Macrovision Corporation Reports Results for the Third Quarter of 2005.SANTA CLARA Santa Clara, city, Cuba Santa Clara (sän`tä klä`rä), city (1994 est. pop. 217,000), capital of Villa Clara prov., central Cuba. , Calif. -- Macrovision Macrovision is a company that develops and markets licensing, access control, and secure distribution technologies for electronically delivered creative works. This includes digital media (video, music), web publishing (text, images), and computer software (consumer software, Corporation (Nasdaq:MVSN MVSN Milizia Volontaria per la Sicurezza Nazionale (Italy) ) announced today third quarter 2005 net revenues of $46.6 million, a decrease of 5% compared to $48.9 million in the third quarter of 2004. Pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. (before amortization of intangibles from acquisitions, in-process research and development charges, impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. on investments, and adjustments for changes to the tax rate, as applicable) were $7.0 million, compared to $11.2 million in the third quarter of 2004. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the quarter were $0.14, compared to $0.22 in the same quarter of 2004. The Company generated $4.0 million of cash from operations and its ending cash and cash equivalents, short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments and long term marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has were $246.3 million. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income for the third quarter of 2005 was $6.1 million, compared to $1.3 million for the third quarter of 2004. Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. GAAP earnings per share for the quarter were $0.12, compared with $0.03 for the comparable quarter in 2004. "The growth rate in DVD DVD: see digital versatile disc. DVD in full digital video disc or digital versatile disc Type of optical disc. The DVD represents the second generation of compact-disc (CD) technology. sales continues to decline, which impacted revenues from our copy protection business. The result being that our revenues, while within the range of guidance previously provided, were insufficient to support our earnings per share guidance," said Fred (Friendly Rollabout Engineered for Doctors) A mobile medical conferencing unit. See videoconferencing. 1. FRED - Robert Carr. Language used by Framework, Ashton-Tate. 2. Amoroso Am`o`ro´so n. 1. A lover; a man enamored. adv. 1. (Mus.) In a soft, tender, amatory style. , President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Macrovision. "We are pleased, however, to have completed our acquisition of Trymedia Trymedia is a division of Macrovision that provides digital distribution services based on its proprietary ActiveMARK DRM and digital distribution technology. Trymedia is headquartered in San Francisco, with offices in Berkshire and Alicante. during the quarter and to have added considerable experience and depth to our management team. Over the past three months we have been working aggressively on our new strategic direction for the future by identifying the organization, management talent and actions needed to leverage our existing leadership position in the marketplace toward achieving a higher value and broader relationship with our customers. To that end, we initiated an action today to consolidate our divisional operations that will result in a reduction in worldwide headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. by approximately 10%. We believe that these collective actions will allow us to expand our market leadership while allowing us to realize synergies in our business processes resulting in improved operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: ." "As a result of our current outlook in the copy protection business, we are lowering our 2005 guidance for revenues to a range of $202 to $204 million. We expect Q4 revenues of between $60 and $62 million. We are also lowering our pro forma EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. to be between $0.79 and $0.81 for the full year of 2005 and between $0.28 and $0.30 for the fourth quarter," added James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. Budge, Chief Financial Officer. "We expect to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. between $2 million and $3 million in restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. in Q4 as a result of our headcount reduction. We expect this headcount reduction combined with other operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. reductions will result in a reduction of $10 million to $12 million in annual operating expense, primarily realized in 2006." Macrovision will hold an investor conference call on November November: see month. 