Glu Reports First Quarter 2013 Financial Results

  Glu Reports First Quarter 2013 Financial Results

  *GAAP smartphone revenue of $17.3 million; non-GAAP smartphone revenue of
    $17.1 million
  *Cash balance of $21.2 million and no debt as of March 31, 2013
  *Two titles set new Glu ARPDAU record
  *Expands real-money gaming portfolio to include Contract Killer slots and
    upcoming multi-game casino suites
  *Appoints new President of Publishing

Business Wire

SAN FRANCISCO -- May 1, 2013

Glu Mobile Inc. (NASDAQ:GLUU), a leading global developer and publisher of
freemium games for smartphone and tablet devices, today announced financial
results for its first quarter ended March 31, 2013.

“We were pleased with the monetization milestones delivered during the quarter
in a number of both new and existing titles,” stated Niccolo de Masi, Chief
Executive Officer of Glu. “We anticipate further monetization and retention
traction as we continue to evolve our studio and begin to launch true
games-as-a-service."

De Masi continued, “We are delighted to appoint Chris Akhavan as President of
Publishing to focus on growing advertising revenues, increase direct marketing
efficiencies, and oversee our 3^rd Party Publishing. We remain excited by the
potential of Glu Publishing which signed three significant titles that we
expect to launch by the end of Q3. Glu remains committed to increasing ARPDAU
and positioning the company to lead in a Social Gaming 2.0 landscape. We will
continue to utilize our brand to extend our reach, as evidenced by our growing
relationship with Probability plc.”

First Quarter 2013 Financial Highlights:

  *Revenue: Total GAAP revenue was $19.1 million in the first quarter of 2013
    compared to $21.5 million in the first quarter of 2012. Total non-GAAP
    revenue was $19.0 million in the first quarter of 2013 compared to $21.6
    million in the first quarter of 2012. Non-GAAP revenue excludes changes in
    deferred revenue.
  *Gross Margin: GAAP gross margin was 84% in the first quarter of 2013
    compared to 85% in the first quarter of 2012. Non-GAAP gross margin was
    90% in the first quarter of 2013 compared to 88% in the first quarter of
    2012. Non-GAAP gross margin excludes changes in deferred revenue and
    royalties and amortization of intangible assets.
  *GAAP Operating Loss: GAAP operating loss was $(5.5) million in the first
    quarter of 2013 compared to a $(6.0) million loss in the first quarter of
    2012.
  *Non-GAAP Operating Loss: Non-GAAP operating loss was $(2.2) million in the
    first quarter of 2013 compared to a loss of $(23,000) during the first
    quarter of 2012. Non-GAAP operating loss excludes changes in deferred
    revenue and royalty expense, stock-based compensation expense,
    amortization of intangible assets, restructuring charges, change in fair
    value of the Blammo earnout, transitional costs and impairment of
    goodwill.
  *Adjusted EBITDA: Adjusted EBITDA was a $(1.4) million loss for the first
    quarter of 2013 compared to a $539,000 profit during the first quarter of
    2012. Adjusted EBITDA is defined as non-GAAP operating income/(loss) less
    depreciation.
  *GAAP Net Loss and EPS: GAAP net loss  was $(5.5) million for the first
    quarter of 2013 compared to a GAAP net loss of $(6.8) million for the
    first quarter of 2012. GAAP EPS was a loss of $(0.08) for the first
    quarter of 2013, based on 66.4 million weighted-average basic shares
    outstanding, compared to a loss of $(0.11) for the first quarter of 2012,
    based on 63.2 million weighted-average basic shares outstanding.
  *Non-GAAP Net Loss and EPS: Non-GAAP net loss was $(2.3) million for the
    first quarter of 2013 compared to a loss of $(0.5) million for the first
    quarter of 2012. Non-GAAP EPS was a loss of $(0.03) for the first quarter
    of 2013 based on 66.4 million weighted-average basic shares outstanding,
    compared to a loss of $(0.01) for the first quarter of 2012 based on 63.2
    million weighted-average basic shares outstanding.
  *Cash Flows Used in Operations: Cash flows used in operations were $(3.7)
    million for the first quarter of 2013 compared to cash flows used in
    operations of $(4.1) million for the first quarter of 2012.

