Posts Tagged ‘Michael Wellesley-Wesley’

ChyronHego CEO to Step Down at End of 2013

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Sep 04 2013

Michael Wellesley-Wesley, who has served as CEO of Chyron (now ChyronHego) for the past 10 years, will retire at the end of 2013, when his current employment agreement expires.  He will remain on the company’s board of directors.

Wellesley-Wesley will be replaced as CEO by current ChyronHego president Johan Apel, who was the chairman and CEO of Hego AB prior to Chyron’s merger with Hego earlier this year.

“The recent completion of the combination of Chyron and Hego unites two pioneering companies to create a global leader in broadcast graphics creation, playout and real-time data visualization,” said Wellesley-Wesley. “This is a truly transformative leap forward, and it presents an appropriate opportunity to define an orderly succession whereby the leadership responsibilities for the combined company transfer to Johan Apel. Johan is superbly well qualified to develop and execute the vision, the strategies and operating concepts for ChyronHego in ways that will allow us to simultaneously address the evolving needs of customers and the expectations of our shareholders.”

According to his most recent employment contract, Wellesley-Wesley receives a base salary of $482,850 per year, as well as incentive bonus.

Wellesley-Wesley is also eligible for bonus payments under Chyron’s 2013 Management Incentive Compensation Plan, which is triggered if the company achieves certain GAAP revenue and budgeted non-GAAP cash flow targets. According to this plan Wellesley-Wesley is eligible to receive up to 70% of his base salary, or $337,995, if both targets are met at the 100% level.  If these targets are exceeded, by 25% or more the payout will increase by an additional 50 percent.

In August 2013, the company disclosed that during the first half of fiscal 2013, excluding the results of operations for Hego, which was acquired on May 22, 2013, Chyron achieved 106% of the target first half of 2013 GAAP-basis revenues objective and achieved 366% of the target first half of 2013 non-GAAP cash flow objective.  As a result, Wellesley-Wesley “earned an incentive compensation award of $221,231, of which the company remitted payroll withholding taxes on his behalf of $91,191 and paid him the balance of $130,040 in company common stock, based on the August 6, 2013 closing market price of $1.59 per share, resulting in the issuance of 81,786 shares.”

At that same time, Chyron terminated the 2013 Management Incentive Compensation Plan, and published a new management incentive compensation plan for the second half of 2013.  This was done to include new executive officers and management and align the interests of all members of management, including certain members of management that became executive officers of the Company upon the consummation of the business combination with Hego during the second quarter of 2013.

The targets for the new plan are also based on “budgeted GAAP-basis revenues for the second half of the fiscal year ending December 31, 2013, and budgeted Non-GAAP cash flows from operating activities for the second half of the fiscal year ending December 31, 2013.

If both targets are achieved, Wellesley-Wesley is eligible for 70% of his base salary, or $168,998 (at 100% achievement of both performance conditions).

Chyron reported a net loss of $2.1m in the second quarter of 2013 on revenue of $10.7m, up 39% versus the same period a year ago, and up 34% versus the previous quarter.

The company’s net loss and operating loss in the second quarter of 2013 were both impacted by transaction costs associated with Chyron’s merger with Hego AB. The company says that when one-time costs,  including Hego merger-related expenses, restructuring costs and a valuation adjustment for contingent consideration related to the Hego merger in second quarter results, it posted net income of $800,000, and an operating profit of $900,000.

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Related Content:

Press Release: Press Release: ChyronHego CEO Michael Wellesley-Wesley to Retire Effective December 31, 2013; Board Selects Johan Apel as Successor

Michael Wellesley-Wesley Employment Agreement with Chyron Corporation

Chyron Corporation: 2013 Management Incentive Compensation Plan

ChyronHego Corporation Second Half of 2013 Management Incentive Compensation Plan

ChyronHego Avoids NASDAQ Delisting as Shareholder Equity Rises After Merger

Hego Merger Drives 39 Percent Revenue Increase for Chyron in Q2 2013

Chyron – Hego Stock Purchase Agreement

More Broadcast Vendor M&A: Chyron to Acquire Hego Group in All-Stock Deal

Michael Wellesley-Wesley Change in Control Agreement – May 23 2013

Michael Wellesley-Wesley Change in Control Agreement – November 19, 2012

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ChyronHego Avoids NASDAQ Delisting as Shareholder Equity Rises After Merger

Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results, SEC Filings | Posted by Joe Zaller
Aug 13 2013

ChyronHego, said in a regulatory filing that the company believes that it has regained compliance with NASDAQ Listing Rule 5450(b)(1)(A), which requires companies listed on the NASDAQ Global Market to maintain a minimum of $10,000,000 in stockholders’ equity.

On August 9, 2013, Chyron received a letter from NASDAQ stating that the Exchange has determined Chyron now complies with the continued listing requirement for shareholders’ equity, subject to the Chyron providing evidence of its compliance upon filing its quarterly report on Form 10-Q for the quarter ended June 30, 2013.

This notification formally puts to rest an issue that Chyron has been dealing with for the past six months.

In March 2013, Chyron received notice of potential delisting from NASDAQ because its stockholder’s equity has fallen below the minimum $10m threshold set by rules of the Exchange.

