK.
Pinnacle Systems will host an audio web-cast at 2:00 p.m. (Pacific Time) on July 27th, 2004, which can be heard live atwww.pinnaclesys.com. Additionally, a replay of the conference call will be available atwww.pinnaclesys.com for two weeks following the call. Thereafter, a transcript of the conference call will be available under the “Investor Relations” section of our website athttp://www.pinnaclesys.com/aboutus/investorrelation.asp?Langue_ID=7.
Use of Non-GAAP Financial Measures
To supplement its consolidated financial statements presented in accordance with GAAP, Pinnacle Systems uses non-GAAP measures of pro forma net income and pro forma earnings per share, which are adjusted from its GAAP results to exclude certain expenses. These non-GAAP adjustments are provided to enhance the reader’s overall understanding of the Company’s current financial performance and its prospects for the future. The Company believes the non-GAAP results provide useful information to both management and investors by excluding certain expenses that it believes are not indicative of its core operating results. The non-GAAP measures are included to provide investors and management with an alternative method for assessing Pinnacle Systems’ operating results in a manner that is focused on the performance of Pinnacle Systems’ ongoing operations and to provide a more consistent basis for comparison between quarters. Further, these non-GAAP results are one of the primary indicators management uses for planning and forecasting in future periods. In addition, since the Company has historically reported non-GAAP results to the investment community, it believes the inclusion of non-GAAP numbers provides consistency in its financial reporting. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States.
About Pinnacle Systems, Inc.
Pinnacle Systems provides broadcasters and consumers with cutting-edge digital media creation, storage, and play-back solutions for use at Home, in the Studio and on the Air. Pinnacle Systems’ award winning digital media solutions are in use around the world for broadcast, video and audio editing, DVD and CDR authoring and on the Internet. A recognized industry leader, the Company has received nine prestigious Emmy Awards for its technical innovations and carries this commitment throughout all of its product lines. Pinnacle Systems may be reached at (650) 526-1600 or at www.pinnaclesys.com.
Safe Harbor Statement
This press release contains forward-looking statements that involve risks and uncertainties within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
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1934, including statements regarding Pinnacle Systems’ expectations for continued improvement in margins, execution and operational efficiency and for capitalizing on market opportunities and delivering superior shareholder value. Forward-looking statements contained in this press release relating to expectations about future events or results are based upon information available to the Company as of the date hereof. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. As a result, Pinnacle Systems’ actual results may differ materially and adversely from those expressed in the forward-looking statements. Factors that may cause such a difference include, but are not limited to, risks related to cost reduction, restructuring and organizational changes made in future quarters and the impact those actions will have on future results, internal operating results, and demand for the Company’s products. Factors that could affect Pinnacle Systems’ business and financial results are detailed in the Company’s periodic reports filed with the Securities and Exchange Commission, including, but not limited to, its Annual Report on Form 10-K for the fiscal year ended June 30, 2003 and Form 10-Q for the quarters ended September 30, 2003 , December 31, 2003, and March 31, 2004, including, but not limited to, under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which are on file with the Securities and Exchange Commission (the “SEC”) and available at the SEC’s website at www.sec.gov. All information set forth in this release and its attachments is made as of July 27th, 2004, and Pinnacle Systems undertakes no obligation to revise or update publicly this information for any reason.
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Pinnacle Systems is a registered trademark of Pinnacle Systems, Inc. All other trademarks and registered trademarks are the
property of their owners.© 2004. Pinnacle Systems, Inc. All Rights Reserved.
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PINNACLE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
GAAP | NON-GAAP | ||||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||
Net sales | $ | 86,490 | $ | 89,339 | $ | 86,490 | $ | 89,339 | |||||
Costs and expenses: | |||||||||||||
Cost of sales | 41,276 | 41,709 | 41,276 | 41,709 | |||||||||
Engineering and product development | 10,896 | 10,935 | 10,896 | 10,935 | |||||||||
Sales, marketing, and service | 24,956 | 26,049 | 24,956 | 26,049 | |||||||||
General and administrative | 5,612 | 5,044 | 5,612 | 5,044 | |||||||||
Amortization of other intangible assets | 1,505 | 3,520 | — | — | |||||||||
Impairment of goodwill | 6,360 | — | — | — | |||||||||
