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 (date of earliest event reported): January 21, 2005

PINNACLE SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

California	000-24784	94-3003809
(State or other jurisdiction of incorporation)	(Commission File No.)	(I.R.S. Employer Identification No.)

280 North Bernardo Avenue

Mountain View, California 94043

(Address of principal executive offices)

Registrant’s telephone number, including area code: (650) 526-1600

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01 Completion of Acquisition or Disposition of Assets.

On January 21, 2005, Pinnacle Systems, Inc. (“Pinnacle”) completed the sale of its Hamburg, Germany-based Steinberg Media Technologies GmbH (“Steinberg”) to Yamaha Corporation (“Yamaha”) for $28.5 million in cash. The sale of Steinberg was pursuant to a Share Purchase and Transfer Agreement entered into on December 20, 2004 (the “Agreement”) between Pinnacle, Steinberg and Yamaha. A copy of the Agreement is attached hereto as Exhibit 2.1.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

Not Applicable.

(b) Pro Forma Financial Information.

The following unaudited pro forma consolidated balance sheet reflects Pinnacle’s disposition of Steinberg to Yamaha as if it had occurred on September 30, 2004. The accompanying unaudited pro forma condensed statements of operations for the year ended June 30, 2004 and for the three months ended September 30, 2004 and 2003 no longer reflect the Steinberg results of operations and charges as continuing operations. The pro forma financial information does not purport to represent what Pinnacle’s consolidated results would have been if the disposition had in fact occurred on these dates, nor does it purport to indicate the future consolidated financial position or future consolidated results of operations of Pinnacle. The pro forma adjustments are based on the operating results and related charges for Steinberg recorded for the periods.

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PINNACLE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

	As of September 30, 2004
	As Reported			Steinberg Adjustments (1)			Pro Forma
Assets
Current assets:
Cash and cash equivalents	$	46,443		$	24,905		$	71,348
Marketable securities		16,903			—			16,903
Accounts receivable, net		39,672			(944	)		38,728
Inventories		44,876			(667	)		44,209
Prepaid expenses and other current assets		6,374			(407	)		5,967
Total current assets		154,268			22,887			177,155
Restricted cash		16,850						16,850
Property and equipment, net		16,031			(796	)		15,235
Goodwill		73,612			(14,273	)		59,339
Other intangible assets, net		15,029			(7,029	)		8,000
Other assets		8,205			(158	)		8,047
	$	283,995		$	631		$	284,626
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	12,562		$	(203	)	$	12,359
Accrued and other liabilities		50,849			(2,709	)		48,140
Deferred revenue		15,825			(16	)		15,809
Total current liabilities		79,236			(2,928	)		76,308
Deferred income taxes		1,786			(1,786	)		0
Total liabilities		81,022			(4,714	)		76,308
Shareholders’ equity:
Common stock		377,215						377,215
Accumulated deficit		(179,418	)		5,345			(174,073	)
Accumulated other comprehensive income		5,176						5,176
Total shareholders’ equity		202,973			5,345			208,318
	$	283,995		$	631		$	284,626

(1) Reflects the assets and liabilities of Steinberg and the related gain net of tax.

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PINNACLE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

	Twelve Months Ended June 30, 2004
	As Reported			Steinberg Adjustments (1)			Pro Forma
Net sales	$	334,827		$	23,532		$	311,295
Costs and expenses:
Cost of sales		174,883			9,742			165,141
Engineering and product development		42,336			3,508			38,828
Sales, marketing and service		104,406			7,420			96,986
General and administrative		23,033			1,009			22,024
Amortization of other intangible assets		8,329			3,469			4,860
Impairment of goodwill		12,311			—			12,311
Impairment of other intangible assets		10,294			10,294			—
Restructuring costs		5,338			1,698			3,640
In-process research and development		2,193						2,193
Total costs and expenses		383,123			37,140			345,983
Operating loss		(48,296	)		(13,608	)		(34,688	)
Interest and other income (expense), net		(295	)		77			(372	)
Loss from continuing operations before income taxes		(48,591	)		(13,531	)		(35,060	)
Income tax expense (benefit)		(1,147	)		(5,869	)		4,722
Loss from continuing operations	$	(47,444	)	$	(7,662	)	$	(39,782	)
Loss per share from continuing operations:
Basic and Diluted	$	(0.71	)	$	(0.11	)	$	(0.59	)
Shares used to compute net loss per share:
Basic and Diluted		67,069			67,069			67,069

(1) Reflects the reversal of the results of operations for Steinberg and the related tax impacts.

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PINNACLE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

	Three Months Ended September 30, 2004									Three Months Ended September 30, 2003
	As Reported			Steinberg Adjustments (1)			Pro Forma			As Reported			Steinberg Adjustments (1)			Pro Forma
Net sales	$	70,542		$	4,567		$	65,975		$	69,343		$	4,714		$	64,629
Costs and expenses:
Cost of sales		39,871			1,601			38,270			38,316			1,789			36,527
Engineering and product development		10,115			806			9,309			10,550			827			9,723
Sales, marketing and service		19,399			1,444			17,955			22,184			2,216			19,968
General and administrative		7,076			284			6,792			5,979			290			5,689
Amortization of other intangible assets		1,381			535			846			2,735			1,210			1,525
Restructuring costs		2,435			—			2,435			—						—
In-process research and development		—						—			2,193						2,193
Total costs and expenses		80,277			4,670			75,607			81,957			6,332			75,625
Operating loss		(9,735	)		(103	)		(9,632	)		(12,614	)		(1,618	)		(10,996	)
Interest and other income, net		508			18			490			334			38			296
Loss from continuing operations before income taxes		(9,227	)		(85	)		(9,142	)		(12,280	)		(1,580	)		(10,700	)
Income tax expense (benefit)		704			(200	)		904			528			(388	)		916
Loss from continuing operations	$	(9,931	)	$	115		$	(10,046	)	$	(12,808	)	$	(1,192	)	$	(11,616	)
Loss per share from continuing operations:
Basic and Diluted	$	(0.14	)	$	0.00		$	(0.15	)	$	(0.20	)	$	(0.02	)	$	(0.18	)
Shares used to compute net income (loss) per share:
Basic and Diluted		69,043			69,043			69,043			65,086			65,086			65,086

(1) Reflects the reversal of the results of operations for Steinberg and the related tax impacts.

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(c) Exhibits.

Exhibit No.	Description
2.1	Share Purchase and Transfer Agreement between Pinnacle Systems, Inc., Pinnacle Systems GmbH, Steinberg Media Technologies GmbH and Yamaha Corporation dated December 20, 2004.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PINNACLE SYSTEMS, INC.
By:	/s/ Scott E. Martin
	Scott E. Martin
	Senior Vice President, Human Resources and Legal

Date: January 27, 2005

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