At that time, Chyron explained that its stockholder’s equity fell below the $10m threshold at the end of 2012 because it took a $19.5m accounting charge against deferred tax assets. Because this allowance reduced the company’s shareholders’ equity by $19.5m, Chyron company ended the year 2012 with shareholders’ equity of about $1.9m, which put it in violation of NASDAQ’s listing requirement.

In accordance with NASDAQ Listing Rules, Chyron had 45 calendar days from the date of the notice to submit to NASDAQ a plan to regain compliance with its listing requirement.

In April 2013 Chyron submitted to NASDAQ its plan to regain compliance with the minimum stockholders’ equity requirement. NASDAQ granted Chyron an extension to regain compliance with the stockholders’ equity requirement until August 15, 2013, by which date the company will be required to file its quarterly report on Form 10-Q for the quarter ended June 30, 2013.

A key factor in Chyron’s plan to regain compliance was the company’s then-proposed merger with Hego, which has now been successfully completed.

Under the terms of the Chyron – Hego Stock Purchase Agreement Chyron paid $1,000 in cash and issued 12,199,431 shares of its common stock to the former Hego stockholders in exchange for all of the issued and outstanding shares of Hego. The issuance of the 12,199,431 shares, at a value of $1.36 per share at the closing of the transaction, resulted in an increase in the Company’s shareholders’ equity of approximately $16.6m.

The company says that as a result of the Hego merger, and following the release of Chyron’s Q2 2013 results, its shareholders’ equity was approximately $17.9m June 30, 2013, comfortable above the minimum threshold set by NASDAQ.

Following the announcement of its Q2 2013 earnings, Chyron filed an 8-K with regulators that disclosing that it has received a letter NASDAQ  stating that once the company files its Form 10-Q for the period ended June 30, 2013, it will officially be compliant with all NASDAQ listing requirements.

In the same filing, Chyron published its management incentive compensation plan for the second half of 2013.  The company says that it terminated its previous 2013 incentive plan and adopted a new plan that include new executive officers and management and aligns the interests of all members of management, including certain members of management that became executive officers of the Company upon the consummation of the business combination with Hego during the second quarter of 2013.

On Chyron’s Q2 2013 earnings call, company CEO Michael Wellesley-Wesley briefly discussed the delisting, saying “As instructed by NASDAQ, we notified the SEC directly and, thus, the NASDAQ indirectly this morning via a current report on Form 8-K that was filed at the SEC before market opened of our compliance with NASDAQ’s minimum shareholders equity requirement and we now consider the matter closed.”

Wellesley-Wesley has long assured shareholders that the company would do whatever it takes to avoid delisting.

On the company’s Q1 2013 earnings call in May 2013 he said: “The bottom line is this – these shares are not going to be delisted. There are all kinds of ways that we can get back in compliance. We’ll make sure that we don’t get delisted.”

With this latest filing, it looks as though Wellesley-Wesley has made good on his promise to ChyronHego shareholders.

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Related Content:

Chyron 8-K Filing: Notice of Renewed Compliance with NASDAQ Listing Rule 5450(b)(1)(A)

Chyron 8-K Filing: Company believes it has regained compliance with NASDAQ’s shareholders’ equity requirement

ChyronHego Corporation: Second Half of 2013 Management Incentive Compensation Plan

Hego Merger Drives 39 Percent Revenue Increase for Chyron in Q2 2013

Chyron Q2 2013 Earnings Call Transcript

Chyron Revenue Up 2 Percent in Q1 2013, Gives Update on Merger, Layoffs, and Potential NASDAQ Delisting

Chyron Lays Off 20 Employees, Says it will Save $3 Million per Year

Chyron Receives Another Delisting Notice From NASDAQ

More Broadcast Vendor M&A: Chyron to Acquire Hego Group in All-Stock Deal

Chyron – Hego Stock Purchase Agreement

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Hego Merger Drives 39 Percent Revenue Increase for Chyron in Q2 2013

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Aug 12 2013

Broadcast graphics specialist Chyron reported that its revenue for the second quarter of 2013 was $10.7m, up 39% versus the same period a year ago, and up 34% versus the previous quarter.

These results include revenue from Hego, which was acquired by Chyron, from May 22, 2013 through June 30, 2013.

Excluding the $2.3m contribution from the sales of Hego products and services, the company’s revenue was up $700,000 or 9 percent, versus the same period a year ago.

The net loss for the quarter was $2.1m, or $0.09 per share, compared to a net loss of $630,000 or $0.04 per share last year, and a net loss of $921,000, or $0.05 last quarter (Chyron issued new share as part of the Hego merger process).

The operating loss for the second quarter of 2013 was $1.9m, compared to an operating loss of $1.1m for the same period last year, and an operating loss of $810,000 last quarter.

The company’s net loss and operating loss were both impacted by transaction costs associated with Chyron’s merger with Hego AB. The company says that when one-time costs,  including Hego merger-related expenses, restructuring costs and a valuation adjustment for contingent consideration related to the Hego merger in second quarter results, it posted net income of $800,000, and an operating profit of $900,000.

Service revenue in the second quarter of 2013 was $3.97m in the quarter, or 37% or total revenue.  Product revenue in the quarter was $6.74m.