A reconciliation of GAAP to non-GAAP results has been provided in the
financial statement tables included in this press release. An explanation of
these measures is also included below under the heading “Non-GAAP Financial
Measures.”

Selected First Quarter of 2013 Operating Highlights and Metrics:

  *We launched seven new freemium titles – Dragon Storm, Stardom: Hollywood,
    Gun Bros 2, Small City, Samurai vs. Zombies Defense 2, Heroes of Destiny,
    and Frontline Commando: D-Day.
  *Our total GAAP smartphone revenue for the first quarter of 2013 was $17.3
    million and comprised 90% of total GAAP revenue.
  *Our non-GAAP smartphone revenue for the first quarter of 2013 was $17.1
    million and comprised 90% of total non-GAAP revenue.
  *Our non-GAAP freemium revenue (micro-transactions, in-game advertising and
    offers) for the first quarter of 2013 was $15.2 million or 89% of non-GAAP
    smartphone revenue.

Recent Developments and Strategic Initiatives:

  *We launched our first two real-money gambling offerings with Probability
    plc –mobile slot games available in the UK that features intellectual
    property from our popular Samurai vs. Zombies Defense and Contract Killer
    games. We have also begun development on Glu-IP-branded mobile casino
    suites which we expect to be available to customers in the UK by Q3 2013.
  *We announced the availability of Samurai vs. Zombies Defense for Xbox
    Games for Windows 8, providing full support for Windows 8 leaderboards,
    achievements, live tiles, cloud storage, and the Xbox 360 controller.
  *Lorne Abony joined the company’s Board of Directors as Chairman of the
    newly-created Strategy Committee.
  *During the first quarter, the company expanded its publishing team to
    focus on driving increased monetization and new global partnerships by
    adding a President of Publishing and a Vice President of 3^rd Party
    Publishing and naming a new Global CTO.

“We had a solid first quarter performance which was driven by the combination
of our new title launches and continuing traction with our sequels,” stated
Eric R. Ludwig, Glu’s Chief Financial Officer. “While our second quarter
guidance reflects a light title launch schedule, we remain in position to
benefit during the second half of the year from new title launches, increasing
monetization trends and progress from Glu Publishing. We remain confident in
our ability to end 2013 with approximately $14 million in cash and without the
need to raise additional capital or incur debt.”

Business Outlook as of May 1, 2013:

The following forward-looking statements reflect expectations as of May 1,
2013. Results may be materially different and are affected by many factors,
such as: consumer demand for mobile entertainment and specifically Glu’s
products; consumer demand for smartphones, tablets and next-generation
platforms; our ability to improve the monetization of our titles and evolve
our studio and begin to launch true games-as-a-service; development delays on
Glu's products; continued uncertainty in the global economic environment;
competition in the industry; storefront featuring; changes in foreign exchange
rates; Glu's effective tax rate and other factors detailed in this release and
in Glu's SEC filings.

Second Quarter Expectations – Quarter Ending June 30, 2013:

  *Non-GAAP revenue is expected to be between $16.5 million and $17.5 million
    and non-GAAP smartphone revenue is expected to be between $15.2 million
    and $16.2 million.
  *Non-GAAP gross margin is expected to be approximately 90.5%.
  *Non-GAAP operating expenses are expected to be approximately $19.9
    million.
  *Adjusted EBITDA, defined as non-GAAP operating loss excluding depreciation
    of approximately $600,000, is expected to range from $(3.5) million to
    $(4.4) million.
  *Income tax expense is expected to be $(0.2) million, which excludes a
    one-time, non-cash income tax benefit of $3.1 million resulting from the
    release of certain tax liabilities upon the expiration of the statute of
    limitations.
  *Non-GAAP net loss is expected to be between $(4.2) million and $(5.1)
    million, or a net loss of $(0.06) to $(0.07) per weighted-average basic
    shares outstanding.
  *Weighted-average common shares outstanding are expected to be
    approximately 69.0 million basic and 71.3 million diluted.

