EXHIBIT 99.1
SEACHANGE
INTERNATIONAL NEWS RELEASE
For more information: John Coulbourn
SeaChange International
508-897-0100 x3098
johnc@schange.com
SEACHANGE INTERNATIONAL ANNOUNCES THE
ACQUISITION OF IPC INTERACTIVE
MAYNARD, Mass. (Dec. 10, 1997) -- SeaChange International, Inc. (Nasdaq:
SEAC) today announced it has acquired privately-held IPC Interactive, Pte. Ltd.
(Singapore) and its wholly owned U.S. subsidiary to capitalize on interactive
television opportunities. Under the terms of the acquisition, 625,000 shares of
SeaChange common stock were exchanged for all outstanding shares and options of
IPC Interactive. The transaction will be accounted for under the purchase method
of accounting.
Headquartered in Novato, Calif. with offices in Singapore, IPC Interactive
provides interactive television network systems to the hospitality and
commercial property markets, in conjunction with entertainment content and
licensing services. SeaChange is a leading provider of advanced digital video
systems for the television industry. With this acquisition, the Company will be
better positioned to provide end-to-end systems to meet the needs of the
interactive digital television market. The new subsidiary will be renamed
Guestserve Networks.
SeaChange and IPC Interactive cooperatively developed the world's first
fiber-optic local-area hotel network with Time Warner Cable of New York City,
which was launched in the second quarter of this year and currently serves over
1,000 Manhattan hotel rooms. By using the centralized video server platform and
interactive network, cable operators can offer a cost-effective, advanced
television service to hotels.
"SeaChange is in the business of building complete digital video systems
that enable television operators to capture new revenue opportunities," said
Bill Styslinger, president and CEO, SeaChange International, Inc. "By combining
IPC Interactive's strengths with ours, SeaChange can now serve both the
hoteliers and cable operators with proven high-quality systems and interactive
television. Cable operators will have the competitive advantage to offer a vast
library of movies, video games and Internet services. And the centralized
network makes the service very cost-effective because the resources are shared
among all the hotel rooms connected by the cable, operators' fiber network."
IPC Interactive's principals are considered pioneers in the industry, and
have been engaged in the development and deployment of interactive TV systems
for the hotel and
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SeaChange Acquires IPC Interactive/2
commercial property industry for 13 years. IPC Interactive's Guestserve System
has consistently been the lodging industry's technology leader, implementing the
first "boxless" smart television to the hotel market in 1984. IPC Interactive
currently provides fully interactive, multimedia, multi-user and multi-lingual
services to 60,000 hotel rooms worldwide, including the 5,000 room MGM Grand
Hotel in Las Vegas. Retaining the IPC Interactive U.S. and Singapore offices
will enable SeaChange to extend its U.S. and Asia Pacific sales and service
capabilities.
"This is an excellent opportunity for IPC Interactive to combine its
interactive television network software and market expertise with SeaChange's
bright future in digital video delivery systems," said Johnathan Edwards,
formerly chairman and CEO, IPC Interactive.
Earlier this year, IPC Interactive introduced its MeTILTM software
platform, which is an enabling technology for the interactive television
network. Based on the Windows NT operating system, MeTIL utilizes the same
communications protocol and fault-tolerant redundant architecture as the World
Wide Web. With the MeTIL interactive server software and SeaChange
MediaClusterTM-based video server platform at the cable headend, multiple hotels
can efficiently be served a high level of interactive services.
Financial Information
- ---------------------
The total acquisition costs for the transaction, including net assumed
liabilities, is approximately $6.7 million. SeaChange expects to immediately
expense approximately $5.0 to $5.5 million of the acquisition cost as purchased
research and development under generally accepted accounting principles.
Additionally, the Company expects to record goodwill and other intangible assets
of approximately $1.2 to $1.7 million, to be amortized to expense over a five-
year period.
IPC Interactive reported revenues of approximately $11 million (audited)
and $8 million (unaudited) for the period ended December 31, 1996 and in 1997
through the date of acquisition, largely from tape-based systems. Recorded
losses for the same two periods were $2.9 million (audited) and $5.4 million
(unaudited), respectively.
Joe Tibbetts, chief financial officer, SeaChange International, commenting
on IPC Interactive's historical results of operations, noted that in August 1997
the company cut its spending levels by reducing its workforce by approximately
25% from over 80 employees to approximately 60.
"While we intend to continue providing IPC Interactive's services to its
installed base and selling its tape-based systems to third-party service
providers in certain markets, we expect that revenue growth will come from
selling new server-based systems to cable companies and larger hotels," said
Tibbetts.
Founded in 1993, SeaChange International, Inc., of Maynard, Mass.
(www.schange.com), is a leading provider of software-based products to manage,
store and distribute digital video for television operators and
telecommunications companies.
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SeaChange Acquires IPC Interactive/3
The Company's products automate the management and distribution of short and
long-form video streams including advertisements, movies, news updates and other
video programming requiring precise, accurate and continuous execution.
SeaChange's products are installed in hundreds of geographic markets and serve
more than 12,000 television channels worldwide.
# # #
MediaCluster, Guestserve Network and MeTIL are trademarks of SeaChange
International, Inc.
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 Company's
ability to integrate the operation of IPC Interactive; fluctuations in demand
for the Company's products and services; the Company's ability to manage its
growth; the Company's ability to develop, market and introduce new and enhanced
products and services on a timely basis; the rapid technological change which
characterizes the Company's markets; the Company's significant concentration of
customers; the Company's dependence on certain sole source suppliers and third-
party manufacturers; the risks associated with international sales as the
Company expands its markets; and the ability of the Company to compete
successfully in the future. 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 dated
March 28, 1997. Any forward-looking statements should be considered in light of
those factors.
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