2, 2005, at 5:00 p.m. ET. Investors and analysts interested in participating in the conference are welcome to call 800-366-7417 (or international +1 303-275-2170) and reference the Macrovision call. The conference call can also be accessed via live Webcast at www.macrovision.com or www.fulldisclosure.com (or www.streetevents.com for subscribers) on November 2, 2005 at 5:00 p.m. ET. The on-demand On-Demand refers to a service or feature which addresses the user's need for instant gratification and immediacy of use. In most cases the value proposition for an on-demand service is wrapped up in the fact that the user or consumer of the service avoids a significant up-front audio Webcast of Macrovision's earnings conference call can be accessed approximately 1-2 hours after the live Webcast ends. Investors and analysts interested in listening to a recorded replay of the conference are welcome to call 800-405-2236 (or international +1 303-590-3000) and enter passcode 11041889#. Access to the replay is available through November 3, 2005. About Macrovision Macrovision develops and markets content value management and software value management technologies for the home video, PC games, music, cable/satellite, consumer software, and enterprise software industries. Macrovision holds a total of 220 issued or pending United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. patents and 1,200 issued or pending international patents, and continues to increase its patent portfolio with new and innovative technologies in related fields. Macrovision has its corporate headquarters in Santa Clara, California Santa Clara, California (IPA: /ˌsæntəˈklærə/) , founded in 1777 and incorporated in 1852, is a city in Santa Clara County, in the U.S. state of California. , with other offices across the United States and around the world. Note to Editors: For more information on Macrovision Corporation and its products, please visit www.macrovision.com. (C) 2005 Macrovision Corporation. Macrovision is a registered trademark of Macrovision Corporation. All other brands and product names and trademarks are the registered property of their respective companies. All statements contained herein, including the quotations attributed to Mr. Amoroso and Mr. Budge, as well as oral statements that may be made by the Company or by officers, directors or employees of the Company acting on the Company's behalf, that are not statements of historical fact, including statements that use the words "will," "believes," "anticipates," "estimates," "expects," "intends" or "looking to the future" or similar words that describe the Company's or its management's future plans, objectives, or goals, are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " and are made pursuant to the Safe-Harbor provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements include the Company's forecast of future revenues and earnings, the business strategies and product plans of the Company and the expected results of the headcount and expense reduction action of the Company. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to be materially different from the historical results and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. from any future results or outcomes expressed or implied by such forward-looking statements. Among the important factors that could cause results to differ materially are the following: the failure of markets for home video, audio CDs, consumer or enterprise software value management, or markets for the technological protection of copyrighted materials contained in such products, to continue, develop or expand, and the failure of the Company's products to achieve or sustain market acceptance or to meet, or continue to meet, the changing demands of content or software providers. Other factors include those outlined in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2004, the latest Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the period ended June June: see month. 30, 2005 and such other documents as are filed with the Securities and Exchange Commission from time to time (available at www.sec.gov). These factors may not constitute all factors that could cause actual results to differ materially from those discussed in any forward-looking statement. The Company operates in a continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. changing business environment and new factors emerge from time to time. The Company cannot predict such factors, nor can it assess the impact, if any, of such factors on the Company or its results. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. The Company assumes no obligation to revise or update any forward-looking statements in order to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or that may arise after the date of this release. Macrovision uses pro forma condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. consolidated statements of income in the presentation of financial results and earnings guidance. Management believes that this presentation may be more meaningful in analyzing the results of operations and income generation, as non-cash, non-operating or non-recurring items (such as amortization of intangibles from acquisitions, in-process research and development, amortization of deferred stock-based compensation, impairment gains and losses on investments, and adjustments for changes to the tax rate) are excluded from the pro forma earnings calculation. The Company believes this presentation is more indicative of its ongoing operational performance. The tables below present the differences between pro forma earnings and GAAP net income on an absolute and per share basis.