2013 Expectations – Full Year Ending December 31, 2013:

  *Non-GAAP revenue is expected to be between $84.0 million and $88.5 million
    and non-GAAP smartphone revenue is expected to be between $80.0 million
    and $84.0 million.
  *Non-GAAP gross margin is expected to be approximately 88.0%.
  *Adjusted EBITDA is expected to range from $(4.7) million to $(6.2)
    million.
  *Non-GAAP net loss is expected to be between $(8.4) million and $(9.9)
    million, or a net loss of $(0.12) to $(0.14) per weighted-average basic
    shares outstanding.
  *Weighted-average common shares outstanding are expected to be
    approximately 68.6 million basic and 71.8 million diluted.
  *We expect to have a cash balance on December 31, 2013 of approximately
    $14.0 million with no debt.

Quarterly Conference Call

Glu will discuss its quarterly results via teleconference today at 1:30 p.m.
Pacific Time (4:30 p.m. Eastern Time). Please dial (877) 593-1988, or if
outside the U.S., (678) 905-9423, with conference ID # 35641864 to access the
conference call at least five minutes prior to the 1:30 p.m. Pacific Time
start time. A live webcast and replay of the call will also be available on
the investor relations portion of the company's website at
www.glu.com/investors. An audio replay will be available between 4:30 p.m.
Pacific Time, May 1, 2013, and 8:59 p.m. Pacific Time, May 8, 2013, by calling
(855) 859-2056, or (404) 537-3406, with conference ID # 35641864.

Disclosure Using Social Media Channels

Glu currently announces material information to its investors using SEC
filings, press releases, public conference calls and webcasts.Glu uses these
channels as well as social media channels to announce information about the
company, games, employees and other issues.Given the recent SEC guidance
regarding the use of social media channels to announce material information to
investors, Glu is notifying investors, the media, its players and others
interested in the company that in the future, it might choose to communicate
material information via social media channels or, it is possible that
information it discloses through social media channels may be deemed to be
material. Therefore, Glu encourages investors, the media, players and others
interested in Glu to review the information posted on the company forum
(http://ggnbb.glu.com/forum.php) and the company Facebook site
(https://www.facebook.com/glu.mobile) and the company twitter account
(https://twitter.com/glumobile).Investors, the media, players or other
interested parties can subscribe to the company blog and twitter feed at the
addresses listed above.Any updates to the list of social media channels Glu
will use to announce material information will be posted on the Investor
Relations page of the company's website at www.glu.com/investors.

Use of Non-GAAP Financial Measures

To supplement Glu's unaudited condensed consolidated financial data presented
in accordance with GAAP, Glu uses certain non-GAAP measures of financial
performance. The presentation of these non-GAAP financial measures is not
intended to be considered in isolation from, as a substitute for, or superior
to, the financial information prepared and presented in accordance with GAAP,
and may be different from non-GAAP financial measures used by other companies.
In addition, these non-GAAP measures have limitations in that they do not
reflect all of the amounts associated with Glu's results of operations as
determined in accordance with GAAP. The non-GAAP financial measures used by
Glu include historical and estimated non-GAAP revenues, non-GAAP smartphone
revenues, non-GAAP operating expenses, non-GAAP gross margins, non-GAAP
operating income/(loss), non-GAAP net loss and non-GAAP basic and diluted net
loss per share. These non-GAAP financial measures exclude the following items
from Glu's unaudited consolidated statements of operations:

  *Change in deferred revenues and royalties;
  *Amortization of intangible assets;
  *Stock-based compensation expense;
  *Restructuring charges;
  *Change in fair value of Blammo earnout;
  *Transitional costs;
  *Impairment of goodwill;
  *Release of tax liabilities; and
  *Foreign currency exchange gains and losses primarily related to the
    revaluation of assets and liabilities.

In addition, Glu has included in this release “Adjusted EBITDA” figures which
are used to evaluate Glu’s operating performance and is defined as non-GAAP
operating income/(loss) excluding depreciation.

Glu may consider whether significant non-recurring items that arise in the
future should also be excluded in calculating the non-GAAP financial measures
it uses.

Glu believes that these non-GAAP financial measures, when taken together with
the corresponding GAAP financial measures, provide meaningful supplemental
information regarding Glu's performance by excluding certain items that may
not be indicative of Glu's core business, operating results or future outlook.
Glu's management uses, and believes that investors benefit from referring to,
these non-GAAP financial measures in assessing Glu's operating results, as
well as when planning, forecasting and analyzing future periods. These
non-GAAP financial measures also facilitate comparisons of Glu's performance
to prior periods.