Total costs and expenses | 90,605 | 87,257 | 82,740 | 83,737 | |||||||||
Operating income (loss) | (4,115 | ) | 2,082 | 3,750 | 5,602 | ||||||||
Interest and other income, net | 173 | 1,767 | 173 | 1,767 | |||||||||
Income (loss) from continuing operations before income taxes | (3,942 | ) | 3,849 | 3,923 | 7,369 | ||||||||
Income tax expense | 560 | 393 | 980 | 1,474 | |||||||||
Income (loss) from continuing operations | (4,502 | ) | 3,456 | 2,943 | 5,895 | ||||||||
Discontinued operations: | |||||||||||||
Income from operations of discontinued business, net of taxes | 256 | — | — | — | |||||||||
Loss on sale of discontinued business, net of taxes | (6,820 | ) | — | — | |||||||||
Loss from discontinued operations | (6,564 | ) | — | — | — | ||||||||
Net income (loss) | $ | (11,066 | ) | $ | 3,456 | $ | 2,943 | $ | 5,895 | ||||
Income (loss) per share from continuing operations: | |||||||||||||
Basic and Diluted | $ | (0.07 | ) | $ | 0.05 | ||||||||
Loss per share from discontinued operations: | |||||||||||||
Basic and Diluted | $ | (0.09 | ) | $ | — | ||||||||
Net income (loss) per share: | |||||||||||||
Basic and Diluted | $ | (0.16 | ) | $ | 0.05 | $ | 0.04 | $ | 0.09 | ||||
Shares used to compute net income (loss) per share: | |||||||||||||
Basic | 68,676 | 63,014 | |||||||||||
Diluted | 68,676 | 66,103 | 70,202 | 66,103 | |||||||||
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PINNACLE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP TO GAAP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands)
Three Months Ended June 30, | ||||||||
2004 | 2003 | |||||||
Non-GAAP net income | $ | 2,943 | $ | 5,895 | ||||
Amortization of other intangible assets | (1,505 | ) | (3,520 | ) | ||||
Impairment of goodwill | (6,360 | ) | — | |||||
Loss from discontinued operations | (6,564 | ) | — | |||||
Income tax effect | 420 | 1,081 | ||||||
GAAP net income (loss) | $ | (11,066 | ) | $ | 3,456 | |||
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PINNACLE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
GAAP AND NON-GAAP - BY DIVISION
(Unaudited, in thousands)
Three Months Ended June 30, 2004 | |||||||||||
Broadcast and Professional | Business and Consumer | Total | |||||||||
Net sales | $ | 33,178 | $ | 53,312 | $ | 86,490 | |||||
Costs and expenses: | |||||||||||
Cost of sales | 14,347 | 26,929 | 41,276 | ||||||||
Engineering and product development | 6,126 | 4,770 | 10,896 | ||||||||
Sales, marketing, and service | 12,883 | 12,073 | 24,956 | ||||||||
General and administrative | 2,313 | 3,299 | 5,612 | ||||||||
Amortization of other intangible assets | 430 | 1,075 | 1,505 | ||||||||
Impairment of goodwill | 6,360 | — | 6,360 | ||||||||
Total costs and expenses | 42,459 | 48,146 | 90,605 | ||||||||
GAAP operating income (loss) | (9,281 | ) | 5,166 | (4,115 | ) | ||||||
Amortization of other intangible assets | 430 | 1,075 | 1,505 | ||||||||
Impairment of goodwill | 6,360 | — | 6,360 | ||||||||
NON-GAAP operating income (loss) | $ | (2,491 | ) | $ | 6,241 | $ | 3,750 | ||||
Three Months Ended June 30, 2003 | |||||||||||
Broadcast and Professional | Business and Consumer | Total | |||||||||
Net sales | $ | 37,577 | $ | 51,762 | $ | 89,339 | |||||
Costs and expenses: | |||||||||||
Cost of sales | 14,444 | 27,265 | 41,709 | ||||||||
Engineering and product development | 6,040 | 4,895 | 10,935 | ||||||||
Sales, marketing, and service | 11,764 | 14,285 | 26,049 | ||||||||
General and administrative | 2,321 | 2,723 | 5,044 | ||||||||
Amortization of other intangible assets | 1,664 | 1,856 | 3,520 | ||||||||
Total costs and expenses | 36,233 | 51,024 | 87,257 | ||||||||
GAAP operating income | 1,344 | 738 | 2,082 | ||||||||
Amortization of other intangible assets | 1,664 | 1,856 | 3,520 | ||||||||
NON-GAAP operating income | $ | 3,008 | $ | 2,594 | $ | 5,602 | |||||
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PINNACLE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
June 30, 2004 | June 30, 2003 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 61,299 | $ | 62,617 | ||||
Marketable securities | 10,955 | 18,804 | ||||||
Accounts receivable, net | 42,168 | 55,958 | ||||||
Inventories | 47,162 | 36,775 | ||||||
Prepaid expenses and other current assets | 8,727 | 9,197 | ||||||
Total current assets | 170,311 | 183,351 | ||||||
Restricted cash | 16,850 | 16,890 | ||||||
Property and equipment, net | 17,223 | 15,351 | ||||||
Goodwill | 73,273 | 60,632 | ||||||
Other intangible assets, net | 16,298 | 29,341 | ||||||
Other assets | 7,789 | 5,311 | ||||||
$ | 301,744 | $ | 310,876 | |||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 18,283 | $ | 17,146 | ||||
Accrued and other liabilities | 56,792 | 53,025 | ||||||
Deferred revenue | 13,909 | 6,564 | ||||||
Total current liabilities | 88,984 | 76,735 | ||||||
Deferred income taxes | 1,972 | 7,826 | ||||||
Long-term liabilities | 106 | 158 | ||||||
Total liabilities | 91,062 | 84,719 | ||||||
Shareholders’ equity: | ||||||||
Common stock | 375,550 | 337,593 | ||||||
Accumulated deficit | (169,487 | ) | (115,294 | ) | ||||
Accumulated other comprehensive income | 4,619 | 3,858 | ||||||
Total shareholders’ equity | 210,682 | 226,157 | ||||||
$ | 301,744 | $ | 310,876 | |||||
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