Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASDAQ 4,095.52 9.29 0.23%
Ticker Volume Price Price Delta
STOXX 50 3,155.81 16.55 0.53%
FTSE 100 6,625.25 41.08 0.62%
DAX 9,409.71 91.89 0.99%
Ticker Volume Price Price Delta
NIKKEI 14,516.27 98.74 0.68%
TOPIX 1,173.37 6.78 0.58%
HANG SENG 22,760.24 64.23 0.28%

Rovi Corporation Reports Third Quarter Financial Performance



Rovi Corporation Reports Third Quarter Financial Performance

               Focus on Operational Improvements Reduces Costs
  Company Raises Adjusted Pro Forma Income Per Common Share Estimates for FY
                                     2012

SANTA CLARA, Calif., Nov. 1, 2012 (GLOBE NEWSWIRE) -- Rovi Corporation
(Nasdaq:ROVI) today reported financial results for the third quarter ended
September 30, 2012. The Company reported GAAP revenues of $169.6 million,
compared to $181.9 million for the third quarter of 2011. GAAP net loss was
$13.3 million, compared to GAAP net income of $1.8 million for the third
quarter of 2011. The year-over-year decline was primarily due to a reduction
in revenues from the Company's consumer electronics customers.

During the quarter, Rovi took actions that will reduce current operating costs
by approximately $31 million on an annual run-rate basis through product
rationalization and targeted cost reductions. Largely as a result of these
reductions, Non-GAAP Adjusted Pro Forma Income was $51.5 million in the third
quarter of 2012 compared to $69.0 million in the third quarter of 2011 and
$39.8 million in the second quarter of 2012. Adjusted Pro Forma Income Per
Common Share for the third quarter of 2012 was $0.50, compared to $0.62 for
the third quarter of 2011 and $0.37 for the second quarter of 2012.

Adjusted Pro Forma Income and Adjusted Pro Forma Income Per Common Share are
defined below in the section entitled Non-GAAP or Adjusted Pro Forma
Information. Reconciliations between GAAP pro forma and Adjusted Pro Forma
results from operations are provided in the tables below.

"Last quarter I spoke about the need to improve execution and operational
efficiency, and I am very pleased with the substantial progress we have made
along these lines during the past three months," said Tom Carson, President
and CEO of Rovi. "After undertaking comprehensive, product-by-product
operational reviews across the business, we focused on product rationalization
and cost reductions this quarter and eliminated almost $31 million in
annualized costs. Additionally, we eliminated plans to add an additional $5
million dollars in annual spending. This frees up funds to invest in new
value-creating strategic initiatives and puts us on the path to achieving an
operating margin more appropriate for our business. These actions also drove a
sequential increase in our quarterly Adjusted Pro Forma Income Per Common
Share and allowed us to raise the midpoint of our Adjusted Pro Forma Income
Per Common Share estimates for the year."

Rovi repurchased approximately 6 million shares of its common stock during the
third quarter for approximately $90 million. The Company now has approximately
$223 million remaining in its existing share repurchase authorization.

Business Outlook

Rovi now anticipates fiscal year 2012 revenue of between $660 million and $670
million, and Adjusted Pro Forma Income Per Common Share of between $1.80 and
$1.90. Rovi will discuss its 2012 outlook in greater detail on the conference
call set to take place today, November 1, 2012, starting at 2:00 p.m. PT.

Conference Call Information

Rovi management will host a conference call today, November 1, 2012, at 2:00
p.m. PT / 5:00 p.m. ET to discuss the financial results. Investors and
analysts interested in participating in the conference are welcome to call
888-549-7750 (or international +1 480-629-9723) and reference the Rovi call.
The conference call can also be accessed via live webcast in the Investor
Relations section of Rovi's website at http://www.rovicorp.com/.

A replay of the conference call will be available through November 2, 2012 and
can be accessed by calling 800-406-7325 (or international +1 303-590-3030) and
entering passcode 4570852#. A replay of the audio webcast will be available on
Rovi Corporation's website approximately 1-2 hours after the live webcast ends
and will remain on Rovi Corporation's website until its next quarterly
earnings call.