Cautions Regarding Forward-Looking Statements

This news release contains forward-looking statements, including those
regarding our "Business Outlook as of May 1, 2013" ("Second Quarter
Expectations – Quarter Ending June 30, 2013" and “2013 Expectations – Full
Year Ending December 31, 2013”) and the statements that: we anticipate further
monetization and retention traction as we continue to evolve our studio and
begin to launch true games-as-a-service; we remain committed to increasing
ARPDAU and positioning the company to lead in a Social Gaming 2.0 landscape;
we expect to launch three significant titles signed by Glu Publishing by the
end of Q3 2013; we will continue to utilize our brand to extend our reach, as
evidenced by our growing relationship with Probability plc; we expect
Glu-IP-branded mobile casino suites to be available to customers in the UK by
Q3 2013; we remain in position to benefit during the second half of the year
from new titles launches, increasing monetization trends and progress from Glu
Publishing; and that we remain confident in our ability to end 2013 with
approximately $14 million in cash and without the need to raise additional
capital or incur debt. These forward-looking statements are subject to
material risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Investors should
consider important risk factors, which include: the risks identified under
"Business Outlook as of May 1, 2013"; the risk that consumer demand for
smartphones, tablets and next-generation platforms does not grow as
significantly as we anticipate or that we will be unable to capitalize on any
such growth; the risk that we do not realize a sufficient return on our
investment with respect to our efforts to develop freemium games for
smartphones, tablets and next-generation platforms, the risk that we will not
be able to maintain our good relationships with Apple and Google; the risk
that our development expenses for games for smartphones, tablets and
next-generation platforms are greater than we anticipate; the risk that our
recently and newly launched games are less popular than anticipated; the risk
that our newly released games will be of a quality less than desired by
reviewers and consumers; the risk that the mobile games market, particularly
with respect to freemium gaming, is smaller than anticipated; and other risks
detailed under the caption "Risk Factors" in our Form 10-K filed with the
Securities and Exchange Commission on March 15, 2013 and our other SEC
filings. You can locate these reports through our website at
http://www.glu.com/investors. We are under no obligation, and expressly
disclaim any obligation, to update or alter our forward-looking statements
whether as a result of new information, future events or otherwise.

About Glu Mobile

Glu Mobile (NASDAQ:GLUU) is a leading global developer and publisher of
freemium games for smartphone and tablet devices. Glu is focused on creating
compelling original IP games such as CONTRACT KILLER, GUN BROS, DEER HUNTER,
BLOOD & GLORY, and SAMURAI VS. ZOMBIES DEFENSE on a wide range of platforms
including iOS, Android, Windows Phone, Google Chrome, and MAC OS. Glu’s unique
technology platform enables its titles to be accessible to a broad audience of
consumers globally. Founded in 2001, Glu is headquartered in San Francisco
with a major office outside Seattle, and international locations in Canada,
China and Russia. Consumers can find high-quality entertainment wherever they
see the ‘g’ character logo or at www.glu.com. For live updates, please follow
Glu via Twitter at www.twitter.com/glumobile or become a Glu fan at
www.facebook.com/glumobile.

CONTRACT KILLER, GUN BROS, DEER HUNTER, BLOOD & GLORY, SAMURAI VS ZOMBIES
DEFENSE, GLU, GLU MOBILE and the 'g' character logo are trademarks of Glu
Mobile Inc.

In the financial tables below, Glu has provided a reconciliation of the most
comparable GAAP financial measure to each of the historical non-GAAP financial
measures used in this press release.



Glu Mobile Inc.
Consolidated Balance Sheets
(in thousands)
(unaudited)
                                                             
                                                   March 31,      December 31,
                                                   2013           2012
                                                                  
ASSETS
Cash and cash equivalents                          $ 21,246       $ 22,325
Accounts receivable, net                             12,358         11,881
Prepaid royalties                                    100            -
Prepaid expenses and other current assets           2,386        2,487    
Total current assets                                 36,090         36,693
                                                                  
Property and equipment, net                          4,620          5,026
Other long-term assets                               435            227
Intangible assets, net                               9,328          10,889
Goodwill                                            19,448       19,440   
Total assets                                       $ 69,921      $ 72,275   
                                                                  