Because the company did not break out the percentage of product versus service revenue from Hego, it is difficult to do a direct comparison with previous periods.

In the first quarter of 2013, the company’s revenue was split 75%/25% in favor of product sales.

Gross margins for the quarter were 68.4%, down from 69.2% last year, and down from 71% last quarter.

Operating expenses for the second quarter of 2013 were $9.2m. up 44% versus the same period a year ago, and up  41% versus the previous quarter.

R&D costs in the quarter were $2.3m, up 21% versus the same quarter last year, primarily due to the inclusion of $400,000 in Hego R&D expenses.

Sales and marketing expenses were $3.3m, down 6% versus the second quarter 2012, primarily due to inclusion of $200,000 of Hego costs, and $20,000 in expense from amortization of intangibles from the Hego merger, offset by a $600,000 decrease in Chyron &M expenses.

G&A expenses in the quarter were $3.6m, an increase 260% versus last year.  The company attributed the big jump in G&A coasts to inclusion of $300,000 in Hego G&A expenses and a $2.3m increase in Chyron G&A expenses, including $1.6m of merger-related expenses, severance costs of $600,000, and equity-based compensation of $400,000.

The company ended the quarter with $2.19m in cash, down from $2.3m last quarter.

“The second quarter was a pivotal quarter in the formation of ChyronHego,” said ChyronHego CEO Michael Wellesley-Wesley. “Having effected an extensive rebranding, we presented the combined company to our customers at the NAB tradeshow in April and received a very encouraging response. In early May, 2013, we eliminated a number of Chyron positions primarily in the United States, thus completing a restructuring initiative that began in 2012, and on May 22, 2013, we formally completed our merger with Hego AB to form ChyronHego. We’ve now been conducting business as a brand new company for just over two months. We have won significant new business in terms of product sales with BT Sport and ITV Regional News in the UK and major US and LatAm networks, as well as with US TV Station Groups. In the area of multi-year sports production services contracts, Hego announced its largest ever contract with the German Soccer League, during the quarter. I am optimistic regarding our business prospects for the second half of 2013.

“The strategic thinking underpinning the creation of ChyronHego is to create a market leading company in the fields of TV Graphics, Data Visualization and Production Services for ‘Live’ TV and Online News and Sports production. This merger creates a strong, global graphics company that is committed to innovation and to evolving existing products and services to support our customers in the future. Our second quarter financial results were inevitably impacted by one-time cash and non-cash expenses associated with the transaction. We anticipate that the compelling financial logic for the transaction will become clearer as we progress through the second half of 2013 and into 2014.”

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Related Content:

Press Release: ChyronHego Reports Financial Results for the Second Quarter Ended June 30, 2013

Previous Quarter: Chyron Revenue Up 2 Percent in Q1 2013, Gives Update on Merger, Layoffs, and Potential NASDAQ Delisting

Previous Year: Chyron Revenue Declines 18 Percent in Q2 2012

Chyron Lays Off 20 Employees, Says it will Save $3 Million per Year

Chyron Receives Another Delisting Notice From NASDAQ

More Broadcast Vendor M&A: Chyron to Acquire Hego Group in All-Stock Deal

Chyron – Hego Stock Purchase Agreement

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Chyron Revenue Up 2 Percent in Q1 2013, Gives Update on Merger, Layoffs, and Potential NASDAQ Delisting

Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results, SEC Filings | Posted by Joe Zaller
May 10 2013

Broadcast graphics specialist Chyron reported that its revenue for the first quarter of 2013 was $8.01m, up 2% versus the same period a year ago, and up 8% versus the previous quarter.

The net loss for the quarter was $921,000, or $0.05 per share, compared to a net loss of $951,000, or $0.06 per share last year, and a net loss of $20m, or $1.17 per share, last quarter, when the company took a $19.5m valuation allowance against the company’s deferred tax assets (see below for implications).

The operating loss for the first quarter of 2013 was $810,000, compared to an operating loss of $1.074m last year, and an operating loss of $570,000 last quarter.

The company’s net loss and operating loss were both impacted by transaction costs associated with Chyron’s pending merger with Hego AB, which was announced in March 2013. Excluding Hego transaction costs, net loss would have been $220,000, and the operating loss would have been $110,000.

The company’s service revenue, which includes the sales of its AXIS cloud-based graphics service, maintenance agreements, training and creative services was $2.04m in the quarter, or 25% or total revenue. This is a decrease of 2% versus the same period a year ago, and a decrease of 7% versus the previous quarter.  The company the lower service revenue to lower revenues from training and other professional services offset by increased sales of software and hardware maintenance contracts for broadcast graphics products.

Product revenue in the quarter was $5.97m (75% of total revenue), an increase of 3% versus Q1 2012, and an increase of 15% versus last quarter.  The company said it experienced a slight increase in product revenue as a result of an improvement in market share in Asia and a major program upgrade in our European market. However, sales fell in North America, due to price competition and weak demand. Sales in Latin America also declined during the quarter.

Gross margins for the quarter were 71%, up from 70% last year, and up from 69.1% last quarter.