Non-GAAP or Adjusted Pro Forma Information

Rovi Corporation provides non-GAAP Adjusted Pro Forma information. References
to Adjusted Pro Forma information are references to non-GAAP pro forma
measures. The Company provides Adjusted Pro Forma information to assist
investors in assessing its current and future operations in the way that its
management evaluates those operations. Adjusted Pro Forma Revenue, Adjusted
Pro Forma Income and Adjusted Pro Forma Income Per Common Share are
supplemental measures of the Company's performance that are not required by,
and are not presented in accordance with GAAP. Adjusted Pro Forma information
is not a substitute for any performance measure derived in accordance with
GAAP, including, but not limited to, GAAP pro forma information prepared in
accordance with ASC 805, Business Combinations.

Adjusted Pro Forma and GAAP pro forma measures assume the Sonic Solutions
business combination and the Roxio software business disposition both occurred
on January 1, 2010. Adjusted Pro Forma Income is defined as GAAP pro forma
income (loss) from continuing operations, net of tax, adding back non-cash
items such as equity-based compensation, amortization of intangibles,
amortization or write-off of note issuance costs, non-cash interest expense
recorded on convertible debt under Accounting Standards Codification ("ASC")
470-20 (formerly known as FSP APB 14-1), mark-to-market fair value adjustments
for interest rate swaps, caps and foreign currency collars and the reversals
of discrete tax items including reserves; as well as items which impact
comparability that are required to be recorded under GAAP, but that the
Company believes are not indicative of its core operating results such as
transaction, transition and integration costs, restructuring and asset
impairment charges, payments to note holders and for expenses in connection
with the early redemption or modification of debt and gains on sale of
strategic investments. While depreciation expense is a non-cash item, it is
included in Adjusted Pro Forma Income as a reasonable proxy for capital
expenditures.

Adjusted Pro Forma Income Per Common Share is calculated using Adjusted Pro
Forma Income and taking into account the benefit of the convertible debt call
option when it allows the Company to purchase shares of its own stock at a
price below what those shares could be purchased for in the open market.

The Company's management has evaluated and made operating decisions about its
business operations primarily based upon Adjusted Pro Forma Revenue, Adjusted
Pro Forma Income and Adjusted Pro Forma Income Per Common Share. Management
uses Adjusted Pro Forma Income and Adjusted Pro Forma Income Per Common Share
as measures as they exclude items management does not consider to be "core
costs" or "core proceeds" when making business decisions. Therefore,
management presents these Adjusted Pro Forma financial measures along with
GAAP measures. 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 Rovi
Corporation does not acquire businesses on a predictable cycle, management
excludes amortization of intangibles from acquisitions, transaction costs and
transition and integration costs in order to make more consistent and
meaningful evaluations of the Company's operating expenses. Management also
excludes the effect of restructuring and asset impairment charges, expenses in
connection with the early redemption or modification of debt and gains on sale
of strategic investments.  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 equity-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 Rovi Corporation. Management
excludes non-cash interest expense recorded on convertible debt under ASC
470-20, mark-to-market fair value adjustments for interest rate swaps, caps,
foreign currency collars, and the reversals of discrete tax items including
reserves as they are non-cash items and not considered "core costs" or
meaningful when management evaluates the Company's operating
expenses. Management reclassifies the current period benefit or cost of the
interest rate swaps from gain or loss on interest rate swaps and caps, net to
interest expense in order for interest expense to reflect the swap rates, as
these instruments were entered into to control the interest rate the Company
effectively pays on its convertible debt. Management includes the benefit of
the convertible debt call option, which allows the Company to purchase shares
of its own stock at approximately $28.28, and is excluded from GAAP EPS
calculation as it is anti-dilutive, because the pragmatic reality is
management would exercise this option rather than allow this dilution to
occur. This convertible debt call option was exercised in August 2011.

Management is using these Adjusted Pro Forma measures to help it make
budgeting decisions, including decisions that affect operating expenses and
operating 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 Rovi Corporation, may calculate their non-GAAP financial measures
differently than the Company calculates its Adjusted Pro Forma measures, these
Non-GAAP measures may have limited usefulness in comparing
companies. Management believes, however, that providing Adjusted Pro Forma
financial information, in addition to GAAP financial information, facilitates
consistent comparison of the Company's financial performance over time. The
Company provides 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 historical pro forma and Adjusted Pro Forma results of operations are
provided in the tables below.

