UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT,
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: February 4, 1999
CHYRON CORPORATION
(Exact Name of Registrant as Specified in Charter)
New York
(State or Other Jurisdiction
of Incorporation)
1-9014
(Commission File Number)
11-2117385
(I.R.S. Employer
Identification No.)
5 Hub Drive
Melville, New York
(Address of Principal Executive Offices)
11747
(Zip Code)
Registrant's telephone number, including area code: (516) 845-2000
Item 5. Other Events and Exhibits
Pursuant to Rule 135c promulgated under the Securities Act of
1933, as amended, the Registrant files, under cover of this 8-K, the text
of a public notice released by the Registrant on this date. The text of
such notice can be found as an exhibit attached hereto.
Exhibits Description
1 Press Release of the Registrant, dated February 4, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
CHYRON CORPORATION
By: /s/ Dawn Johnston
Name: Dawn Johnston
Title: Senior Vice President and
Chief Financial Officer
Date: February 4, 1999
CONTACT:
Edward Grebow,
President and Chief Executive Officer
(516) 845-2175
[email protected]
Dawn R. Johnston
Senior Vice President and Chief Financial Officer
(516) 845-2011
[email protected]
Chyron's Investor Relations:
Focus Partners LLC
Harvey A. Goralnick
(212) 752-9445
[email protected]
Chyron Website: www.chyron.com
CHYRON REPORTS 1998 YEAR-END AND FOURTH QUARTER RESULTS
Melville, NY February 4, 1999 Chyron Corporation (NYSE: CHY), the
world's premier manufacturer of television character generators, graphics,
routing and automation systems, today announced financial results for the
year and fourth quarter ended December 31, 1998.
Net sales for the year were $83.7 million compared to $86.8 million for
1997. The net loss for the year was $4.4 million, or $0.14 per share,
compared to a loss of $.8 million, or $0.02 per share, for 1997.
Net sales for the fourth quarter ended December 31, 1998 were $19.0 million
compared to $23.2 million in the comparable 1997 quarter. The net loss for
the fourth quarter of 1998 was $970 thousand, or $0.03 per share, compared
to net income of $632 thousand, or $0.02 per share, for the comparable
period in 1997.
"While we continue to be disappointed by the slow pace of sales and our
inability to achieve consistent profitability," commented Edward Grebow,
President and CEO, "we are encouraged by signs that America's conversion to
digital television is finally occurring. During the fourth quarter, 42
American broadcast stations commenced digital and HDTV transmission and
retailers started selling digital television sets. Chyron launched sales
of its Duet digital and HDTV graphics platform and has thus far sold 23
units for a total of $1.1 million. I am also encouraged in recent weeks by
the news that digital television sets are beginning to come down in price
and that additional broadcasters are starting digital transmission. We are
optimistic that this will translate into incremental Chyron sales during the
coming months and dramatic increases during coming years. Chyron remains
well positioned to be a significant beneficiary of the conversion to digital
television throughout the world."
Sales of Chyron's graphics products and Pro-Bel products in the U.S.
increased by $10 million during fiscal 1998 but were offset by reduced
international sales, largely in Asia and the U.K., and the loss of revenues
resulting from the sale in August 1998 of the Company's Trilogy division
which represented $2.4 million of the decline. Operating income declined
from $0.3 million in 1997 to an operating loss of $5.5 million in 1998.
Significant factors contributing to this change were an increase in
operating expenses resulting from enhanced R&D efforts to support the
digital and HDTV markets and increased costs associated with the continued
effort to improve customer service, partially offset by improved profit
margins due to a change in product mix. The net loss of $4.4 million
benefited from a gain of $1.2 million realized on the sale of Trilogy.
Consistent with the yearly results, the quarter was impacted by a softness
in sales in the international market and the loss of Trilogy revenues,
partially offset by an overall increase in U.S. sales of Pro-Bel and Chyron
graphics products. Chyron sales in the U.S. increased by 28% from the same
quarter a year ago. This was offset by a 39% decrease in sales outside the
U.S. Overall gross profit was lower by $2.2 million in the fourth quarter
of 1998 compared to the same period in 1997. Although there were improved
margins on sales of the Company's core products, these were offset by
greater than anticipated costs on one large customer contract. Operating
costs declined by $0.4 million to $9.4 million in the fourth quarter of 1998
compared to $9.8 million during the fourth quarter of 1997. Despite the
elimination of operating costs related to Trilogy and cost containment
initiatives instituted by management, these were offset to a lesser degree
by increased R&D costs. The $9.4 million of operating costs in the fourth
quarter of 1998 was lower than the $9.9 million of operating costs in the
third quarter of 1998, reflecting the continuous emphasis on cost reduction
and the elimination of Trilogy operating costs.
During December 1998, Chyron issued $1.1 million of 8% 5-year convertible
notes and is in the process of raising up to $10 million of additional long-
term convertible debt to fund continued research and development and reduce
the Company's reliance on bank debt. There can be no assurance that the
Company will be successful in its effort to raise such additional debt. The
notes will not be registered under the Securities Act of 1933 and may not
be offered or sold in the United States absent registration or an applicable
exemption from the registration requirements. Chyron's management believes
that now is a good time to position the Company for selective acquisitions
as the broadcast industry consolidates, and that strengthening Chyron's
balance sheet will facilitate that strategy.
Information set forth in this Press Release may constitute "forward-looking
statements" under the Private Securities Litigation Reform Act of 1995. In
order to comply with the terms of the safe harbor, the Company notes that
a variety of factors could cause the Company's actual results to differ from
the anticipated results. The risks and uncertainties that may affect the
Company's business include, without limitation, the following: product
concentration in a mature market, dependence on the emerging digital market
and the industry's transition to DTV and HDTV, resistance within the
broadcast or cable industry to implement DTV and HDTV technology, rapid
technological changes, new technologies that could render certain Chyron
products to be obsolete, a highly competitive environment, competitors with
significantly greater financial resources, and new product introductions by
competitors. Further information regarding these as well as other key risk
factors and meaningful cautionary statements that could affect the Company's
financial results are included at length in the Company's Form 10-K for the
fiscal year ended December 31, 1997, filed with the Securities and Exchange
Commission.
CHYRON CORPORATION
Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended Year Ended
December 31 December 31
Unaudited
1998 1997 1998 1997
Net sales $19,027 $23,153 $83,710 $86,774
Cost of products sold 10,419 12,327 44,250 46,944
Gross profit 8,608 10,826 39,460 39,830
Operating expenses:
Selling, general and
administrative 7,467 8,056 31,420 29,662
Research and
development 1,922 1,716 9,537 6,822
Restructuring and other
non-recurring charges - - 3,979 3,082
Total operating
expenses 9,389 9,772 44,936 39,566
Operating income (loss) (781) 1,054 (5,476) 264
Gain on Sale of Trilogy
Broadcast, Ltd. - - 1,194 -
Interest and other
expense, net (381) (67) (1,786) (1,242)
Income (loss) before
(benefit)provision
for income taxes (1,162) 987 (6,068) (978)
(Benefit) provision
for income taxes (192) 355 (1,621) (218)
Net income (loss) $ (970) $ 632 $ (4,447) $ (760)
Net Income (loss)
per share -
Basic and diluted $(0.03) $ 0.02 $ (0.14) $ (0.02)