Macrovision Corporation and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share data)
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------- -------------------
2005 2004 2005 2004
---------- -------- --------- ---------
Net Revenues $46,590 $48,859 $142,261 $122,511
Costs and expenses:
Costs of revenues, including
amortization of intangibles
of $2,967 and $2,403 for
the three months ended
September 30, 2005 and
2004, respectively, and
$7,849 and $3,959 for the
nine months ended September
30, 2005 and 2004,
respectively 9,113 8,478 24,372 14,802
Research and development 8,583 8,409 25,205 19,704
Selling and marketing 13,749 11,227 39,698 28,553
General and administrative 8,804 6,635 24,691 17,268
Deferred compensation
expense relating to
Globetrotter -- -- -- 185
In-process research and
development 500 5,400 500 5,400
Impairment losses (gains) on
investments (78) 5,298 5,648 4,258
---------- -------- --------- ---------
Total costs and expenses 40,671 45,447 120,114 90,170
---------- -------- --------- ---------
Income before interest and
income taxes 5,919 3,412 22,147 32,341
Interest and other income, net 1,317 755 3,228 2,468
---------- -------- --------- ---------
Income before income taxes 7,236 4,167 25,375 34,809
Income taxes 1,148 2,843 7,750 13,874
---------- -------- --------- ---------
Net income $6,088 $1,324 $17,625 $20,935
========== ======== ========= =========
Diluted earnings per share $0.12 $0.03 $0.34 $0.42
========== ======== ========= =========
Shares used in computing
diluted earnings per share 51,340 50,671 51,305 50,430
========== ======== ========= =========
Macrovision Corporation and Subsidiaries
Pro forma Reconciliation of Condensed Consolidated Statements of
Income (Unaudited) (1)
(In thousands, except per share data)
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
2005 2004 2005 2004
---------- -------- --------- ---------
Net income $6,088 $1,324 $17,625 $20,935
Add:
Amortization of intangibles
from acquisitions
(net of taxes) 2,058 1,677 5,510 2,965
In process research and
development (net of taxes) 323 3,456 323 3,456
Deferred compensation
expense relating to
Globetrotter -- -- -- 185
Adjustment to pro-forma tax
rate (1,419) 1,343 (1,248) 1,343
Impairment losses (gains) on
investments (net of taxes) (50) 3,393 3,645 2,725
---------- -------- --------- ---------
Pro forma net income $7,000 $11,193 $25,855 $31,609
========== ======== ========= =========
Diluted earnings per share
reconciliation:
Net income $0.12 $0.03 $0.34 $0.42
Add:
Amortization of
intangibles from
acquisitions (net of
taxes) 0.04 0.03 0.11 0.06
In process research and
development (net of
taxes) 0.01 0.07 0.01 0.07
Deferred compensation
expense relating to
Globetrotter -- -- -- --
Adjustment to pro-forma
tax rate (0.03) 0.03 (0.03) 0.03
Impairment losses (gains)
on investments (net of
taxes) -- 0.06 0.07 0.05
---------- -------- --------- ---------
Pro forma diluted earnings
per share research and
development $0.14 $0.22 $0.50 $0.63
========== ======== ========= =========
Shares used in computing
diluted earnings per share 51,340 50,671 51,305 50,430
========== ======== ========= =========
Notes:
(1) Pro forma results for the three and nine months ended
September 30, 2005 and 2004 are presented for information
purposes only. These results present the operating results of
Macrovision Corporation, excluding costs associated with
amortization of intangibles from acquisitions, in-process
research and development, amortization of capitalized patents
from our acquisition of TTR's assets in the second quarter of
2003, deferred compensation expense, adjustments to the pro
forma tax rate, and impairment losses (gains) on investments.
These costs were $912 for the three month period ended
September 30, 2005, and $8,230 for the nine month period
ending September 30, 2005, net of taxes when applicable,
using the Company's pro forma effective rate. The
amortization expense for capitalized TTR patents included in
cost of revenues was $221 and $688 for the three and nine
months ended September 30, 2005, respectively. The format
presented above is not in accordance with Generally Accepted
Accounting Principles.
Macrovision Corporation and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
September 30, December 31,
2005 2004
------------- ------------
ASSETS
Cash and cash equivalents $127,737 $104,957
Restricted cash -- 859
Short-term investments 97,544 101,299
Accounts receivable, net 34,311 41,468
Prepaid expenses and other assets 14,500 12,643
------------- ------------
Total Current Assets 274,092 261,226
Property and equipment, net 13,109 9,295
Long-term marketable investment
securities 21,065 47,414
Goodwill 108,745 74,529
Other intangibles from acquisitions, net 35,930 31,185
Deferred tax assets 12,071 17,151
Patents and other assets 11,031 11,673
------------- ------------
TOTAL ASSETS $476,043 $452,473
============= ============
LIABILITIES
Accounts payable $5,198 $5,907
Accrued expenses and income taxes payable 26,811 32,639
Deferred revenue 18,602 14,604
------------- ------------
Total Current Liabilities 50,611 53,150
Other liabilities 1,156 979
------------- ------------
TOTAL LIABILITIES 51,767 54,129
STOCKHOLDERS' EQUITY 424,276 398,344
------------- ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $476,043 $452,473
============= ============
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