About Rovi Corporation

Rovi Corporation is focused on revolutionizing the digital entertainment
landscape by delivering solutions that enable consumers to intuitively connect
to new entertainment from many sources and locations. The company also
provides extensive entertainment discovery solutions for television, movies,
music and photos to its customers in the consumer electronics, cable and
satellite, entertainment and online distribution markets. These solutions,
complemented by industry leading entertainment data, create the connections
between people and technology, and enable them to discover and manage
entertainment in an enjoyable form.

Rovi holds over 5,300 issued or pending patents worldwide and is headquartered
in Santa Clara, California, with numerous offices across the United States and
around the world including Japan, China, Luxembourg, and the United Kingdom.
More information about Rovi can be found at www.rovicorp.com.

The Rovi Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=6482

Forward Looking Statements

All statements contained herein 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, and
future opportunities for product, market or customer expansion.

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 include, among others, the Company's ability to successfully
execute on its strategic plan and customer demand for and industry acceptance
of the Company's technologies and integrated solutions. Such factors are
further addressed in the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 2012 and such other documents as are filed with the
Securities and Exchange Commission from time to time (available at
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.

                   Rovi Business and Operating Highlights:

IP Licensing:

  * Continued to license new platforms, signing an agreement that covers
    Nintendo's TVii
  * Extended the term of its existing license agreement with BSkyB for
    interactive program guide (IPG) patents
  * Licensed another major European retailer for its own-branded CE brands
  * Licensed Korean digital satellite broadcaster SkyLife, putting all
    significant Korean pay-TV operators under license
  * Year-to-date patent applications almost double the same period last year

Guide Products:

  * Renewed 39 North American MSOs
  * Signed first Latin America TotalGuide service provider customer
  * On track to deploy TotalGuide solutions at six MSOs during the first half
    of 2013

DivX:

  * Signed DivX Plus Streaming agreements with two IC companies and four OEMs
  * Over 780 million devices deployed with DivX technology

Rovi Entertainment Store: 

  * Announced agreement with Sainsbury's to power a new digital video service
    in the UK
  * Toys"R"Us Movies web store launched in the US
  * Launched Best Buy CinemaNow:

  - on Android tablets and phones in the US and Canada
  - iOS play-back app in the US and Canada for iPad, iPhone and iPod Touch
  - on PlayStation 3 in Canada

  * Dixon's KNOWHOW Movies live in the UK on connected LG TVs and on connected
    Samsung Blu-ray Players 
  * Media Markt live in Germany on Western Digital WD TV Live Box, VideoWeb TV
    and certain Technisat Set-top Boxes
  * Total live storefronts now totals approximately 1.1 million, an 18%
    increase over last quarter

Advertising:

  * Repeat advertising campaigns, including Ford, Mattel, Hellmann's, GO RVing
    and Bank of Montreal in North America; and Red Bull in Europe
  * Launched a new polling feature for the Rovi Advertising Network
  * Extended the Rovi Advertising Network to include Sony Bravia TVs and
    connected Blu-Ray players in Europe

Data:

  * Renewed major handset manufacturer for data on mobile devices
  * Expanded relationship with major Korean CE manufacturer to include
    worldwide listings data
  * Added metadata services to an existing Canadian MSO customer
  * Expanded Rovi's entertainment database to include Brazilian TV, movie and
    celebrity information and announced plans to include similar data for
    Portugal and Russia
  * Enhanced Rovi Music by adding descriptive track-level attributes for 11M+
    tracks to enable finely tuned recommendations and improved playlisting
  * Further enhanced social integration by adding thousands of links to
    Twitter handles and Facebook pages for celebrities, movies and TV shows

For additional business metrics, see our investor presentation located at:
http://ir.rovicorp.com/presentations.aspx?iid=4206196

 
 