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable                                   $ 7,685        $ 7,269
Accrued liabilities                                  1,988          2,124
Accrued compensation                                 3,056          5,989
Accrued royalties                                    2,368          2,781
Accrued restructuring                                401            4
Deferred revenues                                   8,693        9,031    
Total current liabilities                            24,191         27,198
Other long-term liabilities                         5,827        6,190    
Total liabilities                                   30,018       33,388   
                                                                  
Common stock                                         7              6
Additional paid-in capital                           277,784        271,016
Accumulated other comprehensive                      (89      )     167
income/(loss)
Accumulated deficit                                 (237,799 )    (232,302 )
Stockholders' equity                                39,903       38,887   
Total liabilities and stockholders' equity         $ 69,921      $ 72,275   

                                                               
                                                                    
Glu Mobile Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
                                                       Three Months Ended
                                                       March 31,    March 31,
                                                       2013         2012
                                                                    
Revenues                                               $ 19,131     $ 21,544
                                                                    
Cost of revenues:
Royalties and other cost of revenues                     1,988        2,557
Amortization of intangible assets                       1,074      753    
Total cost of revenues                                  3,062      3,310  
Gross profit                                            16,069     18,234 
                                                                    
Operating expenses:
Research and development                                 11,630       15,033
Sales and marketing                                      5,008        4,375
General and administrative                               3,919        4,366
Amortization of intangible assets                        495          495
Restructuring charge                                    511        -      
Total operating expenses                                21,563     24,269 
                                                                    
Loss from operations                                     (5,494 )     (6,035 )
                                                                    
Interest and other income/(expense), net:
Interest income                                          3            7
Other income/(expense), net                             129        (373   )
Interest and other income/(expense), net                132        (366   )
                                                                    
Loss before income taxes                                 (5,362 )     (6,401 )
Income tax provision                                    (135   )    (440   )
Net loss                                               $ (5,497 )   $ (6,841 )
                                                                    
Net loss per share - basic and diluted                 $ (0.08  )   $ (0.11  )
                                                                    
Weighted average common shares outstanding -             66,397       63,229
basic and diluted
                                                                    
Stock-based compensation expense included in:
Research and development                               $ 668        $ 3,260
Sales and marketing                                      67           115
General and administrative                              510        461    
Total stock-based compensation expense                 $ 1,245     $ 3,836  



Glu Mobile Inc.
GAAP to Non-GAAP Reconciliation
(in thousands, except per share data)
(unaudited)
                For the Three Months Ended
                 March 31,    June 30,     September    December     March 31,
                 2012        2012        30,         31,         2013
                                           2012         2012
                                                                     
GAAP revenues
Featurephone     $ 4,165      $ 3,710      $ 2,924      $ 2,336      $ 1,856
Smartphone        17,379     19,911     18,423     18,645     17,275 
Total GAAP        21,544     23,621     21,347     20,981     19,131 
revenues
                                                                     
Change in
deferred
revenues
Featurephone
change in          (7     )     17           (21    )     17           29
deferred
revenue
Smartphone
change in         57         534        (167   )    (167   )    (137   )
deferred
revenue
Total change
in deferred       50         551        (188   )    (150   )    (108   )
revenues
                                                                     
Non-GAAP
Revenues
Featurephone       4,158        3,727        2,903        2,353        1,885
Smartphone        17,436     20,445     18,256     18,478     17,138 
Total non-GAAP    21,594     24,172     21,159     20,831     19,023 
Revenues
                                                                     
GAAP gross         18,234       20,552       18,128       17,856       16,069
profit
Change in
deferred           50           551          (188   )     (150   )     (108   )
revenues
Amortization
of intangible      753          932          1,025        1,073        1,074
assets
Change in
deferred          60         67         (30    )    (121   )    81     
royalty
expense
Non-GAAP gross    19,097     22,102     18,935     18,658     17,116 
profit
                                                                     
GAAP operating     24,269       25,769       22,311       24,527       21,563
expense
Stock-based        (3,836 )     (3,038 )     2,878        (1,826 )     (1,245 )
compensation
Amortization
of intangible      (495   )     (495   )     (495   )     (495   )     (495   )
assets
Transitional       (173   )     (30    )     (192   )     (94    )     -
costs
Change in fair
value of           (645   )     (386   )     954          (90    )     (29    )
Blammo earnout
Impairment of      -            -            (3,613 )     -            -
goodwill
Restructuring     -          (320   )    (213   )    (838   )    (511   )
charge
Non-GAAP
operating         19,120     21,500     21,630     21,184     19,283 
expense
                                                                     
GAAP operating     (6,035 )     (5,217 )     (4,183 )     (6,671 )     (5,494 )
loss
Change in
deferred           50           551          (188   )     (150   )     (108   )
revenues
Non-GAAP cost
of revenues        813          999          995          952          1,155
adjustment
Stock-based        3,836        3,038        (2,878 )     1,826        1,245
compensation
Amortization
of intangible      495          495          495          495          495
assets
Transitional       173          30           192          94           -
costs
Change in fair
value of           645          386          (954   )     90           29
Blammo earnout
Impairment of      -            -            3,613        -            -
goodwill
Restructuring     -          320        213        838        511    
charge
Non-GAAP
operating         (23    )    602        (2,695 )    (2,526 )    (2,167 )
income/(loss)
                                                                     
GAAP net loss      (6,841 )     (2,988 )     (3,563 )     (7,067 )     (5,497 )
Change in
deferred           50           551          (188   )     (150   )     (108   )
revenues
Non-GAAP cost
of revenues        813          999          995          952          1,155
adjustment
Non-GAAP
operating          5,149        4,269        681          3,343        2,280
expense
adjustment
Foreign
currency           373          (205   )     460          (263   )     (129   )
exchange
loss/(gain)
Release of tax    -          (2,427 )    -          -          -      
liabilities
Non-GAAP net     $ (456   )   $ 199       $ (1,615 )   $ (3,185 )   $ (2,299 )
income/(loss)
                                                                     
                                                                     
Reconciliation of net loss and net loss per share:
GAAP net loss
per share -      $ (0.11  )   $ (0.05  )   $ (0.06  )   $ (0.11  )   $ (0.08  )
basic and
diluted
Non-GAAP net
income/(loss)
per share -      $ (0.01  )   $ 0.00       $ (0.03  )   $ (0.05  )   $ (0.03  )
basic and
diluted
Shares used in
computing
Non-GAAP basic     63,229       63,802       64,562       65,678       66,397
net
income/(loss)
per share
Shares used in
computing
Non-GAAP           63,229       69,490       64,562       65,678       66,397
diluted net
income/(loss)
per share
                                                                     
Non-GAAP operating expense break-out:
GAAP research
and              $ 15,033     $ 15,697     $ 9,979      $ 13,566     $ 11,630
development
expense
Transitional       (68    )     (1     )     (45    )     (70    )     -
costs
Stock-based       (3,260 )    (2,396 )    3,388      (1,223 )    (668   )
compensation
Non-GAAP
research and      11,705     13,300     13,322     12,273     10,962 
development
expense
                                                                     
GAAP sales and
marketing          4,375        4,701        5,545        6,272        5,008
expense
Transitional       -            -            (15    )     (24    )     -
costs
Stock-based       (115   )    (155   )    (73    )    (43    )    (67    )
compensation
Non-GAAP sales
and marketing     4,260      4,546      5,457      6,205      4,941  
expense
                                                                     
GAAP general &
administrative     4,366        4,556        2,466        3,356        3,919
expense
Transitional       (105   )     (29    )     (132   )     -            -
costs
Change in fair
value of           (645   )     (386   )     954          (90    )     (29    )
Blammo earnout
Stock-based       (461   )    (487   )    (437   )    (560   )    (510   )
compensation
Non-GAAP
general and      $ 3,155     $ 3,654     $ 2,851     $ 2,706     $ 3,380  
administrative
expense

                                                                    

Glu Mobile Inc.
Non-GAAP Adjusted EBITDA
(in thousands, except per share data)
(unaudited)
                      For the Three Months Ended
                      March 31,    June 30,     September    December     March 31,
                      2012         2012         30,          31,          2013
                                                2012         2012
                                                                          
GAAP net loss         $ (6,841 )   $ (2,988 )   $ (3,563 )   $ (7,067 )   $ (5,497 )
Change in deferred      50           551          (188   )     (150   )     (108   )
revenues
Change in deferred      60           67           (30    )     (121   )     81
royalty expense
Amortization of         1,248        1,427        1,520        1,568        1,569
intangible assets
Depreciation            562          556          554          696          731
Stock-based             3,836        3,038        (2,878 )     1,826        1,245
compensation
Change in fair
value of Blammo         645          386          (954   )     90           29
earnout
Transitional costs      173          30           192          94           -
Impairment of           -            -            3,613        -            -
goodwill
Restructuring           -            320          213          838          511
charge
Foreign currency
exchange                373          (205   )     460          (263   )     (129   )
loss/(gain)
Interest and other
(income)/expense,       (7     )     (5     )     (5     )     (1     )     (3     )
net
Income tax             440        (2,019 )    (1,075 )    660        135    
provision/(benefit)
Total Non-GAAP        $ 539       $ 1,158     $ (2,141 )   $ (1,830 )   $ (1,436 )
Adjusted EBITDA

In addition to the reasons stated above, which are generally applicable to
each of the items Glu excludes from its non-GAAP financial measures, Glu
believes it is appropriate to exclude certain items for the following reasons:

Change in Deferred Revenue and Royalties. At the date we sell certain premium
games and micro-transactions, Glu has an obligation to provide additional
services and incremental unspecified digital content in the future without an
additional fee. In these cases, we recognize the revenue and any associated
royalty expense on a straight-line basis over the estimated life of the user.
Internally, Glu’s management excludes the impact of the changes in deferred
revenue and royalties related to its premium and freemium games in its
non-GAAP financial measures when evaluating the company’s operating
performance, when planning, forecasting and analyzing future periods, and when
assessing the performance of its management team. Glu believes that excluding
the impact of the changes in deferred revenue and royalties from its operating
results is important to facilitate comparisons to prior periods during which
Glu did not delay the recognition of significant amounts of revenue related to
its games and to understand Glu’s operations.

Amortization of Intangible Assets. When analyzing the operating performance of
an acquired entity, Glu's management focuses on the total return provided by
the investment (i.e., operating profit generated from the acquired entity as
compared to the purchase price paid) without taking into consideration any
allocations made for accounting purposes. Because the purchase price for an
acquisition necessarily reflects the accounting value assigned to intangible
assets (including acquired in-process technology and goodwill), when analyzing
the operating performance of an acquisition in subsequent periods, Glu's
management excludes the GAAP impact of acquired intangible assets to its
financial results. Glu believes that such an approach is useful in
understanding the long-term return provided by an acquisition and that
investors benefit from a supplemental non-GAAP financial measure that excludes
the accounting expense associated with acquired intangible assets.

Stock-Based Compensation Expense. Glu adopted ASC 718, "Compensation – Stock
Compensation" beginning in its fiscal year ended December 31, 2006. Included
in the stock compensation expense is the contingent consideration potentially
issuable to the Blammo employees who were former shareholders of Blammo, which
is recorded as research and development expense over the term of the earn-out
periods, since these employees are primarily employed in product development.
Glu re-measures the fair value of the contingent consideration each reporting
period and only records a compensation expense for the portion of the earn-out
target which is likely to be achieved. In addition, Glu is exposed to
potential continued fluctuations in the fair market value of the contingent
consideration in each reporting period, since re-measurement is impacted by
changes in Glu’s share price and the assumptions used by Glu. When evaluating
the performance of its consolidated results, Glu does not consider stock-based
compensation charges. Likewise, Glu's management team excludes stock-based
compensation expense from its short and long-term operating plans. In
contrast, Glu's management team is held accountable for cash-based
compensation and such amounts are included in its operating plans. Further,
when considering the impact of equity award grants, Glu places a greater
emphasis on overall stockholder dilution rather than the accounting charges
associated with such grants. Glu believes it is useful to provide a non-GAAP
financial measure that excludes stock-based compensation in order to better
understand the long-term performance of its business.

Restructuring Charges. Glu undertook restructuring activities in the second,
third and fourth quarters of 2012 and the first quarter of 2013 and recorded
(1) a non-cash restructuring charge due to vacating a portion of its offices
in Washington and vacating its Brazil office and (2) cash restructuring
charges due to the termination of certain employees in its Brazil, China,
Europe and U.S. offices. Glu recorded the severance costs as an operating
expense when it communicated the benefit arrangement to the employee and no
significant future services, other than a minimum retention period, were
required of the employee to earn the termination benefits. Glu believes that
these restructuring charges do not reflect its ongoing operations and that
investors benefit from a supplemental non-GAAP financial measure that excludes
these charges.

Change in Fair Value of Blammo Earnout. As part of the acquisition of Blammo,
Glu committed to issue additional consideration in the form of Glu’s common
stock to the former, non-employee Blammo shareholders if certain revenue
targets are achieved. Glu recorded the estimated contingent consideration
liability at acquisition and will adjust the fair value of the liability each
reporting period. When analyzing the operating performance of an acquired
entity, Glu’s management focuses on the total return provided by the
investment (i.e., operating profit generated from the acquired entity as
compared to the purchase price paid including the final amounts paid for
contingent consideration) without taking into consideration any expenses
recognized post-acquisition related to the change in fair value of the
contingent consideration. Because the final purchase price paid for an
acquisition necessarily reflects the accounting value assigned to both the
consideration, including the contingent consideration, paid and to the
intangible assets (including goodwill) acquired, when analyzing the operating
performance of an acquisition in subsequent periods, the Company’s management
excludes the GAAP impact of any adjustments to the fair value of these
acquisition-related balances to its financial results. Glu believes that the
fair value adjustments affect comparability from period to period and that
investors benefit from a supplemental non-GAAP financial measure that excludes
these charges.

Transitional Costs. GAAP requires expenses to be recognized for various types
of events associated with a business acquisition such as legal, accounting and
other deal related expenses.  Additionally, Glu has incurred various costs
related to the transition and integration of Blammo, GameSpy and Griptonite
into Glu’s operations. Glu recorded these non-recurring acquisition and
transitional costs as operating expenses when they were incurred. Glu believes
that these acquisition and transitional costs affect comparability from period
to period and that investors benefit from a supplemental non-GAAP financial
measure that excludes these expenses.

Impairment of Goodwill. In accordance with ASC 350 “Goodwill and Other
Intangible Assets” Glu performs its annual goodwill impairment test as of
September 30. Glu recorded a goodwill impairment charge in the third quarter
of 2012 as the fair value of one of its three reporting units was determined
to be below its carrying value. As this impairment is non-recurring, Glu
believes it does not reflect the Company’s ongoing operations and that
investors benefit from a supplemental non-GAAP financial measure that excludes
this impairment, enabling them to compare the Company’s core operating results
in different periods without this variability.

Release of tax liabilities. In the second quarter of 2012, Glu recorded a
one-time, non-cash income tax benefit related to the release of certain
foreign income tax liabilities upon the expiration of the statute of
limitations. Glu believes that this one-time tax benefit does not reflect its
ongoing operations and that investors benefit from a supplemental non-GAAP
financial measure that excludes this benefit.

Foreign currency exchange gains and losses. Foreign currency exchange gains
and losses represent the net gain or loss that Glu has recorded for the impact
of currency exchange rate movements on cash and other assets and liabilities
denominated in foreign currencies related to the revaluation of assets and
liabilities. Accordingly, foreign currency exchange gains and losses are
generally unpredictable and can cause Glu’s reported results to vary
significantly. Due to the unusual magnitude of these gains and losses, and the
fact that Glu has not engaged in hedging or taken other actions to reduce the
likelihood of incurring a sizeable net gain or loss in future periods, Glu
began, with the quarter ended December 31, 2008, to present non-GAAP net loss
and net loss per share excluding foreign exchange gains and losses for
comparability purposes. Glu believes that these gains and losses do not
reflect its ongoing operations and that investors benefit from a supplemental
non-GAAP financial measure that excludes these items, enabling investors to
compare Glu’s core operating results in different periods without this
variability. Foreign exchange gains/(losses) recognized during 2012 and 2013
were as follows (in thousands):

March 31, 2012      $ (373 )
June 30, 2012          205
September 30, 2012     (460 )
December 31, 2012     263  
FY 2012              $ (365 )
                     
                     
March 31, 2013       $ 129  
FY 2013              $ 129

Contact:

Media & Investor Relations:
ICR, Inc.
Seth Potter, 646-277-1230
ir@glu.com