Operating expenses for the first quarter of 2013 were $6.53, up 1% compared to last year, and up 15% versus the previous quarter. Excluding Hego transaction costs, operating expenses would have been $5.84m, or 12% lower than the same period a year ago.

Last quarter, Chyron combined its reporting of sales and G&A expenses.  This quarter it did not break out its expenses at all, making it difficult to determine the full impact of the cost-cutting exercise that the company embarked upon several quarters ago.  However, the company did say that its expenses in both research and development and sales and marketing, were essentially flat with the previous year when Hego transaction costs are excluded.

The company ended the quarter with $2.3m in cash, versus $2.4m last quarter.

 

Update on Latest Round of Staff Layoffs

Prior to the release of its Q1 2013 earnings, Chyron disclosed that it has cut the size of its workforce by 20 employees as part of a reorganization plan designed to “reduce operating expenses while maintaining its focus on strategic initiatives.”

The company says that it will take a charge of approximately $950,000 in Q2 2013 to cover the cost of the staff reduction, and that these actions will result in savings of approximately $3m on an annualized basis, beginning in the third quarter of 2013.

Chyron has reduced the size of its employee base by more than 30% since the end of Q1 2012.  At that time, the company had 126 employees.  There were 107 employees at the end of Q1 2013; and there are now 86 employees following the latest round of staff cuts.

Chyron CEO Michael Wellesley-Wesley told investors that the layoffs came after “eight weeks of very, very rigorous studying and discussion as to where these changes should be made,” and that the cuts were made “across the board.”

According to Wellesley-Wesley, the only departments not impacted by the layoffs were the company’s customer service department and customer-facing product specialists. Sales, engineering, internal administration, and “quite a layer of mid and senior management figures were affected,” he said.

The company will gain an additional 90 – 100 full-time employees following the completion of its pending merger with Hego AB.

 

Update on Potential Nasdaq Delisting:

In March 2013, Chyron received a letter from The NASDAQ Stock Market notifying the company that it is no longer in compliance with the minimum stockholders’ equity requirement for continued listing on the NASDAQ Global Market because its stockholder’s equity has fallen below the minimum $10m threshold set by NASDAQ Listing Rule 5450(b)(1)(A).

If it does not regain compliance with the Rule, Chyron’s shares could be delisted from Nasdaq.

On the company’s earnings call, Wellesley-Wesley said that the company’s stockholders equity fell below this level at the end of the previous quarter as the result of the company taking a $19.5m valuation allowance against the company’s deferred tax assets (described above).

Wellesley-Wesley said that because this allowance reduced the company’s shareholders’ equity by $19.5m, the company ended the year 2012 with shareholders’ equity of about $1.9m, which put it in violation of Nasdaq’s listing requirement.

Wellesley-Wesley said the company has filed a plan of compliance with Nasdaq, and that a primary element of this plan is the company’s proposed merger with Hego, which the company believes will bring with it enough shareholders’ equity to bring the company’s total about $10m.

However, Wellesley-Wesley cautioned that regaining compliance with Rule 5450(b)(1)(A) was not a certainty because of additional one-time charges will be recorded in the second quarter of 2013.  These include a charge of approximately $950,000 for the headcount reduction that the company enacted at the beginning of May 2013,  and a second charge of approximately $1.3m due to the early vesting of equity awards upon the closing of  the Hego transaction.

Nevertheless, Wellesley-Wesley assured shareholders: “The bottom line is this – these shares are not going to be delisted. There are all kinds of ways that we can get back in compliance. We’ll make sure that we don’t get delisted.”

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Related Content:

Press Release: Chyron Reports Financial Results for the First Quarter 2013

Previous Quarter: Chyron Posts Another Loss in Q4 2012 as Revenue Continues to Decline

Previous Year: Revenue and Losses Up at Chyron in Q1 2012

Chyron Lays Off 20 Employees, Says it will Save $3 Million per Year

Chyron Receives Another Delisting Notice From NASDAQ

More Broadcast Vendor M&A: Chyron to Acquire Hego Group in All-Stock Deal

Chyron – Hego Stock Purchase Agreement

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Chyron Lays Off 20 Employees, Says it will Save $3 Million per Year

broadcast technology market research | Posted by Joe Zaller
May 08 2013

Broadcast Graphics specialist Chyron Corporation said it has cut the size of its workforce by 20 employees as part of a reorganization plan designed to “reduce operating expenses while maintaining its focus on strategic initiatives.”

The company estimates that it will save approximately $3m on an annualized basis as the result of the layoffs, beginning in the third quarter of 2013.

All terminated employees will receive severance pay and benefits, as well as an adjustment in the terms of their stock option and/or restricted stock unit (“RSU”) equity awards outstanding on their termination date. The affected employees’ RSU awards will be modified to state that they will vest on June 24, 2013 if the impacted employee signs a separation agreement from the company.

The company says that expenses for severance, benefits and changes in equity awards will be approximately $950,000, with severance benefits accounting for about $600,000, and costs relating to the changes in the equity awards making up the remainder.

These charges will be recorded as an expense in Q2 2013.

These new staff cuts continues the trend that stated in Q3 2013, when Chyron appeared to shift from its previous strategy of increasing engineering, sales, and marketing expenses in anticipation of increased revenue from both new products and cyclical spending from broadcasters gearing up for the 2012 Olympics and presidential elections.

In anticipation  of a strong 2012 Chyron increased its spending across the board, and by the first quarter of 2012 the company’s operating expenses had jumped 20% versus the previous year, including 31% y/y increase in sales and marketing costs, and a 19% y/y increase in R&D spending.

However, when the anticipated new revenues had not materialized by the third quarter of 2012, Chyron CEO Michael Wellesley-Wesley told investors on the company’s Q3 2012 earnings call: “I can assure you that we’ve taken and will continue to take the appropriate steps to align our operating expenses with the current business climate.”  At that time, Wellesley-Wesley said the company had scaled back investments in product development and that the company would also be reducing headcount.  On the company’s Q3 2012 earnings call Wellesley-Wesley told analysts “about 60% of our costs are related directly to people and so it’s difficult to make meaningful reductions in expense — operating expenses — without addressing that fact. The steps we’ve taken will certainly reduce OpEx by 5% or more going forward and you will begin to see the real impact of that take effect in Q1 next year.”

With the announcement of the latest round of layoffs, Chyron is now saying that the impact of these additional cuts will begin to materialize in Q3 2013.

For the full year 2012, Chyron had revenue of $30.2m, down 4% versus 2011, and recorded a net loss of $22.3m, or $1.31 per share. $19.5m of the company’s net loss was valuation allowance against the company’s deferred tax assets.

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Related Content:

Chyron 8K Filing: Discloses Staff Reduction

More Broadcast Vendor M&A: Chyron to Acquire Hego Group in All-Stock Deal

Chyron Posts Another Loss in Q4 2012 as Revenue Continues to Decline

Chyron Cuts Expenses as Revenue Declines 3 Percent in Q3 2012

Chyron Q3 2012 Earnings Call Transcript

 

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More Broadcast Vendor M&A: Chyron to Acquire Hego Group in All-Stock Deal

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Mar 11 2013

Chyron announced that it has signed a definitive agreement to acquire Stockholm-based Hego Group, a provider of graphics and data visualization solutions for TV and sports, in an all-stock deal.

The company’s referred to the deal as a merger in its press release, and announced that it will rename the combined company ChyronHego.

Hego Group chairman and CEO Johan Apel, will become president and COO of ChyronHego, and will also get a seat on the company’s board of directors. . Michael Wellesley-Wesley, president and CEO of Chyron, will remain as ChyronHego CEO.

 

All Stock Deal with Three-Year Earn-Out

Under the terms of the deal, Chyron will issue a number of shares of Chyron common stock which will represent 40% of its aggregate shares of common stock outstanding, including certain outstanding options, after the closing, in exchange for all of Hego’s outstanding capital stock.

The deal also includes an earn-out provision whereby Hego shareholders will be entitled to receive additional shares of Chyron stock (up to a total of 50% of the aggregate shares outstanding) for achievement of certain revenue milestones during 2013, 2014 and/or 2015.

 

Combined Company Financials

Hego, which has about 100 employees, had revenue of $14.8m in 2012, up 37 percent from 2011.  Hego posted an operating profit of $1.6m in 2012.

Chyron posted an operating loss of $3.7m in 2012 on revenue of $30.2m

This implies the total 2012 performance of the enlarged company was revenue of approximately $45m, and an operating loss of $2.1m.

 

“The merger of Chyron and Hego brings together two pioneering companies to create a global leader in broadcast graphics creation, playout, and real-time data visualization. This is a truly transformative transaction for Chyron,” said Michael Wellesley-Wesley. “By combining the teams and resources of Chyron and Hego, we will deliver to our customers a highly diverse and compelling broadcast graphics capability.”

“With this merger, we are looking forward to integrating Hego and Chyron solutions and working together to innovate new products and services,” stated Johan Apel, chairman and CEO of Hego Group. “Our objective is to develop powerful, easy-to-use solutions for sports, news and live TV. Hego has grown quickly over the last few years but this merger takes us to a whole new level, especially in North and South America where our offerings have been generating significant interest. We’re excited about this combined company and I believe that our customers are the real beneficiaries.”

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Related Content:

Press Release: Chyron to Acquire Hego Group

Chyron Posts Another Loss in Q4 2012 as Revenue Continues to Decline

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Chyron Posts Another Loss in Q4 2012 as Revenue Continues to Decline

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Mar 11 2013

Broadcast graphics specialist Chyron reported that its revenue for the fourth quarter of 2012 was $7.4m, down 9% versus the same period a year ago, and up 2% versus the previous quarter.

The net loss for the quarter was $20m, or $1.17 per share, versus a net loss of $400,000 or $0.02 per share last year, and a net loss of $3.49m, or $.21 per share. Included in the $20m net loss was a $19.5m valuation allowance against the company’s deferred tax assets.

The company’s operating loss for the fourth quarter of 2012 was $570,000, versus an operating loss of $430,000 last year, and operating loss of $1m last quarter.

Chyron CEO Michael Wellesley-Wesley described called the company’s Q4 2012 performance “somewhat disappointing” but said they were “in line with our experience of 2012 as a whole and similar from an end user demand standpoint to conditions being reported by [Vizrt].”

Wellesley-Wesley said demand for the company’s products and services “weakened in the second half of 2012 and didn’t have a meaningful recovery in the fourth quarter.”

 

Product revenue in the fourth quarter was $5.2m (70% of total revenue versus 67% last quarter) down 13% versus the same period a year ago, and up 7% versus the previous quarter.

Service revenue in the quarter which includes the sales of its AXIS cloud-based graphics service, maintenance agreements, training and creative services was $2.2m, up 6% versus last year, and down 8% versus last quarter.

Service revenue contributed 30% of total revenue, versus 25% last year, and 33% of total revenue last quarter.

Gross margins for the fourth quarter were 69.1%, down from 71.4% last year, and up from 67.9% last quarter.

Operating expenses for the fourth quarter were $5.7 compared to $6.2m last year, and $5.9m last quarter. R&D expenses for the quarter were $1.76m, flat with last year and  down 4% versus last quarter. SG&A expenses for the quarter were $3.93m, down 12% versus last year. Interestingly, Chyron combined their reporting of sales and G&A expenses this quarter, making it the first time in recent memory that the two were not provided separately.  This also makes it difficult to determine the full impact of the cost-cutting exercise that Chyron appears to have implemented last quarter.

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Full Year Results

For the full year 2012, the company’s revenue was $30.2mm, down 4% versus 2011.

The net loss for the full year 2011 was $22.3m. or $1.31 per share million compared to a net loss of $4.2m or $0.26 per share in full year 2011, including the $19.5m provision mentioned above.

On an operating basis, the loss for the year was $3.7m, compared to a net loss of $1.95m in 2011.

Gross margins for the full year 2012 were 69.2% down from 70% in 2011. Operating expenses for year were $24.7m, up 2% versus 2011.  The company said this primarily driven by 10% higher research and development expenses and 4% higher sales and marketing expenses, offset somewhat by 12% lower general and administrative expenses.

Full year revenue from services was $8.5m, up 11% versus 2011. Service revenues as a percentage of total revenues for 2012 were 28% as compared to 24% in 2011.

Product revenue for the year was $21.7m, a decrease of 9% versus 2011. Product revenues as a percentage of total revenues for 2012 were 72% as compared to 76% in 2011.

Chyron finished the year with $2.48m, in cash, down from $4.22m last year.

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Wellesley-Wesley offered an honest assessment of the company’s position, saying “We believe that revenue growth in our traditional mature segments is achievable only through competitive wins and the current depressed and price competitive environment suggests that we will need to move in a different direction for us to rebuild shareholder value. Our industry will consolidate over the next 2-3 years in response to the rapid technology changes currently impacting the broadcast space. There are pockets of strong growth that we need to address and the best way to achieve growth is through alliances, partnerships and acquisitions.”

This was a nice segue into the company’s separate announcement that it has merged with Hego in an all stock transaction.

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Related Content:

Press Release: Chyron Reports Financial Results for the Fourth Quarter and Full Year 2012

Press Release: Chyron to Acquire Hego Group

Rising Share Price Helps Chyron Avoid NASDAQ Delisting

Chyron Receives Notice of Potential Delisting From NASDAQ

Previous Quarter: Chyron Cuts Expenses as Revenue Declines 3 Percent in Q3 2012

Previous Year: Chyron Grows Top Line 15% in Q4 2011, But Losses Persist

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Chyron Receives Notice of Potential Delisting From NASDAQ

Broadcast technology vendor financials, SEC Filings | Posted by Joe Zaller
Nov 13 2012

Broadcast graphics specialist Chyron reported that it has received notification of potential delisting from the Nasdaq Stock Market because it no longer complies with NASDAQ Listing Rule 5450(a)(1) (the “Minimum Bid Price Rule”), as the bid price of the Company’s common stock closed below the minimum $1.00 per share for the 30 consecutive business days.

Chyron has an initial grace period of 180 days, or until May 6, 2013, to regain compliance with the Minimum Bid Price Rule. If it is not able to do this, NASDAQ will provide written notification to Chyron that its common stock will be delisted.

In order for Chyron to regain compliance, the company’s common stock must close at or above $1.00 per share for a minimum of 10 consecutive business days at any time before May 6, 2013.

Chyron says it “intends to monitor the bid price for its common stock between now and May 6, 2013 and will consider various options available to the Company if its common stock does not trade at a level that is likely to regain compliance.” The company said that it may appeal NASDAQ’s delisting determination, and that it may also be eligible for an additional grace period of 180 days if it satisfies all of the requirements of NASDAQ Listing Rule 5505, other than the minimum bid price requirement.

Chyron’s shares fell more than 10% to $0.50 on the news.  The company’s stock price has been below $1 since October 1, 2012, and is currently at the lowest level in the company’s history according to this chart.

Last week on its Q3 2012 earnings call, Chyron Michael Wellesley-Wesley was asked about the potential for the company’s shares to be delisted.  Wellesley-Wesley responded by saying that one NASDAQ’s listing requirements “is that the bid price shouldn’t drop below $1 for more than 30 days and we’re now at around that point. The next step would be to receive some notification from NASDAQ that is the case and that is of concern to them. And then there is a long process of discussion with NASDAQ, who I don’t think are keen to delist any companies and there are certainly many strategies and ways that we could avoid that happening and it is a three to six months process and so nothing is going to happen quickly.”

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Related Content:

Chyron 8-K Filing: Notice of Potential Delisting From Nasdaq

Chyron Cuts Expenses as Revenue Declines 3 Percent in Q3 2012

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Chyron Cuts Expenses as Revenue Declines 3 Percent in Q3 2012

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Nov 08 2012

Broadcast graphics specialist Chyron reported that its revenue for the third quarter of 2012 was $7.25m, down 3% versus the same period a year ago, and down 6% versus the previous quarter.

The net loss for the quarter was $700,000, or $0.04 per share, versus a net loss of $3.49m, or $.21 per share last year, and a net loss of $600,000 last quarter. The company’s operating loss for the quarter was $1m, versus an operating loss of $870,000 last year, and operating loss of $1.1m last quarter.

Chyron CEO Michael Wellesley-Wesley attributed the ongoing losses to “a slowdown in our product revenue stream as a result of delays in spending as broadcasters emphasize cost control and reschedule their capital expenditures. This decline was experienced in North America and more markedly in Europe where many countries’ economies have stalled.”

Investors sent the shares lower on the results.  Chyron’s share price has been below $1 since October 1, 2012, prompting speculation that it may be delisted from public markets.
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Product revenue in the third quarter was $4.86m (67% of total revenue) down 16% versus the same period a year ago, and down 9% versus the previous quarter.
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Service revenue in the quarter which includes the sales of its AXIS cloud-based graphics service, maintenance agreements, training and creative services was $2.39m, up 13% versus both the previous year and the previous quarter, despite a decline in creative services revenue.

Service revenue contributed 33% of total revenue, versus 28% last year, and 26% of total revenue last quarter.

Gross margins for the third quarter were 67.9%, down from 69.0% last year, and 69.2% last quarter.  The company attributed the decrease in gross margins to product mix and sales discounting.

Operating expenses for the third quarter were $5.9 compared to $6m last year, and $6.4m last quarter. R&D expenses for the quarter were $1.82m, up 4% versus last year, and down 4% versus last quarter. Sales & market expenses for the quarter were $3.1m, down 8% versus last year, and down 11% versus last quarter. G&A expenses in the quarter were $.99m down 8% versus last year and flat with the previous quarter.

 

Cost Cutting Program Indicates Shift in Strategy

Based on these lower q/q OpEX numbers, it looks as though Chyron implemented a cost-cutting program during the quarter.

If this is the case, it is a reversal of the strategy Wellesley-Wesley put in place last year when the company began ramping  up its expenses in anticipation of increased revenue from both new products and cyclical spending from broadcasters gearing up for the 2012 Olympics and presidential elections.

For example, in November 2011, company CEO Michael Wellesley-Wesley confidently stated that Chyron had made some “strategic hires for key sales positions, [and] going forward we anticipate further improvements in 2012, especially in the domestic market owing to factors associated with the 2012 Olympics and the upcoming Presidential election. Internationally, we are looking for an increased contribution from our EMEA and Latin America operations as a result of the increased headcount in the sales department that have been put in place this year.”

In anticipation  of a strong 2012 Chyron increased its spending across the board, and by the first quarter of 2012 the company’s operating expenses had jumped 20% versus the previous year, including 31% y/y increase in sales and marketing costs, and a 19% y/y increase in R&D spending.

On a year-to-date basis, the company’s operating expenses are 6% higher than during the first nine months of 2011, despite revenue being 3% lower. For the first nine months of 2012, the company’s R&D expenses are up 13%, and its sales and marketing costs are up 12% respectively versus the previous year. There has been a YTD 16% decline in G&A, however this is primarily due to the lower legal costs as described in the company’s conference call last quarter.

However now three quarters of 2012 are behind us, it appears that the anticipated revenue increases have not materialized, causing Wellesley-Wesley to shift strategies.  On the company’s earnings call he told investors “I can assure you that we’ve taken and will continue to take the appropriate steps to align our operating expenses with the current business climate.” He also said product investment be scaled back, and that the company would also have staff layoffs.

Wellesley-Wesley told analysts “about 60% of our costs are related directly to people and so it’s difficult to make meaningful reductions in expense — operating expenses — without addressing that fact.”  Chyron parted ways with its CMO immediately after the IBC tradeshow in September, and is clearly taking other measures to contain cost, including additional layoffs.

When describing the projected impact of the cost reduction exercise, Wellesley-Wesley told analysts “the steps we’ve taken will certainly reduce OpEx by 5% or more going forward and you will begin to see the real impact of that take effect in Q1 next year.

Wellesley-Wesley summed up the quarter in company’s press release saying, “Our third quarter revenues of $7.25m were 3% below the comparable period in 2011. This continues the pattern of nearly flat year over year comparisons we experienced in the first half. As is the case for other companies in our industry we have experienced a slowdown in our product revenue stream as a result of delays in spending as broadcasters emphasize cost control and reschedule their capital expenditures. This decline was experienced in North America and more markedly in Europe where the economy has stalled. This was offset somewhat by improvements in our Asian and Latin American markets. Our services revenues grew 13% year over year with the result that services accounted for 33% of total revenues in the third quarter. We have taken steps to align our operating expenses with the current business climate.”

 

 

Year-to-Date Results

For the first nine months of 2012, Chyron’s revenue was $22.81m, down 3% versus the same period last year.

The net loss for the first nine months was $2.28m, or -$0.13 per share, compared to a net loss of $3.85m, or -$0.23 per share, last year.  The operating loss for the first nine months of 2012 was $3.18m, compared to an operating loss of $1.51m for the first nine months of 2011.

 

 

Low Share Price Could Lead to Potential Delisting

Chyron’s shares fell 12%, to $0.65 the day after its Q3 2012 results were released.  The company’s stock price has been below $1 since October 1, 2012, and is currently at the lowest level in the company’s history according to this chart.

On the earnings call the company was asked whether the low share price may lead to its delisting from public markets.  Wellesley-Wesley acknowledged that one NASDAQ’s listing requirements “is that the bid price shouldn’t drop below $1 for more than 30 days and we’re now at around that point. The next step would be to receive some notification from NASDAQ that that is the case and that is of concern to them. And then there is a long process of discussion with NASDAQ, who I don’t think are keen to delist any companies and there are certainly many strategies and ways that we could avoid that happening and it is a three to six months process and so nothing is going to happen quickly.”

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Related Content:

 

Press Release: Chyron Reports Financial Results for the Third Quarter and First Nine Months of 2012

Previous Quarter: Chyron Revenue Declines 18 Percent in Q2 2012

Previous Year: Chyron Posts Net Loss in Q3 2011 Despite Growing Revenue Nine Percent

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Chyron Revenue Declines 18 Percent in Q2 2012

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Aug 09 2012

Broadcast graphics specialist Chyron reported that its revenue for the second quarter of 2012 was $7.7m, down 18% versus the same period a year ago, and down 3% versus the previous quarter.

Revenue in North America declined 27% versus last year when the company had a large one-off order that was not repeated. 

International revenue grew 9% versus last year.  EMEA revenue was down in the quarter but this was offset by gains in Latin America and APAC, which the company said each increased considerably on a percentage basis versus the previous year.

The net loss for the quarter was $600,000, versus net income of $100,000 last year, and a net loss of $951,000 last quarter. The company’s operating loss for the quarter was $1.1m, versus an operating profit of $200,000 last year, and operating loss of $1.074m last quarter

Gross margins for the quarter were 69.2%, down from 69.6% last year, and down from 70% from last quarter.

Operating expenses in the quarter were $6.4m, down slightly from last year. R&D expenses for the quarter were $1.9m, up 17% versus last year.  Sales & market expenses for the quarter were $3.5m, up 9% versus last year.  G&A expenses in the quarter were $1m, down by 33% versus last year, due primarily to reduced fees for legal and professional fees.

The company’s service revenue, which includes the sales of its AXIS cloud-based graphics service, maintenance agreements, training and creative services was $1.9m in the quarter, or 25% or total revenue. This is a decline of 5% versus the same period a year ago, and a decline of 10% versus the previous quarter.

Product revenue in the quarter was $5.8m, or 75% of total revenue for the quarter.  This represents a decline of 22% versus the same period a year ago, and flat with the previous quarter. 

 

Results for first six months of 2012

Revenue for the first six months of 2012 was $15.6m, down 3% from the same period a year ago.

Service revenues for the first half were $4.0m, or 26% of total revenue. This represents an increase of  13% over the prior year’s first half. Axis revenues increased 8% and maintenance agreements revenues increased 22%, but other services revenues decreased primarily due to a decline in creative services revenues. Product revenues for the first half were $11.6m, a 7% decline compared to the first half of 2011. Product revenues represented 74% and service revenues 26% of total revenues for the first half of this year as compared to 78% and 22%, respectively, for the first half of last year.

Net loss for the first half of 2012 was $1.6m, versus a net loss of $400,000 last year. The operating loss for the first half of the year was $2.2m, versus an operating loss of $600,000 in the first half of 2011.

Gross margins for the first half was 69.8%, flat with last year.

Operating expenses during the first half of the year were $13m, an increase of 10% versus last year. Increases of 18% in R&D expenses to $3.9m and 19% in sales & marketing expenses to $7m were somewhat offset by a 19% decline in General and Administrative expenses to $2.2m.

The company ended the quarter with $2.75m in cash, versus $4.2m six months ago.

 

“While the financial results of the second quarter did not meet our expectations, we expect that the second half of the year will produce improved operational and financial results,” said Chyron CEO Michael Wellesley-Wesley. The biggest impact was less than anticipated sales in our North American markets combined with the ongoing softness in Europe. We believe that purchasing managers are reacting to the potential for a second leg of the recession and becoming more conservative in their purchasing decisions.”

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Related Content:

Press Release:  Press Release: Chyron Reports Financial Results For The Second Quarter And First Six Months Of 2012

Previous Year: Chyron Turns First Profit Since 2008 As Second Quarter 2011 Sales Jump 36 Percent

Previous Quarter: Revenue and Losses Up at Chyron in Q1 2012

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