ROVI CORPORATION
GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
 
 
                                     Three Months Ended   Nine Months Ended
                                     September 30,        September 30,
                                     2012       2011      2012       2011
Revenues                             $ 169,574  $ 181,889 $ 502,882  $ 513,606
Costs and expenses:                                                   
Cost of revenues                     32,724     28,931    93,947     78,149
Research and development             39,664     43,928    126,390    116,920
Selling, general and administrative  40,149     47,359    126,904    141,481
Depreciation                         5,757      5,134     16,883     14,867
Amortization of intangible assets    27,839     28,767    83,316     81,545
Restructuring and asset impairment   4,514      1,911     5,886      18,831
charges
Total costs and expenses             150,647    156,030   453,326    451,793
Operating income from continuing     18,927     25,859    49,556     61,813
operations
Interest expense                     (16,654)   (13,610)  (45,207)   (40,774)
Interest income and other, net       1,628      855       3,425      3,961
Debt modification expense            —          —         (4,496)    —
Loss on interest rate swaps and      (4,242)    (845)     (10,654)   (1,457)
caps, net
Loss on debt redemption              —          —         (1,758)    (9,418)
(Loss) income from continuing        (341)      12,259    (9,134)    14,125
operations before income taxes
Income tax expense (benefit)         13,737     6,790     20,172     (2,611)
(Loss) income from continuing        (14,078)   5,469     (29,306)   16,736
operations, net of tax
Discontinued operations, net of tax  751        (3,716)   (7,179)    (8,676)
Net (loss) income                    $ (13,327) $ 1,753   $ (36,485) $ 8,060
Basic earnings per share:                                             
Basic (loss) income per share from   $ (0.14)   $ 0.05    $ (0.28)   $ 0.15
continuing operations
Basic income (loss) per share from   0.01       (0.03)    (0.06)     (0.08)
discontinued operations
Basic net (loss) income per share    $ (0.13)   $ 0.02    $ (0.34)   $ 0.07
Shares used in computing basic net   103,307    108,771   105,948    109,369
earnings per share
Diluted earnings per share:                                           
Diluted (loss) income per share from $ (0.14)   $ 0.05    $ (0.28)   $ 0.15
continuing operations
Diluted income (loss) per share from 0.01       (0.03)    (0.06)     (0.08)
discontinued operations
Diluted net (loss) income per share  $ (0.13)   $ 0.02    $ (0.34)   $ 0.07
Shares used in computing diluted net 103,307    111,897   105,948    114,718
earnings per share
 
See notes to the GAAP Consolidated Financial Statements in our Form 10-Q.

 
 
ROVI CORPORATION
GAAP CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
 
 
                                               September 30, December 31,
                                               2012          2011
ASSETS                                                        
Current assets:                                               
Cash and cash equivalents                      $ 283,996     $ 136,780
Short-term investments                         537,212       283,433
Trade accounts receivable, net                 136,174       126,752
Taxes receivable                               4,339         2,976
Deferred tax assets, net                       12,338        32,152
Prepaid expenses and other current assets      40,111        15,056
Assets held for sale                           —             20,344
Total current assets                           1,014,170     617,493
Long-term marketable investment securities     89,592        65,267
Property and equipment, net                    39,876        43,203
Finite-lived intangible assets, net            738,859       815,049
Other assets                                   25,018        41,610
Goodwill                                       1,378,429     1,364,145
Total assets                                   $ 3,285,944   $ 2,946,767
                                                              
LIABILITIES AND STOCKHOLDERS' EQUITY                          
Current liabilities:                                          
Accounts payable and accrued expenses          $ 102,333     $ 107,037
Deferred revenue                               20,069        16,460
Current portion of long-term debt              39,100        25,500
Liabilities held for sale                      —             5,445
Total current liabilities                      161,502       154,442
Taxes payable, less current portion            66,869        63,980
Long-term debt, less current portion           1,439,204     969,598
Deferred revenue, less current portion         2,190         4,041
Long-term deferred tax liabilities, net        22,316        36,267
Other non current liabilities                  23,060        25,687
Total liabilities                              1,715,141     1,254,015
Stockholders' equity:                                         
Common stock                                   125           123
Treasury stock                                 (634,570)     (482,479)
Additional paid-in capital                     2,180,505     2,114,402
Accumulated other comprehensive income (loss)  209           (313)
Retained earnings                              24,534        61,019
Total stockholders' equity                     1,570,803     1,692,752
Total liabilities and stockholders' equity     $ 3,285,944   $ 2,946,767
 
See notes to the GAAP Consolidated Financial Statements in our Form 10-Q.
 

