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Macrovision Solutions Corporation Reports Fourth Quarter Financial Performance
Santa Clara - 2/10/2009 - Macrovision Solutions Corporation (NASDAQ: MVSN) announced today, on a GAAP basis, fourth quarter 2008 revenues of $118.2 million, compared to $41.9 million for the fourth quarter of 2007. Fourth quarter 2008 GAAP net loss was $209.9 million compared to net income of $9.2 million for the fourth quarter of 2007. GAAP diluted earnings (loss) per share for the quarter was $(2.06), compared to $0.17 for the fourth quarter of 2007. The fourth quarter GAAP net loss for 2008 included impairment charges of $208.3 million related to the goodwill and intangible assets of TV Guide Network, TVG Network and TV Guide Online, all of which are classified as discontinued operations. Subsequent to year end, the Company entered into agreements to sell all three of these businesses. The impairment charges were based upon the proceeds the Company will receive for these sales.
As management believes that including Gemstar's operating results only for the period since its acquisition on May 2, 2008, diminishes the comparative value of results from the prior year, management believes it is useful to measure the results on a non-GAAP Adjusted Pro Forma basis, assuming the Gemstar acquisition was consummated on January 1, 2007. The Adjusted Pro Forma results exclude Macrovision's Software and Games businesses that were sold on April 1, 2008, the eMeta business that was sold on November 14, 2008 and the TV Guide Magazine business that was sold on December 1, 2008. It also excludes the discontinued Hawkeye product line and the results of TV Guide Network, TVG Network and TV Guide Online, all of which are classified as discontinued operations. On this basis, fourth quarter 2008 Adjusted Pro Forma Revenues were $118.2 million, compared to $103.2 million for the fourth quarter of 2007. Fourth quarter 2008 Adjusted Pro Forma EBITDA was $52.7 million, compared to $20.9 million for the fourth quarter of 2007. Adjusted Pro Forma EBITDA is defined as pro forma operating income from continuing operations, adding back non-cash items such as equity-based compensation, depreciation and amortization and items which impact comparability, such as transaction, transition and integration costs, restructuring and asset impairment charges, insurance settlements and accrual reversals related to a former Gemstar CEO. Reconciliations between pro forma revenues and Adjusted Pro Forma Revenues and between pro forma operating income from continuing operations and Adjusted Pro Forma EBITDA are provided in the tables below.
The Adjusted Pro Forma combined company year-to-date results reflect eight months of synergies. As of December 31, 2008, the Company had taken expense reduction actions that will lead to over $50 million in savings on an annualized basis. "I am pleased with our fourth quarter financial results and our ability to overachieve the top and bottom line expectations we set for ourselves as we entered 2008. Despite the overall economic slowdown, we grew revenues by 15% year over year in the fourth quarter driven by growth in CE licensing and increases in the number of digital television subscribers. We believe there is opportunity for further growth by increasing our penetration into CE devices, adding new licensees as well as benefiting from the increasing numbers of digital television subscribers," said Fred Amoroso, President and CEO of Macrovision. "I am also delighted that we have closed the sale of two of the non-core media businesses we expected to sell coming out of the Gemstar acquisition and entered into a definitive agreement to sell the third. The proceeds from these divestitures will be used to pay down our term loan. We are now singularly focused on our core businesses." "We have no changes to our previously announced 2009 revenue and earnings estimates," added James Budge, Chief Financial Officer. "We continue to expect that our 2009 revenue will range between $435 and $475 million and that our 2009 Adjusted Pro Forma Earnings Per Share will range between $1.15 and $1.45." GAAP to Adjusted Pro Forma Reconciliation As a result of the Gemstar acquisition, the Company's management now evaluates and makes operating decisions about its business operations primarily based upon Adjusted Pro Forma Revenue, Adjusted Pro Forma EBITDA and Adjusted Pro Forma Earnings Per Share. Management uses Adjusted Pro Forma EBITDA and Adjusted Pro Forma Earnings Per Share as measures as they exclude depreciation, amortization, equity-based compensation, transaction costs, transition and integration costs, insurance settlements and discontinued product lines; items management does not consider to be "core costs" when making business decisions. Therefore, management presents these Adjusted Pro Forma financial measures along with GAAP measures. The income statement line items impacted in the adjustment from GAAP to the Adjusted Pro Forma presentation in this earnings release are revenue, cost of revenues, research and development, selling, general and administration, depreciation and amortization, restructuring and asset impairment charges. For each such Adjusted Pro Forma financial measure, the adjustment provides management with information about the Company's underlying operating performance that enables a more meaningful comparison of its financial results in different reporting periods. For example, since Macrovision