                                                                          
                                                                          
ROVI CORPORATION                                                          
ADJUSTED PRO FORMA RECONCILIATION                                         
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                  
(UNAUDITED)                                                               
                                                                          
               Three Months Ended                   Three Months Ended
               September 30, 2012                   September 30, 2011
               GAAP                   Adjusted      GAAP                 Adjusted
               Pro                                  Pro                  Pro
               Forma    Adjustments   Pro Forma     Forma    Adjustments Forma
               (1)                                  (1)
Revenues:                                                                 
Service        $ 78,692 $ —           $ 78,692      $ 74,464 $ —         $ 74,464
providers
CE             72,533   —             72,533        87,629   —           87,629
manufacturers
Other          18,349   —             18,349        19,796   —           19,796
Total revenues 169,574  —             169,574       181,889  —           181,889
Costs and                                                                 
expenses:
Cost of        32,724   (760)         31,964        28,931   (1,467)     27,464
revenues (2)
Research and
development    39,664   (5,276)       34,388        43,928   (8,879)     35,049
(3)
Selling,
general and    40,149   (8,114)       32,035        47,359   (13,382)    33,977
administrative
(4)
Depreciation   5,757    —             5,757         5,134    —           5,134
(5)
Amortization
of intangible  27,839   (27,839)      —             27,787   (27,787)    —
assets
Restructuring
and asset      4,514    (4,514)       —             1,911    (1,911)     —
impairment
charges
Total costs    150,647  (46,503)      104,144       155,050  (53,426)    101,624
and expenses
Operating
income from    18,927   46,503        65,430        26,839   53,426      80,265
continuing
operations
Interest       (16,654) 6,148         (10,506)      (13,610) 7,444       (6,166)
expense (6)
Interest
income and     1,628    —             1,628         855      —           855
other, net
Loss on
interest rate  (4,242)  4,242         —             (845)    845         —
swaps and
caps, net (7)
(Loss) income
from
continuing     (341)    56,893        56,552        13,239   61,715      74,954
operations
before income
taxes
Income tax     13,737   (8,647)       5,090         6,810    (814)       5,996
expense (8)
(Loss) income
from           $
continuing     (14,078) $ 65,540      $ 51,462      $ 6,429  $ 62,529    $ 68,958
operations,
net of tax
Diluted (loss)
income per
share from     $ (0.14)               $ 0.50        $ 0.06               $ 0.62
continuing
operations
Shares used in
computing
diluted net    103,307  37            103,344       111,897  (359)       111,538
earnings per
share (9)
                                                                          
(1) GAAP Pro Forma financial information for the 2012 period is the same as our
GAAP results; no adjustments have been made to the GAAP results since they are
comparative with prior quarter's pro forma results. GAAP Pro Forma financial
information for the 2011 period has been prepared in accordance with ASC 805,
Business Combinations, and assumes the acquisition of Sonic and sale of Roxio
Consumer Software business had occurred on January 1, 2010.
(2) Adjustments to cost of revenues consist of the following:
                        September 30, September 30,                       
                        2012          2011
Equity based            $ (760)       $ (1,205)                           
compensation
Transition and
integration             —             (262)                               
costs
Total                   $ (760)       $ (1,467)                           
adjustment
(3) Adjustments to research and                                                      
development consist of the following:
                        September 30, September 30,                       
                        2012          2011
Equity based            $ (5,276)     $ (5,494)                           
compensation
Transition and
integration             —             (3,385)                             
costs
Total                   $ (5,276)     $ (8,879)                           
adjustment
(4) Adjustments to selling, general
and administrative consist of the                                                    
following:
                        September 30, September 30,                       
                        2012          2011
Equity based            $ (8,114)     $ (10,721)                          
compensation
Transition and
integration             —             (2,661)                             
costs
Total                   $ (8,114)     $ (13,382)                          
adjustment
(5) While depreciation is a non-cash item, it is included in Adjusted Pro Forma
Income From Continuing Operations as management considers it a proxy for capital
expenditures.
(6) Adjustments eliminate non-cash interest expense such as amortization of note
issuance costs and the convertible note discount recorded under ASC 470-20
(formerly known as FSP APB 14-1) and reclass to include the impact of interest
rate swaps on interest expense.
(7) Adjustment eliminates non-cash mark-to-market gain or loss related to
interest rate swaps and caps and reclassifies the current period benefit from the
interest rate swap to interest expense.
(8) Adjusts tax expense to the adjusted pro forma cash tax rate.
(9) For the 2012 period, since the adjustments resulted in Adjusted Pro Forma Net
Income, shares used in computing diluted net earnings per share were adjusted to
include dilutive common equivalent shares outstanding. For the 2011 period,
adjustment recognizes the benefit of convertible debt call option, which allows
the Company to purchase shares of its own stock at approximately $28.28, and
which is excluded from GAAP EPS calculation as it is anti-dilutive.