Solutions Corporation does not acquire businesses on a predictable cycle, management excludes amortization of intangibles from acquisitions in order to make more consistent and meaningful evaluations of the Company's operating expenses. Management also excludes the effect of restructuring, asset impairment charges, gains or losses on sales of strategic investments, insurance settlements and accrual reversals related to a former Gemstar CEO for the same reason. Management excludes discontinued product lines as it believes this exclusion is as meaningful for comparability purposes as excluding the results from a business that meets the criteria to be classified as discontinued operations on a GAAP basis. Management excludes the impact of equity-based compensation to help it compare current period operating expenses against the operating expenses for prior periods and to eliminate the effects of this non-cash item, which, because it is based upon estimates on the grant dates may bear little resemblance to the actual values realized upon the future exercise, expiration, termination or forfeiture of the stock-based compensation, and which, as it relates to stock options and stock purchase plan shares, is required for GAAP purposes to be estimated under valuation models, including the Black-Scholes model used by Macrovision Solutions Corporation. Management uses these Adjusted Pro Forma measures to help it make budgeting decisions between those expenses that affect operating expenses and operating margin (such as research and development and sales, general and administrative expenses), and those expenses that affect cost of revenue and gross margin. Further, Adjusted Pro Forma financial information helps management track actual performance relative to financial targets. Making Adjusted Pro Forma financial information available to investors, in addition to GAAP financial information, may also help investors compare the Company's performance with the performance of other companies in our industry, which may use similar financial measures to supplement their GAAP financial information. Management recognizes that the use of Adjusted Pro Forma measures has limitations, including the fact that management must exercise judgment in determining which types of charges should be excluded from the Adjusted Pro Forma financial information. Because other companies, including companies similar to Macrovision Solutions Corporation, may calculate their non-GAAP financial measures differently than the Company calculates its Adjusted Pro Forma measures, these Adjusted Pro Forma measures may have limited usefulness in comparing companies. Management believes, however, that providing this Adjusted Pro Forma financial information, in addition to the GAAP financial information, facilitates consistent comparison of the Company's financial performance over time. The Company has provided Adjusted Pro Forma financial information to the investment community, not as an alternative, but as an important supplement to GAAP financial information; to enable investors to evaluate the Company's core operating performance in the same way that management does. Reconciliations between pro forma revenues and Adjusted Pro Forma Revenues and between pro forma combined company operating income from continuing operations and Adjusted Pro Forma EBITDA are provided in the tables below. Dial-in Information A replay of the conference call will be available through February 13, 2009 and can be accessed by calling 800-405-2236 (or international +1 303-590-3000) and entering passcode 11125042#. A replay of the audio webcast will be available on Macrovision's website approximately 1-2 hours after the live webcast ends and will remain on Macrovision's website until our next quarterly earnings call.
About Macrovision Solutions Corporation ©Macrovision 2009. Macrovision is a registered trademark of Macrovision Solutions Corporation and its subsidiaries. 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, 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" and are made pursuant to the Safe-Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, the Company's estimates of future revenues and earnings, business strategies, closings of a sale transaction and use of proceeds from the sales transactions and statements regarding the financial impact of, expected synergies and expected cost savings from, the transactions described herein. 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 from any future results or outcomes expressed or implied by such forward-looking statements. Such factors included, among others, the Company's ability to successfully integrate the merged businesses and technologies, the Company's ability to realize the anticipated synergies and cost savings, the Company's ability to execute on its plans to rationalize head count, eliminate corporate marketing initiatives and duplicate public company expenses, and consolidate IT and facilities expenditures, failure to close the sale transaction, and customer demand for the technologies and integrated offerings. Such factors are further addressed in the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2008 and such other documents as are filed with the Securities and Exchange Commission from time to time (available at http://www.sec.gov/). The Company assumes no obligation, except as required by law, to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.
For more information, contact:
James Budge Lauren Landfield |