 
 
ROVI CORPORATION
ADJUSTED PRO FORMA RECONCILIATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
 
                               Three Months Ended
                               June 30, 2012
                               GAAP                              Adjusted
                               Pro Forma (1)     Adjustments     Pro Forma
Revenues:                                                         
Service providers              $ 77,607          $ —             $ 77,607
CE manufacturers               64,841            —               64,841
Other                          15,869            —               15,869
Total revenues                 158,317           —               158,317
Costs and expenses:                                               
Cost of revenues (2)           31,436            (1,364)         30,072
Research and development (3)   42,275            (7,223)         35,052
Selling, general and           43,195            (9,470)         33,725
administrative (4)
Depreciation (5)               5,728             —               5,728
Amortization of intangible     27,878            (27,878)        —
assets
Total costs and expenses       150,512           (45,935)        104,577
Operating income from          7,805             45,935          53,740
continuing operations
Interest expense (6)           (16,405)          6,241           (10,164)
Interest income and other, net 187               —               187
Debt modification expense      (32)              32              —
Loss on interest rate swaps    (6,308)           6,308           —
and caps, net (7)
(Loss) income from continuing  (14,753)          58,516          43,763
operations before income taxes
Income tax expense (8)         1,863             2,076           3,939
(Loss) income from continuing  $ (16,616)        $ 56,440        $ 39,824
operations, net of tax
Diluted (loss) income per
share from continuing          $ (0.16)                          $ 0.37
operations
Shares used in computing
diluted net earnings per share 107,035           433             107,468
(9)
 
(1) GAAP Pro Forma financial information for the 2012 period is the same as
our GAAP results; no adjustments have been made to the GAAP results since they
are comparative with prior quarter's pro forma results. 
(2) Adjustment to cost of revenues consists of $1.4 million of equity based
compensation.
(3) Adjustment to research and development consists of $7.2 million of equity
based compensation.
(4) Adjustment to selling, general and administrative consists of $9.5 million
of equity based compensation.
(5) While depreciation is a non-cash item, it is included in Adjusted Pro
Forma Income From Continuing Operations as management considers it a proxy for
capital expenditures.
(6) Adjustments eliminate non-cash interest expense such as amortization of
note issuance costs and the convertible note discount recorded under ASC
470-20 (formerly known as FSP APB 14-1) and reclass to include the impact of
interest rate swaps on interest expense.
(7) Adjustment eliminates non-cash mark-to-market gain or loss related to
interest rate swaps and caps and reclassifies the current period benefit from
the interest rate swap to interest expense.
(8) Adjusts tax expense to the adjusted pro forma cash tax rate.
(9) Since the adjustments resulted in Adjusted Pro Forma Net Income, shares
used in computing diluted net earnings per share were adjusted to include
dilutive common equivalent shares outstanding.

                                                                          
                                                                          
ROVI CORPORATION                                                          
ADJUSTED PRO FORMA RECONCILIATION                                         
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                  
(UNAUDITED)                                                               
               Nine Months Ended                    Nine Months Ended
               September 30, 2012                   September 30, 2011
               GAAP                   Adjusted      GAAP                 Adjusted
               Pro                                  Pro                  Pro
               Forma    Adjustments   Pro Forma     Forma    Adjustments Forma
               (1)                                  (1)
Revenues:                                                                 
Service        $        $ —           $ 235,653     $        $ —         $
providers      235,653                              221,756              221,756
CE             213,043  —             213,043       256,116  —           256,116
manufacturers
Other          54,186   —             54,186        60,623   —           60,623
Total revenues 502,882  —             502,882       538,495  —           538,495
Costs and                                                                 
expenses:
Cost of        93,947   (3,456)       90,491        81,163   (3,482)     77,681
revenues (2)
Research and
development    126,390  (19,117)      107,273       122,563  (22,366)    100,197
(3)
Selling,
general and    126,904  (27,808)      99,096        149,473  (40,940)    108,533
administrative
(4)
Depreciation   16,883   —             16,883        15,108   —           15,108
(5)
Amortization
of intangible  83,316   (83,316)      —             84,508   (84,508)    —
assets
Restructuring
and asset      5,886    (5,886)       —             18,831   (18,831)    —
impairment
charges
Total costs    453,326  (139,583)     313,743       471,646  (170,127)   301,519
and expenses
Operating
income from    49,556   139,583       189,139       66,849   170,127     236,976
continuing
operations
Interest       (45,207) 18,578        (26,629)      (40,766) 24,309      (16,457)
expense (6)
Interest
income and     3,425    —             3,425         3,775    —           3,775
other, net
Debt
modification   (4,496)  4,496         —             —        —           —
expense
Loss on
interest rate  (10,654) 10,654        —             (1,457)  1,457       —
swaps and
caps, net (7)
Loss on debt   (1,758)  1,758         —             (9,418)  9,418       —
redemption
(Loss) income
from
continuing     (9,134)  175,069       165,935       18,983   205,311     224,294
operations
before income
taxes
Income tax     20,172   (6,550)       13,622        21,310   (3,367)     17,943
expense (8)
(Loss) income
from           $                                    $                    $
continuing     (29,306) $ 181,619     $ 152,313     (2,327)  $ 208,678   206,351
operations,
net of tax
Diluted (loss)
income per
share from     $ (0.28)               $ 1.43        $ (0.02)             $ 1.79
continuing
operations
Shares used in
computing
diluted net    105,948  403           106,351       110,384  4,593       114,977
earnings per
share (9)
                                                                          
(1) GAAP Pro Forma financial information for the 2012 period is the same as our
GAAP results; no adjustments have been made to the GAAP results since they are
comparative with prior quarter's pro forma results. GAAP Pro Forma financial
information for the 2011 period has been prepared in accordance with ASC 805,
Business Combinations, and assumes the acquisition of Sonic and sale of Roxio
Consumer Software business had occurred on January 1, 2010.
(2) Adjustments to cost of revenues consist of the following:
                        September 30, September 30,                       
                        2012          2011
Equity based            $ (3,456)     $ (2,716)                           
compensation
Transition and
integration             —             (766)                               
costs
Total                   $ (3,456)     $ (3,482)                           
adjustment
(3) Adjustments to research and                                                      
development consist of the following:
                        September 30, September 30,                       
                        2012          2011
Equity based            $ (19,117)    $ (15,188)                          
compensation
Transition and
integration             —             (7,178)                             
costs
Total                   $ (19,117)    $ (22,366)                          
adjustment
(4) Adjustments to selling, general
and administrative consist of the                                                    
following:
                        September 30, September 30,                       
                        2012          2011
Equity based            $ (27,808)    $ (28,426)                          
compensation
Transition and
integration             —             (12,514)                            
costs
Total                   $ (27,808)    $ (40,940)                          
adjustment
(5) While depreciation is a non-cash item, it is included in Adjusted Pro Forma
Income From Continuing Operations as management considers it a proxy for capital
expenditures.
(6) Adjustments eliminate non-cash interest expense such as amortization of note
issuance costs and the convertible note discount recorded under ASC 470-20
(formerly known as FSP APB 14-1) and reclass to include the impact of interest
rate swaps on interest expense.
(7) Adjustment eliminates non-cash mark-to-market gain or loss related to
interest rate swaps and caps and reclassifies the current period benefit from the
interest rate swap to interest expense.
(8) Adjusts tax expense to the adjusted pro forma cash tax rate.
(9) Since the adjustments resulted in Adjusted Pro Forma Net Income, shares used
in computing diluted net earnings per share were adjusted to include dilutive
common equivalent shares outstanding.

CONTACT: Investor Contacts
        
         Peter Halt
         Rovi Corporation
         +1 (818) 295-6800
        
         Chris Keller
         Rovi Corporation
         +1 (408) 562-8400

Rovi Corporation Logo
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement