UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             

Commission file number: 000-53413

Rovi Corporation

(Exact name of registrant as specified in its charter)

Delaware	26-1739297
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

2830 De La Cruz Boulevard

Santa Clara, California

95050

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code:

(408) 562-8400

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Exchange on Which Registered
Common Stock, $0.001 Par Value	The NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  þ    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Act.    Yes  ¨    No  þ

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer  þ    Accelerated filer  ¨    Non-accelerated filer  ¨    Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  þ

The aggregate market value of voting and non-voting common equity held by non-affiliates of the Registrant was approximately $4.4 billion as of June 30, 2011, based upon the closing price on the NASDAQ Global Select Market reported for such date. This calculation does not reflect a determination that certain persons are affiliates of the Registrant for any other purpose. The number of shares outstanding of the Registrant’s Common Stock on February 14, 2012, was 109,831,234 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement related to the 2012 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days after December 31, 2011, are incorporated by reference into Part III of this Form 10-K.

INDEX

PART I
ITEM 1.	BUSINESS	3
ITEM 1A.	RISK FACTORS	20
ITEM 1B.	UNRESOLVED STAFF COMMENTS	43
ITEM 2.	PROPERTIES	43
ITEM 3.	LEGAL PROCEEDINGS	44
ITEM 4.	MINE SAFETY DISCLOSURES	45
PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY , RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	46
ITEM 6.	SELECTED FINANCIAL DATA	49
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	51
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	66
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	67
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES	67
ITEM 9A.	CONTROLS AND PROCEDURES	68
ITEM 9B.	OTHER INFORMATION	69
PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	71
ITEM 11.	EXECUTIVE COMPENSATION	71
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	71
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS , AND DIRECTOR INDEPENDENCE	71
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	71
PART IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	72
	SIGNATURES	75

Discussions of some of the matters contained in this Annual Report on Form 10-K for Rovi Corporation (the “Company,” “we” or “us”) may constitute forward-looking statements within the meaning of the Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, and as such, may involve risks and uncertainties. Some of these discussions are contained under the captions “Item 1. Business” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We have based these forward-looking statements on our current expectations and projections about future events or future financial performance, which include implementing our business strategy, developing and introducing new technologies, obtaining, maintaining and expanding market acceptance of the technologies we offer, and competition in our markets.

In some cases, you can identify these forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “future,” “predict,” “potential,” “intend,” or “continue,” and similar expressions. These statements are based on the beliefs and assumptions of our management and on information currently available to our management. Our actual results, performance and achievements may differ materially from the results, performance and achievements expressed or implied in such forward-looking statements. For a discussion of some of the factors that might cause such a difference, see “Item 1A. – Risk Factors” and elsewhere in this Form 10-K. Except as required by law, we specifically disclaim any obligation to update such forward-looking statements.

PART I

ITEM 1. BUSINESS

Overview

We are focused on powering the discovery and enjoyment of digital entertainment by providing a broad set of integrated solutions that are embedded in our customers’ products and services and used by end consumers to simplify, guide and enhance their interaction with digital entertainment. Our offerings can be categorized as providing opportunities for content discovery, video delivery and advertising. Content discovery solutions include interactive program guides (“IPGs”), recommendations, search capability, device management, media recognition technologies and licensing of our extensive database of descriptive information about television, movie, music, books, and game content. Video Delivery solutions include video compression-decompression technology (“codecs”), the Rovi Entertainment Store video delivery solution, content authoring solutions, and content protection technologies and services. Advertising solutions include IPG advertising, the Rovi Advertising Network and advertising on Rovi operated consumer websites. In addition to offering Company developed IPGs, our customers may also license our patents and deploy their own IPG or a third party IPG. Our solutions are deployed by companies in the consumer electronics, cable and satellite, entertainment and online distribution markets and utilized by consumers globally.

On February 17, 2011, we acquired Sonic Solutions (“Sonic”) for approximately $763.1 million in cash and stock. We believe the Sonic acquisition not only enhances our offerings to our business customers, but also facilitates the next step forward in our strategy of providing connected consumers the capability to find content they are seeking using our technologies and metadata, as well as to enjoy that content from multiple sources on any device.

On February 1, 2012, we sold our Roxio Consumer Software business. The results of the Roxio Consumer Software business have been reclassified to discontinued operations.

Industry Background

The entertainment media market continues its transformation from analog to digital content and from physical to online distribution. The design, distribution, protection and consumption of all forms of digital

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content continues to experience an unprecedented amount of change. The expansion of network bandwidth, the increased availability of digital content and devices that allow people to enjoy digital content, and the increased mobility provided by tablets and smartphones are all helping to accelerate this market shift. As part of this change, consumers are demanding high-quality digital content in many formats and places. Users are also seeking flexible means by which to legally acquire and add content to their digital libraries permanently or for a period of time and want to be able to enjoy that content in numerous locations on different devices. They want to easily discover and access content (movies, music, photos and programming) and enjoy it when and where they want.

No matter what content consumers desire or are enjoying, we believe video content such as movies and TV shows remains important. New devices and services are continually being created that bring video content to consumers. Consumers are in an upgrade cycle investing in high-end high definition televisions (“HDTVs”) that help maximize video enjoyment. Additionally, consumers are investing in new devices, such as tablets and smartphones, with the intent to use them to enjoy digital content, among other uses. These devices require the ability to provide information identifying what is available to the viewer in broadcast television (TV listings), stored or packaged video and video on demand (“VOD”) or even professional short form video such as news clips or comedy shorts.

We refer to providing this information as “guidance.” Guidance becomes more complex as more sources of entertainment become available to consumers. Beyond existing Pay-TV options, consumers can now download or stream Internet-based content to their media devices, accessed via several different business models. In addition, the current home media device infrastructure can be very complex. Setting up such an environment generally requires integrating numerous devices, a deep understanding of the interoperability of media formats and creation of mechanisms for managing and enjoying content. The alternative is to purchase products from a single vendor and sacrifice the ability to integrate all types of media into many devices or have many devices operating in silos, significantly limiting the mobility and flexibility that consumers desire.

The introduction of these new capabilities are impacting every part of the entertainment supply chain, from content producers, to distribution channels and consumption device manufacturers, causing them each to reevaluate their business models, as well as introducing new competitors at each phase of the supply chain.

In the case of content producers, the industry shift to digital media, IP enabled entertainment platforms, and portable digital devices (such as tablets and smartphones) threatens current revenue models built on tightly controlled distribution windows. Consumers seek to enjoy movies and TV shows at their own convenience, not necessarily watching TV at home or going to the theaters. As a result, the existing revenue streams based upon theater attendance, packaged media sales and television broadcasts are all threatened. As technological advances facilitate digital downloads and digital copying, motion picture studios, music labels, cable, satellite, broadcast television and program distributors have become more concerned with how to protect their intellectual property, while making it available to consumers in the manner they wish to receive it, without sacrificing the aggregate revenue returned from today’s various distribution windows. Studios have invested heavily in shifting consumers to a digital purchase model and sponsored standards based initiatives, such as Ultraviolet, to build this new business model amidst these shifting economics.

Distribution channels, such as cable and satellite operators, web portals and retailers, and others are all seeking ways to best obtain or maintain a competitive advantage in a digital entertainment world. They require highly customizable solutions that aid the consumer experience, such as additional data about the entertainment content, or additional guidance technology, while still allowing the distribution channel to retain its unique identity. They are also seeking to increase their interaction with the consumer and create new revenue opportunities. This includes having not just a physical and web presence, but also providing media digitally on any device the consumer may choose to use. This requires substantial investment in technology infrastructure to augment their current businesses. Additionally, content producers are exploring new forms of distribution to protect or advance their position in the distribution window chain, which includes experimenting with direct to

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consumer models and new forms of content licensing, such as exclusive downloads, subscription to a studio’s portfolio, or making a streamed or downloaded movie available for purchase simultaneous with the home video distribution window. All of this results in increased competition for distributors, leading to their need to create unique distribution arrangements and to integrate with many partners to reach consumers.

The markets for consumer electronic “CE” manufacturers are also in flux. Consumers are demanding capabilities to interact with broad ranges of media, such as over-the-top video, not just viewing content that is broadcast to the device. Increased functionality requires extensive software be embedded into these devices, which is not necessarily a core competency for CE manufacturers. New types of devices such as tablets are also competing for consumers’ spending as consumers become more comfortable with new ways of enjoying their entertainment. CE manufacturers also desire an ongoing revenue relationship with their customer, not just to sell them a new device every few years. This leads to a demand for add-on services or advertising that allow the CE manufacturer to profit from the on-going distribution or maintenance of entertainment content.

As traditional media changes, the opportunities for advertisers evolve as well. Currently advertisers spend more heavily on television commercials than any other form of advertising. As television viewership has become more fragmented, advertisers have sought new ways to reach consumers. Advertisers are now experimenting across the many devices and applications consumers use to access digital media. Additionally, the growth of web advertising has increased the criteria advertisers use to evaluate successful advertising, adding metrics such as personalization and guaranteed views.

Rovi’s Markets

We sell our products into the following market verticals (i) service providers (cable, satellite, telecommunications, mobile and internet service providers among others), (ii) CE manufacturers, and (iii) Other.

Service Providers

Our service provider vertical generated 43%, 49% and 48% of our revenue from continuing operations in 2011, 2010 and 2009, respectively.

IPGs

An IPG is an interactive listing of television or video program information that enables viewers to navigate through, sort, select and schedule video programming for viewing and recording. We believe that interactive video guidance technology is a necessary tool for television viewers bombarded with an increasing amount of available content and an increasing number of digital cable and satellite television channels, VOD services, and IP enabled download services. The IPG is evolving from a guide to linear television content to a guide for all the digital content that users have access to in the home or available to them on their TV, including programming delivered over the Internet.

Our service provider licensees either deploy IPGs provided by the Company or, pursuant to an IPG patent license, their own IPG or a third party IPG. For service providers that deploy one of our IPGs, we also offer operational support, content, professional services and data. Our IPGs allow service providers to customize certain elements of the IPGs for their customers and also allow these providers to upgrade, over time, the features and services they can offer to their customers. Our service provider IPGs are compatible with service providers’ subscription management, pay-per-view (“PPV”) and VOD services. Our IPGs allow service providers to provide their viewers with current and future program information. We currently offer IPGs marketed to service providers under the i-Guide, Passport and TotalGuide brands.

TotalGuide HD and TotalGuide xD are our latest IPG offerings for service providers. TotalGuide HD provides an advanced user experience that enables subscribers to quickly see what’s on their favorite channels,

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search and browse by program, celebrities, cast and credits across video service offerings such as linear broadcasts, service provider VOD, third party internet provided VOD and their DVR. TotalGuide HD intuitively enables viewers to discover content based on the actors, directors or other characteristics of shows and alleviates the complexity of scrolling through hundreds of channels and thousands of on demand titles and also makes extensive use of cover art in the browsing experience to make the content more engaging. TotalGuide HD enables consumers to easily find and discover shows and access content from multiple sources. Consumers can take immediate action to watch, record or bookmark programs for later viewing. The application also introduces a new way for consumers to find and enjoy their cable operator’s VOD content. We have entered into TotalGuide HD licensee agreements with Bend Broadband, Buckeye, Charter and Cogeco and expect that these licensees will begin deploying TotalGuide HD by the end of 2012.

TotalGuide xD is a search and discovery application that connects and extends the cable video experience from set-top boxes to multiple mobile screens, including tablets and smartphones. Designed for seamless operation with Rovi’s i-Guide, Passport Guide, and TotalGuide HD, TotalGuide xD makes extensive use of Rovi Cloud Services, such as video and celebrity data, search and recommendations, user profile management, and advertising services. TotalGuide xD has the flexibility to connect to a variety of mobile video content sources, including pay TV subscriptions anytime, anywhere, as cable operators introduce these services. TotalGuide xD is licensed to service providers to enable them to connect and extend their existing and emerging video experiences to web and mobile devices allowing their subscribers to search and discover available video content from a single user experience. With TotalGuide xD, consumers can even use their devices to set DVR recordings and tune to content. We have entered into TotalGuide xD licensee agreements with Armstrong, Bend Broadband, Blueridge, Buckeye and Cogeco and expect that these licensees will deploy TotalGuide xD in 2012.

TotalGuide products also extend onto websites, allowing MSOs to embed IPGs into their own websites and enable remote recording capabilities or just channel browsing.

Most of our service provider IPGs also feature advertising. Additionally, we work with some service providers to sell advertising on a guide that they have developed and package their subscriber footprint into the entire footprint that we offer advertisers. Service providers who have a patent license from us are not required to provide advertising in their IPG. However, our agreements with domestic service providers generally require the sharing of advertising revenue if IPG advertising is provided.

Historically, we have primarily sold broadcasters, or their agencies, the opportunity to promote their products via advertisements inserted in IPGs. Our most recent guides even allow an advertisement for a specific television program to link directly to the TV channel it is on or allow consumers to program a recording or a reminder from the ad. However, conventional advertisers, or their agencies, are our largest source of advertising growth. We offer packages to advertisers to provide them nationwide or targeted advertising on a guide for a period of time. Advertisers place ads through a variety of display formats incorporated into the guide screens. Depending on the IPG deployed, advertisements can display additional text information or video when clicked on via the remote control. Advertisers can target specific audiences by airing advertising at certain times of the day or in specific geographies. We believe conventional advertisers are increasingly aware of the value proposition for advertisements inserted in IPGs.

To demonstrate the value of this advertising, we began measuring usage and ad views by consumers for certain service provider guides deployed in the United States (a clickstream analysis) in late 2008. This information has increased and, we believe, will continue to increase our revenue from advertising by offering the advertiser evidence of the reach of a given advertisement or time slot. Service providers generally pay us a monthly per subscriber fee. Service providers in the online space generally pay us a fee based on unique users. We have also entered into agreements with certain licensees that enable them to provide an IPG to an unlimited number of subscribers or unique users, provided they pay us a specified flat fee. We also include in service provider revenues any revenue related to an IPG deployed by a service provider in a subscriber household whether the ultimate payment for that IPG comes from the service provider or from a manufacturer of a set-top

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box. We generally do not receive a license fee from manufacturers for set-top boxes deployed by a cable or satellite provider where that provider has also licensed our IPG technology.

Our service provider customers include British Sky Broadcasting Group, Canal+, Charter, Comcast Corporation (“Comcast”), Cox Communications, Cablevision, DirecTV, EchoStar Communications, Foxtel, MegaCable, Sky Deutschland, Sky Italia, Shaw Communications, Time Warner Cable, UPC, Verizon and others. We also have license agreements with third party IPG providers such as Alticast, NDS, Scientific-Atlanta and others. The majority of subscribers for which we are paid a license fee are receiving an IPG pursuant to a patent license between us and the service provider or third party IPG provider. As of December 31, 2011, approximately 137 million subscribers worldwide are receiving a licensed or Rovi-provided IPG, including approximately 50 million internationally.

Consumer Electronics

Our CE vertical generated 46%, 40% and 42% of our revenue from continuing operations in 2011, 2010 and 2009, respectively.

IPGs

We currently offer multiple IPGs to the CE industry, including those marketed under the G-GUIDE brand in Japan and the TotalGuide brands in Europe and North America. These IPGs are generally incorporated into mid- to high-end plasma, DLP and LCD televisions and Blu-ray or DVD hard drive recorder based products. Our IPGs generally deliver continuously updated multi-day program listings to users, regardless of whether they receive their television signal via cable or over-the-air broadcast. We use a variety of terrestrial, satellite and broadband Internet transmission means to deliver listings data to our IPGs.

Our CE IPG products also feature advertising. Some of our CE IPG product agreements require that we share a portion of this IPG advertising revenue with the CE manufacturer. CE manufacturers who have a patent license from us are not required to provide advertising in their IPG.

Our CE IPG licensees include devices distributed under the Apple, Hitachi, LG, Mitsubishi, Panasonic, Philips, Samsung, Sharp, Sony, Toshiba and other brands. Generally, our agreements enable our licensees to incorporate our CE IPG technology or utilize our CE IPG patents in specified products, in certain territories, provided we receive license fees based on the number of units produced and shipped that incorporate our technology or utilize our patents. Our agreements with some of the major CE manufacturers allow them to ship an unlimited number of units incorporating our CE IPG technology or utilizing our CE IPG patents, provided they pay us a specified flat fee.

TotalGuide is the Company’s next generation guide, expanding guidance and available content beyond a traditional IPG. We believe our TotalGuide solution allows CE manufacturers to increase customer satisfaction by offering simple and intuitive access to multiple content types: broadcast, premium, Internet-based / over-the-top video, and personal. In addition, our TotalGuide solution enhances the consumer experience through our rich media television guidance information database, as well as with extended multimedia and increased personalization options. With search and recommendations technologies, our TotalGuide solution guides consumers to find favorites and discover new content, no matter if it comes from broadcast TV or is Internet-based / over-the-top. CE manufacturers can elect to deploy a full TotalGuide solution consisting of the broadcast and broadband guides, or deploy selected components implemented via a professional services agreement. Additionally, a CE manufacturer can also choose to implement the Rovi Cloud Services that power our TotalGuide solution, such as entertainment metadata, search, recommendations, advertising, device management and user profiles to power their own IPGs. CE manufacturers can choose to implement the Rovi Cloud Services on their own, or contract with Rovi professional services to custom build a user interface or application unique to that customer. An important element of our TotalGuide solution is its ability to not only provide guidance to

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Internet-based content, but to also allow the consumer to view the Internet-based content they find. To facilitate this activity, the Company has relationships with online content distributors, such as Blockbuster, Showtime, Flixster and Starz, to make their content available via TotalGuide. We have entered into nearly 50 of these relationships in North America and EMEA. The content is not only integrated with the TotalGuide user interface, but also with our database so that a consumer can search and access the media that the content partner makes available (for free, purchase or rental). Whether these relationships provide us with revenue depends on the content distributor as well as the Company’s agreement with CE manufacturers, who then must determine which content distributor’s services they desire to have integrated into their devices.

Our TotalGuide solution also provides advertising options for both program promoters and conventional advertisers. Advertisements within TotalGuide are selectable, allowing a more interactive experience, including commerce. Banner advertisements can be clicked on and a consumer can then access trailers, special offers and social media. TotalGuide also offers new forms of in-grid advertising which can be inserted into the grid either in a row or into a cell. Once selected, an interactive experience can be triggered. The CE TotalGuide advertising footprint is included with the Service Provider advertising footprint by our IPG advertising sales group when selling IPG advertising.

In Japan, Interactive Program Guide Inc. (“IPG JV”), our joint venture with Dentsu Inc. and Tokyo News Service Limited, is the exclusive provider of program listings and advertising for our IPGs marketed under the G-Guide brand. We own 46% of IPG JV and have certain contractual rights with respect to the ongoing management of IPG JV. We also retain the right to license our technology and intellectual property to third parties in Japan who will receive program listings and advertising from IPG JV, and we retain all rights to the revenue from such licenses. We have entered into licensing agreements with CE manufacturers and other third parties for televisions, digital recorders, personal computers and cell phones that are enabled to receive the G-Guide service.

DivX

Our DivX products are focused on improving the way consumers experience video media. We offer a high-quality video compression-decompression software library, or codec, to enable distribution of content across the Internet and through recordable media in either physical or streamed forms. The DivX codecs have been developed as a solution to address the opportunity created by the transformation of content and the consumer’s desire for the best possible experience. Specifically, we have built the technological platform and galvanized the community necessary to enable a digital media ecosystem of consumers, content creators, software vendors, hardware device manufacturers and advertisers, allowing each participant in this ecosystem to benefit from the participation of the other participants.

DivX codecs are embedded in devices to enable the playback of digital media for consumers. To support DivX there is extensive effort put into maintaining an ecosystem, which includes approvals from Hollywood studios, supporting a DivX DRM to protect the content encoded in DivX, providing encoding tools needed by retailers and others offering digital content, operating a license service to validate clients prior to allowing playback of protected media, and promoting the usage of DivX among those producing and distributing video.

As streaming has become a more critical form of enjoying video, we have developed DivX Plus Streaming. We believe DivX Plus Streaming will be an industry leading solution for providing adaptive bitrate streaming to numerous devices, including PC, TV, Blu-ray and numerous portable devices. DivX Plus Streaming offers enhanced capability, such as subtitling, multi-language support, and multiple audio tracks, which solves several issues for showing content in multiple regions. Additionally, DivX Plus Streaming is focused on providing the best quality video playback removing screen shifts or “jitter” that consumers experience when streaming video as bandwidth rates change. The Rovi Entertainment Store will begin using DivX Plus Streaming in 2012, to provide the best possible video experience in our own storefronts.

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DivX codecs and media players have been downloaded by consumers hundreds of millions of times. Our DivX technology has been embedded in over 500 million CE devices in a broad range of categories including DVD players, Blu-ray players, digital televisions, mobile phones, tablets, gaming consoles and set-top boxes (“STB”).

Our DivX licensees include devices distributed under the LG, Panasonic, Philips, Samsung, Sharp, Sony, Toshiba and other brands. Generally, our agreements enable our CE licensees to incorporate our DivX technology in specified products in certain territories, provided we receive license fees based on the number of units produced and shipped that incorporate our technology. We have also entered into agreements with certain licensees that enable them to ship an unlimited number of units, provided they pay us a specified flat fee. Additionally, in very limited device categories, we have entered into agreements with certain licensees which allow them to use our DivX technology in perpetuity for a one-time fee. In addition to CE licensing revenue, we also generate revenue from licensing upgraded versions of our free software on-line directly to consumers, referral and advertising fees and content distribution fees.

The Rovi Advertising Platform

As more CE devices are connected to the Internet, they are incorporating new user interfaces allowing consumers to interact with application and other web like content. Specifically, TVs and Blu-ray players are now platforms for accessing digital entertainment, not just watching broadcast or physical media. These new user interfaces offer an opportunity to advertise to consumers. We offer our advertising capability, traditionally utilized in a Rovi provided Service Provider or CE manufacturer IPG, in support of any user interface via Rovi Cloud Services. We offer Rovi Ad Platform services to CE manufacturers who want to include display advertising in their user interfaces, regardless of whether a Rovi user interface is present or not. Additionally, we are able to support application developers who want to provide display advertising in their TV based application. We utilize the extensive data collection capability of our platform and we integrate the data that we collect from other devices to provide advertisers a unique perspective on the performance of connected TVs for advertising effectiveness. We utilize the same processes and infrastructure to support the rest of our advertising business, including sales, ad operations, ad creative, reporting and analysis.

We provide this advertising platform to CE manufactures at no cost. Rovi sells, traffics, and reports on the advertising, sometimes in exclusive arrangements and provides revenue shares to the CE manufactures. Our current Rovi Advertising Platform customers include Samsung and Sony.

Connected Platform

Connected Platform is a standards-compliant software solution embedded in consumer electronics and networking equipment designed to allow consumers to access content such as photos, music, and movies stored remotely on any of their connected devices. The Connected Platform complies with the Digital Living Network Alliance (DLNA) and Universal Plug and Play (UPnP) Forum standards. It is sold to CE manufacturers and is comprised of several different components: Digital Media Server (DMS) software, Digital Media Adapter (DMA) software, and Digital Media Player (DMP) software, each sold as a software development kit (SDK).

Our Connected Platform customers currently include Buffalo, Scientific-Atlanta, Samsung and others.

Media Recognition

Our LASSO media recognition solution is embedded in a CE device (including automobiles) or service that reads media and associates it with the correct data from our data solutions database (such as title, artist, and tracks). The data look-up is accomplished either via a remote call to the infrastructure we operate or to a database we provide to embed on the device. The recognition is accomplished via either a table of contents review (for instance, read the table of contents of a CD) or taking a fingerprint of the media (for instance, identify wave

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formats of the media) and matching it to our database. The recognition technology is sold in conjunction with supporting data services, playlisting and voice recognition. CE manufacturers typically pay us per device royalties for each device within which our media recognition data services are implemented. Our media recognition customers include Nokia, Samsung and others.

Media Manager

The Rovi Media Manager is a product which is sold as a companion to LASSO or Connected Platform, creating a solution targeting CE manufacturers. It is a PC application enabling consumers to manage personal media they have stored throughout their home including music, photos and video files. It is integrated with LASSO enabling a consumer to identify and tag any media they may have on their home storage. It is integrated with Connected Platform allowing consumers to move media between devices. Media Manager is also integrated with the Rovi Cloud Services, allowing users to search for video and other entertainment data that is contained in Rovi’s metadata catalog. The Media Manager is an incremental licensing opportunity to LASSO and/or Connected Platform and is sold on a per unit basis.

Rovi Digital Copy Solution

The Rovi Digital Copy Solution is a new offering for consumer electronics devices and PC software applications that enables a consumer to recognize and authenticate physical DVD or Blu-ray discs and purchase a digital copy to be placed in a Rovi Entertainment Store and/or UltraViolet locker. Rovi Digital Copy Solution can determine whether a disc is legal or pirated, and also whether the disc is a retail, rental or subscription version of a release. Once authenticated, a CE manufacturer, PC OEM, online store, portal or application can offer an opportunity to a consumer to purchase another copy (such as a high definition version of a standard definition DVD that has been detected). Rovi Digital Copy Solution is an SDK that is embedded into DVD and Blu-Ray players or integrated into PC software applications and works in concert with Rovi Media Recognition Service, Rovi Authentication Service and Rovi Entertainment Store’s Commerce Services.

Content Protection

Our analog video content security, commercially known as ACP, has been used to protect billions of videocassettes since 1985 and billions of DVDs since 1997. For additional details on ACP technology see “Content Protection” in the “Other” section below.

We license ACP directly to CE manufacturers as well as semiconductor companies that supply the CE manufacturers. Semiconductor companies that incorporate our digital PPV, VOD and DVD content security solutions into their semiconductor chips pay us a one-time service fee to verify correct implementation of our content security technology in their digital-to-analog application-specific integrated circuits (“ASICs”) that are embedded in digital set-top boxes and DVD hardware. They are authorized to sell these Rovi-capable ASICs to Rovi-licensed DVD hardware manufacturers and to Rovi-licensed digital set-top box and DVR manufacturers.

CE device manufacturers license our technology for an up-front fee and annual license fee, as well as per-device fee for shipped devices. Digital set-top box and DVR manufacturers license our video content security solutions typically for an up-front fee and a per-unit royalty, a portion of which may be tied to product activation by system operators. We have also entered into agreements with the majority of large CE and set-top box manufacturers in which they paid us a one-time fee for a perpetual license to our technology.

Our CE content protection customers sell set-top boxes and hardware under the Scientific Atlanta, Fujitsu Limited, Mitsubishi Electronics, Motorola, Pace, Panasonic, Pioneer Electronics, Samsung Electronics, Sharp, Sony Electronics, Toshiba and other brands.

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Other

Other includes the Rovi Entertainment Store, our data solutions business, our MainConcept codec and Professional products businesses and our business of licensing our content protection products and services to entertainment companies. Our Other vertical generated 11%, 11% and 10% of our revenue from continuing operations in 2011, 2010 and 2009, respectively.

Rovi Entertainment Store

The Rovi Entertainment Store business provides a “white-label” service to companies that want to distribute, either in a sale or rental model, premium entertainment content directly to consumers using the Internet for delivery to a broad range of devices. Customers include traditional retailers, CE manufacturers, Hollywood studios and companies looking to provide over-the-top (OTT) video-on-demand services to “connected” devices. The Rovi Entertainment Store library contains thousands of digital assets, including content from 20^th Century Fox Film Corporation, Universal Studios, Sony Pictures Entertainment, Paramount Pictures, Warner Bros., Summit Entertainment, and Lions Gate Entertainment, which content includes major Hollywood hits, feature-length films, television episodes, short films, and music concerts. Rovi Entertainment Store has historically provided its “white-label” service to companies distributing premium entertainment content in the United States. Subsequent to acquiring Rovi Entertainment Store, we launched support for a “white-label” service in Canada. Additionally, prior to the close of the Sonic acquisition, Sonic acquired Nowtilus Online mbH (“Nowtilus”). Nowtilus provides “white-label” OTT VOD solutions to companies seeking to provide premium entertainment content to connected devices in Germany. We anticipate continued expansion of our “white-label” services in North America and Europe next year.

Additionally, we anticipate expanding Rovi Entertainment Store to offer Service Providers the ability to provide IP based VOD and access to subscription content, by integrating the Rovi Entertainment Store service into TotalGuide xD.

We generally receive service fees from retailers and others for operating their storefronts and also record revenue from the sale or rental of individual content titles when the content is purchased and delivered. Rovi Entertainment Store customers currently include Best Buy, Warner Brothers / Flickster, Media Markt and others.

Data Solutions

We offer music, television, movie, book, and video game metadata. In addition, we catalog information on celebrities, awards, sports, and other data necessary to provide a robust set of metadata. Our television guidance information database includes unique data on more than 3 million TV programs. Our database also has information on approximately 3 million music albums, 30 million tracks, 8 million books and 65,000 video games. Our data services are operated with systematic processes that are designed to ensure completeness and quality of the data as well as linking the relationships among the data elements. The data services are broken into levels of data: basic data (such as artist, album), navigational data (such as relationships between actor and other movies or television series), and editorial data (such as actor biographies, television, movie or music reviews). We have continued to expand our data to include information from social networks, catalogs of digital providers and other sources such as Wikipedia.

Besides licensing the data to Web properties or embedding the data in CE devices, the databases are also available via our web sites, specifically allrovi.com, allmusic.com and allgame.com. Each is a complete view of the database, but not exportable for commercial use by others, and is an advertising-supported business.

Additionally, we license the Rovi Cloud Services to customers of our data. They can choose to gain real time access to the data via our Web Services or to incorporate additional functionality such as media search, recommendations (social, editorial, personalized) or enhanced advertising.

Web properties typically pay us a monthly or annual fee for the rights to use the metadata, receive regular updates and integrate it into their own service. Rovi Cloud Services customers generally pay a consumption fee

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based on the number of database lookups or calls they perform or a monthly fee for the right to access the Rovi Cloud Services. Our music, movie and video game metadata customers include Apple, Best Buy, Barnes and Noble, Comcast, Ebay, Google, Microsoft, MTV Networks and others.

We provide resources for all types of media and businesses in print, on-screen and online formats—as well as through interactive and electronic program guides. Additionally, the data covers multiple geographies including the US, Latin America, major Western European countries, Japan and Korea. We license a number of data and service offerings, including schedules, listings, TV supplements, and Web Services. Our data can be sold stand-alone or as a complement to an IPG.

MainConcept and Professional Products Group

We offer our professional product software under the Scenarist, CineVision, and DVDit product names to major motion picture studios, high-end authoring houses and other professional customers. Our MainConcept toolkits are used for video encoding and decoding supporting a wide range of standard formats including an H.264 codec solution and a wide range of other high-quality video codecs and technologies for the broadcast, film, consumer electronics and computer software markets.

Generally, our agreements enable our MainConcept licensees to incorporate our technology in specified products in certain territories, provided we receive license fees based on the number of units produced and shipped that incorporate our technology. We have also entered into agreements with certain licensees that enable them to ship an unlimited number of units, provided they pay us a specified flat fee.

Content Protection

Motion pictures typically generate significant revenue from the sales of packaged media, primarily DVDs. Any household that owns a DVD-R, personal video recorder (“PVR”), PC, or a media center, is capable of making unauthorized, high-quality digital and analog copies unless that content is properly copy protected against this variety of threats.

Our ACP technologies allow consumers to view programming stored on prerecorded videocassettes and DVDs or transmitted as digital pay-per-view or video-on-demand programs via cable or satellite, but deter unauthorized consumer copying of such programming on recordable DVD devices. Motion Picture Association of America (“MPAA”) and independent studios can use our video content security technology to protect movie releases on videocassette or DVD. For the protection to work, ACP must be present on both the media (physical or digital) and the hardware device.

We sell directly to MPAA and independent studios. Content owners utilize our solutions to secure their content and thus ensure that the end customer pays them for the use of their content. Studios generally pay us an annual license fee to use our ACP technology.

Our content security technology customers include the following companies: Buena Vista Home Video, Paramount Pictures, Twentieth Century Fox Home Entertainment and others.

Rovi’s Growth Strategy

Build Upon Key Customer Relationships. We maintain relationships with customers in various industry and market segments, including:

• CE manufacturers of digital television, Blu-ray and standard DVD players, CD and DVD drives, PVRs, network attached storage devices (NAS) and digital set-top boxes and other types of devices

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• Service providers such as the leading cable and satellite television system operators and telecommunications operators

• Large online retailers, music services, advertisers and portal websites

• Video content providers including MPAA members and independent movie studios

We intend to grow our business by capitalizing on existing and creating new customer relationships. We will target existing customers and seek to expand the technologies we provide them. Specifically, we will target existing IPG patent licensees and seek to sell them our IPG product. We believe TotalGuide as well as our other products are the types of products that make this feasible. We also believe that as the TotalGuide installed base increases, we can substantially grow our advertising revenue. If a customer determines that it should build its own guide or consumer facing user interface, we then offer the customer Rovi Cloud Services to power the experience and speed its time to market. This enables us to offer advertising to a connected device in which a Rovi guide or application may not be present. Additionally, we will focus on non-customer companies seeking to capture a portion of the digital entertainment opportunity. We believe our compelling solutions will help us create new customer relationships.

We also believe we have the opportunity to introduce the Rovi Entertainment Store to new market verticals, such as service providers, which can help increase revenue for the Rovi Entertainment Store and also expand the demand for our TotalGuide solution. We see opportunities to add advertising capability into the Rovi Entertainment Store, both on the user interface and also alongside appropriate content. Also, we expect that integrating DivX Plus Streaming into the Rovi Entertainment Store will result in a DivX Plus Streaming licensing opportunity with CE manufacturers. As we use DivX Plus Streaming to create a better user experience for enjoying streamed content, we expect to license DivX Plus Streaming to CE manufacturers who want to be able to host Rovi Entertainment Store storefronts on those devices.

Introduce New Product Applications and Technologies. We intend to develop additional digital entertainment content solutions to sell to our extensive customer base. We have committed significant resources to expand our technology base, to enhance our existing products, to introduce additional products, and to participate in industry standard-setting efforts and organizations. We intend to pursue opportunities to improve technologies in our current fields of operations as well as in future formats and digital distribution solutions.

Expand and Protect Patent Position. We have built, and continue to add to, a large patent portfolio that helps differentiate our products. We believe that our future success will depend on our ability to continue to introduce proprietary solutions for IPGs, connected devices and data. We have patented many of these proprietary solutions, and our patents underpin our strong competitive position and financial model. We also have acquired patents from others. We intend to continue to obtain patents and to protect and defend our patented technologies aggressively.

Continue to Make Strategic Acquisitions. We may continue to expand our technology portfolio and extend our businesses by pursuing licensing arrangements, joint ventures, and strategic acquisitions of companies whose technologies or proprietary rights complement our technologies.

Copyrights, Trademarks, and Tradenames

We own or have rights to various copyrights, trademarks and trade names used in our business. For our continuing business units, these include, but are not limited to, Rovi^®, All Game Guide^®, All Music Guide^®, AMG^®, AMG All-Game Guide^®, AMG All-Media Guide^®, AMG All-Movie Guide^®, AMG Sonicguide^®, DivX, Explore Movies^®, Explore Music^®, Lasso™, MainConcept, M1 Mediabolic^®, Music Map™, Passport , RipGuard^®, Tapestry™, TotalGuide, RoviGuides, G-GUIDE and Gemstar.

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Research and Development

Our internal research and development efforts are focused on developing enhancements to existing products and new applications for our current technologies. We have acquired other companies and technologies to supplement our research and development expenditures.

Our primary locations for product development are in California (Burbank, Playa Vista, Santa Clara, San Diego and San Francisco), Michigan (Ann Arbor), Pennsylvania (Radnor), and China (Hangzhou and Shanghai).

Operations and Technical Support

We have technical support and certification operations to support our entertainment, CE and system operator products.

We provide a variety of technical support to our customers:

• We provide post-sales training, technical support, and integration services to service provider licensees of our IPG applications software as part of their service offerings.

• We provide post-sales professional services and technical support, training, integration, non-recurring engineering and software development services to CE, set-top box and NAS manufacturers incorporating the Connected Platform in their products.

• We provide pre- and post-sales professional services and technical support to companies incorporating our media recognition data services or media recognition into their products.

• We support the efforts of television, PVR, and DVD hardware manufacturers, digital PPV/VOD system operators and PPV/VOD set-top box manufacturers to design hardware that properly incorporates and is compatible with our video content security solutions.

• We operate the internet based services needed to power the Rovi Entertainment Store and Rovi Cloud Services. For the Rovi Entertainment Store this includes hosting the video content and content management system, operating the commerce function or integrating with appropriate agents, and operating the backend of storefronts, including delivery of video content purchased or rented by consumers. For Rovi Cloud Services this includes data delivery, search, recommendations, advertising, device management and media recognition. We occasionally take end user calls related to these services.

• We provide broadcast data delivery of television line-up data and advertising to TVs and set-top boxes enabled with our IPGs in North America, major European markets and Japan. This service provides the data that populates the guides with the listings and advertising necessary to make the IPG useful to a consumer. In addition, we deliver, via the Internet or satellite, similar line-up and advertising data to cable and satellite providers in North America.

• We support our customers’ efforts to ensure our IPGs operate properly within their devices, by offering porting services.

• We provide customer care for IPG customers following deployment of our IPGs. This service deals with issues with data and advertising distribution as well as functional issues for a consumer.

• We assist semiconductor manufacturers in incorporating and certifying our video content security solutions, DivX and Rovi Entertainment Store technology into a variety of digital video integrated circuits.

• We regularly test the effectiveness and transparency of our video content protection technologies on representative samples of consumer televisions, DVD players, DVD drives, PVRs, and recorder devices to determine whether modifications or enhancements may be necessary.

• We test for RipGuard compatibility and effectiveness with a variety of CD/DVD drive software and hardware.

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Intellectual Property Rights

We operate in an industry in which innovation, investment in new ideas and protection of our intellectual property rights are critical for success. We protect our innovations and inventions through a variety of means, including but not limited to applying for patent protection domestically and internationally.

As of December 31, 2011, we hold 664 U.S. patents and have 781 U.S. patent applications pending. We also have 2,430 foreign patents issued and 1,276 foreign patent applications pending. Each of our U.S. issued patents will expire at a different time based on the particular filing date of that respective patent, with expiration dates as late as 2029.

Competition

IPGs

There are a number of companies that produce and market IPGs as well as television schedule information in various other formats, that compete or we believe will compete with our IPG products and services. These alternative formats include passive and interactive on-screen electronic guide services and online listings.

A common competitor we encounter is a customer who chooses to build its own IPG and license our intellectual property. We believe that we provide a strong alternative to “do-it-yourself,” as we have products ready to be implemented and already have data distribution infrastructure and content as well as integration to third party services (such as VOD services for service providers). We intend to build differentiation by continuing to integrate our products into a suite of products and services to provide solutions for our customers. We believe our solutions can speed our customers’ time to market, be deployed at a lower cost than internally built products, and are superior to “do-it-yourself” products. For those that choose to do it themselves we have added Rovi Cloud Services to provide them services that can power their self-developed experience.

We have begun to see activity from Web properties or device manufacturers, such as Yahoo! and Google, or Boxee entering the CE market, namely embedded in TVs in North America or by launching their own devices. Such companies could offer competitive functionality in the future.

Many of our competitors and other companies and individuals have obtained, and may be expected to obtain in the future, patents that may directly or indirectly affect the products or services offered or under development by us. We are currently developing a variety of enhancements to our IPGs. We cannot assure that any enhancements developed by us would not be found to infringe patents that are currently held or may be issued to others. There can be no assurance that we are or will be aware of all patents containing claims that may pose a risk of infringement by our products and services. In addition, patent applications are generally confidential for a period of 18 months from the filing date, or until a patent is issued in some cases, so we cannot evaluate the extent to which certain products and services may be covered or asserted to be covered by claims contained in pending patent applications prior to their publication. In general, if one or more of our products or services were to infringe patents held by others, we may be required to stop developing or marketing the products or services, to obtain licenses to develop and market the products or services from the holders of the patents or to redesign the products or services in such a way as to avoid infringing the patent claims. This could have an effect on our ability to compete in the IPG marketplace.

DivX Codecs

We face significant competition in the digital media markets in which we operate. We believe that our most significant competitive threat comes from companies that have the collective financial, technical and other resources to develop the technologies, services, products, and partnerships necessary to create a digital media ecosystem that can compete with the DivX ecosystem. For example, companies such as Amazon.com, Apple,

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Google, Microsoft, Sony, Yahoo! and Adobe Systems may have competitive advantages over us because of their greater size and resources and the strength of their respective brand names. In addition, some of our current or potential competitors, such as Apple, Dolby Laboratories, Microsoft and Sony, may be able to offer integrated system solutions in certain markets for entertainment technologies, including audio, video and rights management technologies related to personal computers or the Internet, which could make competing products and technologies that we develop unnecessary. By offering an integrated system solution, these potential competitors also may be able to offer competing products and technologies at lower prices than our products and technologies. Further, many of the consumer hardware and software products that include our technologies also include technologies developed by our competitors. As a result, we must continue to invest significant resources in product development in order to enhance our technologies and our existing products and introduce new high-quality technologies and products to meet the wide variety of such competitive pressures.

We also compete with companies that offer products or services that compete with specific aspects of our digital media ecosystem. For example, our digital rights management technology competes with technologies from companies such as Apple, ContentGuard, Intertrust Technologies, Microsoft, Nagra Audio and NDS Group, as well as the internal development efforts of certain of our licensees.

Our proprietary video compression technologies also compete with other video compression technologies, including other implementations of MPEG-4 or implementations of H.264/AVC. In addition, a number of companies such as Adobe Systems, Apple, Ateme, Google, Microsoft, and RealNetworks offer video formats that compete with our proprietary video format.

Rovi Entertainment Store

The Rovi Entertainment Store faces a wide range of competition from other companies seeking to position themselves strategically as the digital distribution of Hollywood movies and other premium content grows in scope and importance. Significant competition exists from well-established traditional premium content distribution channels, including retailers that rent, sell or trade DVDs and games, cable and satellite VOD services, and other in-home entertainment. Consumers have a variety of vendor choices and multiple distribution options for premium content consumption, and we believe that this competition will increase over the coming years as the proliferation of digital delivery continues. Some of our current or future competitors may have significantly greater financial, technical, marketing and other resources than we do, may enjoy greater brand recognition than we do, or may have more experience or advantages than we have in the markets in which they compete.

Content Security Technology

Our video content security solutions are proprietary and have broad U.S. and international patent coverage. We have an analog content security solution that has been widely deployed on commercial products that significantly distorts or inhibits copying by PVRs, including DVD recorders and hard drive recorders with an analog out. Currently, our video content security technology is embedded in nearly all DVD players and most digital set-top boxes worldwide. While it is possible that a competitive video content security technology could be developed and deployed, we believe it would take years for the competitive technology to be accepted by hardware manufacturers and embedded into the consumer electronic devices. Given the time this would take, it is unlikely any other analog content security technology would displace our content security infrastructure and our extensive video content security “ecosystem.” The greatest competitive threat to our content security technology is content providers choosing not to copy protect their content or CE manufacturers ceasing to produce PVRs with an analog out.

With the increase in online content distribution over the Internet, and with the continuing advance of digital content and high-definition formats, our analog video content security solutions that protect standard definition

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content on optical media and digital PPV/VOD signals are viewed by some of our customers as being less important than the other digital and network content protection solutions. As a result, other Internet-based digital content security or DRM technologies may present significant competition to our video content security business, such as DRM offerings by Intertrust, Microsoft, Apple, RealNetworks, ContentGuard, Philips, IBM and Sony.

Data Services

In the database and data services area, we compete with other providers of entertainment-related content data such as Tribune Media Services, Internet Movie Database (IMDB) and Gracenote. While we do not believe that our competitors’ data sets are focused on exploration, discovery, and content management in the way that our data is, nor are they tightly tied to a portfolio of software to which they add significant value, they may present competition to our data services business.

Media Recognition Technology

In the recognition technology and CE manufacturer area, our primary competitor is Gracenote, who provides media recognition technology as part of their CDDB data set. Their core technology provides basic album and track metadata when a CD is inserted into a drive. Shazam Entertainment also sells a music media recognition technology.

Legislative and Regulatory Actions

A number of government and legislative initiatives have been enacted to encourage development and implementation of technologies that protect the rights and intellectual property of the content owners. For example, the United States and other countries have adopted certain laws, including the Digital Millennium Copyright Act of 1998, or DMCA, and the European Copyright Directive, which are aimed at the prevention of piracy of content and the manufacture and sale of products that circumvent copy protection technologies, such as those covered by our patents.

VBI and Digital Data Carriage Matters

We use the vertical blanking interval, or VBI, in the analog television signals of the local affiliates of major broadcast networks to supply updates throughout the day of program listing information to our guidance solutions for consumer electronics devices in the United States. We have agreements which allow for the distribution of our CE IPG data over the digital broadcast signals of participating stations, following the installation of necessary equipment. The Federal Communications Commission (“FCC”) has ruled that it is within the discretion of a cable multiple system operator (“MSO”) to retransmit or strip out data transmitted in the VBI lines of broadcast stations carried on that MSO’s system. We have agreements with MSOs which provide for carriage of our program listing information in either the VBI or within the digital signal of broadcast television stations.

Compatibility Between Cable Systems and Consumer Electronic Equipment

The FCC has been working for over a decade to implement a congressional mandate that it create a competitive market for cable television set-top boxes and other devices to access video programming on cable systems (“navigation devices”) and give consumers a choice in the device used to access such programming, while still allowing the cable systems to have control over the secured access to their systems.

To meet its statutory obligation without compromising the security of video services, the Commission required cable systems to make available a security element (now known as a CableCARD) separate from the basic navigation device needed to access video program channels. In 2003, the FCC adopted regulations implementing an agreement between cable television system operators and consumer electronics manufacturers

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to facilitate the retail availability of so-called “plug and play” devices that utilize unidirectional CableCARDs, including digital televisions and other digital devices that enable subscribers to access cable television programming without the need for a set-top box (but without the ability for consumers to use interactive content). Due to certain legislative developments in the U.S., cable subscribers may be able to utilize interactive and other two-way services without the need for a set-top box, meaning that consumers could use an IPG built directly into a TV to access and operate their cable subscriptions and not need to purchase or rent a set-top box from the cable operator. In an effort to ensure that cable operators adequately support CableCARDs, FCC regulations also prohibited multi-channel video service providers (except satellite providers) from deploying after July 1, 2007, navigation devices with combined security and non-security functions (the “integration ban”). Both cable operators and consumer electronics manufacturers are required to use the same security solution. Further developments with respect to these issues could impact the availability and/or demand for “plug and play” devices, particularly bi-directional devices, and set-top boxes, all of which could affect demand for IPGs incorporated in set-top boxes or CE devices.

General Government Regulation

We are subject to a number of foreign and domestic laws and regulations that affect companies that import or export software and technology, including encryption technology, such as the U.S. export control regulations as administered by the U.S. Department of Commerce.

We are also subject to a number of foreign and domestic laws that affect companies conducting business on the Internet. In addition, because of the increasing popularity of the Internet and the growth of online services, laws relating to user privacy, freedom of expression, content, advertising, accessibility, network neutrality, information security and intellectual property rights are being debated and considered for adoption by many countries throughout the world. Each jurisdiction may enact different standards, which could impact our ability to deliver data, services or other solutions on the Internet.

We may be further subject to international laws associated with data protection, privacy and other aspects of our business in Europe and elsewhere and the interpretation and application of data protection laws is still uncertain and in flux. In addition, because our services are accessible worldwide, foreign jurisdictions may claim that we are required to comply with their laws. In addition, the application of existing laws regulating or requiring licenses for certain businesses of our advertisers can be unclear. The resulting regulation, if any, may alter our ability to target advertising or provide data about the end-users and/or customers and their behavior.

In the U.S., online service providers have been subject to claims of defamation, libel, invasion of privacy and other data protection claims, tort, unlawful activity, copyright or trademark infringement, or other theories based on the nature and content of the materials searched and the ads posted or the content generated by users. In addition, several other federal laws could have an impact on our business. For example, the Digital Millennium Copyright Act has provisions that limit, but do not eliminate, our liability for hosting or linking to third-party websites that include materials that infringe copyrights or other rights, so long as we comply with the statutory requirements of this act. The Children’s Online Privacy Protection Act restricts the ability of online services to collect information from minors, and the Protection of Children from Sexual Predators Act of 1998 requires online service providers to report evidence of violations of federal child pornography laws under certain circumstances.

Employees

As of December 31, 2011, we had approximately 2,024 full-time employees. Of these employees, approximately 624 were based outside of the United States. None of our employees are covered by a collective bargaining agreement or are represented by a labor union. We have not experienced any organized work stoppages. We believe that our future success will depend in part upon the continued service of our key employees and on our continued ability to hire and retain qualified personnel. We may not be able to retain our key employees and may not be successful in attracting and retaining sufficient numbers of qualified personnel to conduct our business in the future.

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Information About Our Executive Officers

The names of our current executive officers, their ages as of February 20, 2012, and their positions are shown below. Biographical summaries of each of our executive officers are included below.

Name	Age	Positions
Thomas Carson	52	President and Chief Executive Officer
James Budge	45	Chief Financial Officer
Stephen Yu	46	Executive Vice President, General Counsel and Corporate Secretary

Thomas Carson. Mr. Carson has served as our President and Chief Executive Officer since December 2011. Mr. Carson previously was Executive Vice President, Worldwide Sales & Services since May 2008 when the acquisition of Gemstar-TV Guide International by the Company was completed. From April 2006 to May 2008, Mr. Carson served in various capacities at Gemstar, including President of the North American IPG business and President for North American CE business. From February 2005 to April 2006, Mr. Carson served as Executive Vice President of Operational Efficiency programs at Thomson Multimedia Corporation and from February 2004 to February 2005, he served as Executive Vice President, Global Sales and Services at Thomson. Mr. Carson holds a B.S in business administration and an MBA from Villanova University.

James Budge. Mr. Budge has served as our Chief Financial Officer since September 2005. Mr. Budge served as Chief Financial Officer of Trados, Inc., an enterprise management software provider, from January 2004 until its merger with SDL International in August 2005. From August 2002 until joining Trados, Mr. Budge served as Chief Financial Officer of Sendmail, Inc., a secure email provider, and from April 1999 until its merger with IBM in January 2002, Mr. Budge served as Chief Financial Officer of CrossWorlds Software, Inc., a provider of business infrastructure software. Mr. Budge holds a B.S. in Accounting from Brigham Young University and is a Certified Public Accountant.

Stephen Yu. Mr. Yu has served as our Executive Vice President, General Counsel and Corporate Secretary since May 2006. He served as Vice President, General Counsel and Secretary of Aspect Communications Corporation, a provider of contact center solutions, from April 2003 until its acquisition by Concerto Software, Inc. in September 2005. From June 2002 to January 2003, Mr. Yu served as Vice President, General Counsel and Secretary of Riverstone Networks, Inc., a provider of ethernet network solutions, and from September 1999 to May 2002, he served as Vice President, General Counsel and Secretary of Palm, Inc., a provider of mobile computing solutions. Mr. Yu holds a B.S. in electrical engineering from Purdue University and a J.D. cum laude from Georgetown University Law Center. Mr. Yu is a member of the California State Bar.

Available Information

Our Internet website is located at http://www.rovicorp.com. We make available free of charge on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or otherwise furnish it to, the Securities and Exchange Commission (the “SEC”). Copies will be provided to any stockholder upon request to Rovi Corporation, Attention: Corporate Secretary, 2830 De La Cruz Boulevard, Santa Clara, California 95050. The reference to our Internet website does not constitute incorporation by reference of the information contained on or hyperlinked from our Internet website and should not be considered part of this document.

The public may also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Rooms by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The SEC’s Internet website is located at http://www.sec.gov.

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ITEM 1A. RISK FACTORS

In addition to the other information contained in this Annual Report on Form 10-K, you should consider carefully the following risks. This list is not exhaustive and you should carefully consider these risks and uncertainties before investing in our common stock. If any of these risks occur, our business, financial condition or operating results could be adversely affected.

If we fail to develop and timely deliver innovative technologies in response to changes in the technology and entertainment industries, our business could decline.

The markets for our products and technologies are characterized by rapid change and technological evolution. We will need to continue to expend considerable resources on research and development in the future in order to continue to design and deliver enduring, innovative entertainment products and technologies. Despite our efforts, we may not be able to develop timely and effectively market new products, technologies and services that adequately or competitively address the needs of the changing marketplace. In addition, we may not correctly identify new or changing market trends at an early enough stage to capitalize on market opportunities. At times, such changes can be dramatic, such as the shift from VHS videocassettes to DVDs for consumer playback of movies in homes and elsewhere or the transition from packaged media to Internet distribution. Our future success depends to a great extent on our ability to develop and timely deliver innovative technologies that are widely adopted in response to changes in the technology and entertainment industries and that are compatible with the technologies or products introduced by other entertainment industry participants. Despite our efforts and investments in developing new products, services and technologies:

• we cannot assure you that the level of funding and significant resources we are committing for investments in new products, services and technologies will be sufficient or result in successful new products, services or technologies;

• we cannot assure you that our newly developed products, services or technologies can be successfully protected as proprietary intellectual property rights or will not infringe the intellectual property rights of others;

• we cannot assure you that any new products or services that we develop will achieve market acceptance;

• our products, services and technologies may become obsolete due to rapid advancements in technology and changes in consumer preferences;

• we cannot assure you that revenue from new products, services or technologies will offset any decline in revenue from our products, services and technologies which may become obsolete; and

• our competitors and/or potential customers may develop products, services or technologies similar to those developed by us, resulting in a reduction in the potential demand for our newly developed products, services or technologies.

Our failure to successfully develop new and improved products, services and technologies, including as a result of any of the risks described above, may reduce our future growth and profitability and may adversely affect our business, results and financial condition.

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Our competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements than we do, which could reduce demand for our products or render them obsolete and if competition increases or if we are unable to effectively compete with existing or new competitors, the result could be price reductions, fewer customers and loss of market share, any of which could result in less revenue and harm our business.

Our IPGs face competition from companies that produce and market program guides as well as television schedule information in a variety of formats, including passive and interactive on-screen electronic guide services, online listings, over the top applications, printed television guides in newspapers and weekly publications, and local cable television guides. Our IPG products also compete against customers who choose to build their own IPG and license our intellectual property.

Our DivX and Rovi Entertainment Store solutions face competition in the digital media markets in which we operate. We believe that our most significant competitive threat comes from companies that have the collective financial, technical and other resources to develop the technologies, services, products and partnerships necessary to create a digital media ecosystem that can compete with the DivX ecosystem. Those potential competitors currently include Adobe Systems, Apple, Google, Microsoft, and Yahoo!. We also compete with companies that offer products or services that compete with specific aspects of our digital media ecosystem. For example, our digital rights management technology competes with technologies from companies such as Apple, ContentGuard, Intertrust Technologies, Microsoft, Nagra Audio and NDS Group, as well as the internal development efforts of certain of our licensees. In addition, we compete with companies such as Yahoo!, VUDU, Inc., a subsidiary of Wal-Mart Stores, Inc., Boxee, Inc. and with internally developed proprietary solutions developed by hardware device manufacturers and integrated circuit manufacturers in our development and marketing of technologies to enable the next generation of Internet-enabled consumer electronics devices. Our proprietary technologies also compete with other video compression technologies, including other implementations of MPEG-4 or implementations of H.264/AVC. In addition, a number of companies such as Adobe Systems, Apple, Ateme, Google, Microsoft, and RealNetworks offer video formats that compete with our proprietary video format. We also face competition from subscription entertainment services, cable and satellite providers, DVDs and other emerging technologies and products related to content distribution. Our content distribution platforms and services face significant competition from services, such as peer-to-peer and content aggregator services, which allow consumers to directly access an expansive array of content without securing licenses from content providers.

In the connected device middleware and metadata marketplace, there is competition not only from other companies, but also from customer-implemented internally-developed solutions. We believe that our DVD digital-to-analog copy protection and videocassette copy protection systems currently have limited competition. It is possible, however, that alternative copy protection technologies could become competitive. Additionally, new competitors or alliances among competitors may emerge and rapidly acquire significant market share in any of these areas.

The markets for the consumer hardware and software products sold by our OEM customers are competitive and price sensitive. Licensing fees for our technologies, products and services, particularly in the physical media area, may decline due to competitive pricing pressures and changing consumer demands. In addition, our retail sales business is also subject to competitive pricing pressures, and we may experience pricing pressures in other parts of our business. These trends could make it more difficult for us to increase or maintain our revenue and could adversely affect our operating results. To increase per unit royalties, we must continue to introduce new, highly functional versions of our technologies, products and services for which we can charge higher amounts. Any inability to introduce such technologies, products and services in the future or other declines in the amounts we can charge would also adversely affect our revenues.

Some of our current or future competitors may have significantly greater financial, technical, marketing and other resources than we do, may enjoy greater brand recognition than we do, or may have more experience or

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advantages than we have in the markets in which they compete. In addition, some of our current or potential competitors, such as Apple, Dolby Laboratories, Microsoft and Sony, may be able to offer integrated system solutions in certain markets for entertainment technologies, including audio, video and rights management technologies related to personal computers or the Internet, which could make competing products and technologies that we develop unnecessary. By offering an integrated system solution, these potential competitors also may be able to offer competing products and technologies at lower prices than our products and technologies. Further, many of the consumer hardware and software products that include our technologies also include technologies developed by our competitors. As a result, we must continue to invest significant resources in product development in order to enhance our technologies and our existing products and introduce new high-quality technologies and products to meet the wide variety of such competitive pressures. Our ability to generate revenues from our business will suffer if we fail to do so successfully.

Our business may be adversely affected by fluctuations in demand for consumer electronics devices incorporating our technologies.

We derive significant revenues from CE manufacturer license fees for our solutions that are based on the number of units shipped. We do not manufacture hardware, but rather depend on the cooperation of CE manufacturers to incorporate our technologies into their products. Generally, our license agreements do not require manufacturers to include our technology in any specific number or percentage of units, and only a few of these agreements guarantee a minimum aggregate licensing fee. Purchases of new CE devices, including television sets, integrated satellite receiver decoders, DVRs, DVD recorders, personal computers and Internet appliances are largely discretionary and may be adversely impacted by increasing market saturation, durability of products in the marketplace, new competing products, alternate consumer entertainment options and general economic trends in the countries or regions in which these products are offered. Global economic downturns may significantly impact demand for such CE devices. As a result, our future operating results may be adversely impacted by fluctuations in sales of CE devices employing our technologies.

The decision by manufacturers to incorporate our solutions into their products is a function of what other guide technologies and products are available. Our future operating results may be adversely impacted as a result of CE manufacturers opting not to incorporate our technology into their devices as a result of other available alternatives.

Dependence on the cooperation of cable multi system operators (“MSOs”) and digital broadcast satellite (“DBS”) providers, television broadcasters, hardware manufacturers, publications, data providers and delivery mechanisms could adversely affect our revenues.

We rely on third party providers to deliver our IPG data to CE devices that include our IPG. Further, our national data network provides customized and localized listings to our IPG service for MSOs and DBS providers and licensees of our data used in third party IPGs for MSOs and DBS providers. In addition, we purchase some of our program guide information from commercial vendors. The quality, accuracy and timeliness of that data may not continue to meet our standards or be acceptable to consumers. We also rely on other arrangements in the United States, which are not long-term, with other broadcasters for secondary carriage of our IPG data to CE devices. There can be no assurance that these delivery mechanisms will distribute the data without error or that the agreements that govern some of these relationships can be maintained on favorable economic terms. Our inability to renew these existing arrangements on terms that are favorable to us, or enter into alternative arrangements that allow us to effectively transmit our IPG data to CE devices could have a material adverse effect on our CE IPG business.

Our IPG data to CE devices broadcast can be, and has been in the past in some markets, deleted or modified by some of the local service providers. Widespread deletion or modification of this data by service providers could have a material adverse impact on our CE IPG business. Furthermore, in order for CE devices that incorporate our IPG to receive our data, such data must also be able to pass through any receivers through which

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such CE devices are receiving television programming signals. Even if our IPG data is passed to cable subscribers through cable networks by the service providers, there is a risk that the cable set-top boxes deployed by such subscribers can impede the passage of our IPG data to CE devices. Widespread impedance of our IPG data to CE devices in any of the manners set forth above could have a material adverse impact on our CE IPG business.

We deliver our data to our IPG service for MSOs and to licensees of our data used in third party IPGs for MSOs via satellite transmission, among other means. While we have built in certain redundancies in our data delivery operation, a third party provides us with satellite capacity to transmit our data to our IPG service for certain MSOs and to licensees of our data used in third party IPGs for MSOs. Our arrangement with the third party provider may be terminated on little or no notice. In the event that a provider of satellite capacity elects not to provide this capacity to transmit our data, there can be no assurance that all of our customers who currently receive our data via such provider will be able to receive our data via alternative means without significant delay or additional cost to us. In the event that such provider elects not to transmit our data, our business, operating results and financial condition could be adversely affected.

We are exposed to risks associated with our changing technology base through strategic acquisitions, investments and divestitures.

We have expanded our technology base in the past through strategic acquisitions of companies with complementary technologies or intellectual property and intend to do so in the future. Acquisitions hold special challenges in terms of successful integration of technologies, products and employees. We may not realize the anticipated benefits of acquisitions and divestitures we have completed in the past or the benefits of any other acquisitions or divestitures we may complete in the future, and we may not be able to incorporate any acquired services, products or technologies with our existing operations, or integrate personnel from the acquired businesses, in which case our business could be harmed.

Acquisitions, divestitures and other strategic investments involve numerous risks, including:

• problems integrating and divesting the operations, technologies, personnel or products over geographically disparate locations;

• unanticipated costs, litigation and other contingent liabilities;

• continued liability for pre-closing activities of divested businesses or certain post-closing liabilities which we may agree to assume as part of the transaction in which a particular business is divested;

• adverse effects on existing business relationships with suppliers and customers;

• risks associated with entering into markets in which we have no, or limited, prior experience;

• incurrence of significant exit charges if products acquired in business combinations are unsuccessful;

• significant diversion of management’s attention from our core business and diversion of key employees’ time and resources;

• inability to retain key customers, distributors, vendors and other business partners of the acquired business; and

• potential loss of our key employees or the key employees of an acquired organization.

The merger agreement governing the acquisition of Sonic and its subsidiaries also did not contain any post-closing indemnification provisions. Therefore, any claims for known or unknown Sonic or DivX liabilities, whether related to intellectual property ownership, infringement or otherwise, are our responsibility. Any such claim, with or without merit, could be time consuming to defend, result in costly litigation and divert management’s attention.

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To the extent that expenses increase but revenues do not or there are significant costs associated with presently unknown liabilities, our business, operating results and financial condition may be adversely affected. In addition, failure to minimize the numerous risks associated with the post-acquisition integration strategy also may adversely affect the trading price of Rovi’s common stock.

Financing for future acquisitions may not be available on favorable terms, or at all. If we identify an appropriate acquisition candidate for any of our businesses, we may not be able to negotiate the terms of the acquisition successfully, finance the acquisition or integrate the acquired business, products, technologies or employees into our existing business and operations. Future acquisitions and divestitures may not be well-received by the investment community, which may cause the value of our stock to fall. We cannot ensure that we will be able to identify or complete any acquisition or divestiture in the future. Further, the terms of our indebtedness constrains our ability to make and finance additional acquisitions or divestitures.

If we acquire businesses, new products or technologies in the future, we may incur significant acquisition-related costs. In addition, we may be required to amortize significant amounts of identifiable intangible assets and we may record significant amounts of goodwill that will be subject to annual testing for impairment. We have in the past and may in the future be required to write off all or part of one or more of these investments that could harm our operating results. If we consummate one or more significant future acquisitions in which the consideration consists of stock or other securities, our existing stockholders’ ownership could be significantly diluted. If we were to proceed with one or more significant future acquisitions in which the consideration included cash, we could be required to use a substantial portion of our available cash. Acquisitions could also cause operating margins to fall depending upon the financial models of the businesses acquired.

Our strategic investments may involve joint development, joint marketing, or entry into new business ventures, or new technology licensing. Any joint development efforts may not result in the successful introduction of any new products by us or a third party, and any joint marketing efforts may not result in increased demand for our products. Further, any current or future strategic acquisitions and investments by us may not allow us to enter and compete effectively in new markets or enhance our business in our existing markets and we may have to write off our equity investments in companies as we have done in the past.

Our success is heavily dependent upon our proprietary technologies.

We believe that our future success will depend on our ability to continue to introduce proprietary solutions for digital content and technologies. We rely on a combination of patent, trademark, copyright and trade secret laws, nondisclosure and other contractual provisions, and technical measures to protect our intellectual property rights. Our patents, trademarks or copyrights may be challenged and invalidated or circumvented. Our patents may not be of sufficient scope or strength or be issued in all countries where products incorporating our technologies can be sold. We have filed applications to expand our patent claims and for improvement patents to extend the current expiration dates, however, expiration of some of our patents may harm our business. If we are not successful in protecting our intellectual property, our business would be harmed.

Others may develop technologies that are similar or superior to our technologies, duplicate our technologies or design around our patents. Effective intellectual property protection may be unavailable or limited in some foreign countries. Despite efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise use aspects of processes and devices that we regard as proprietary. Policing unauthorized use of our proprietary information is difficult, and the steps we have taken may not prevent misappropriation of our technologies. Such competitive threats could harm our business.

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Our ability to maintain and enforce our trademark rights has a large impact on our ability to prevent third party infringement of our brand and technologies and if we are unable to maintain and strengthen our brands, our business could be harmed.

Maintaining and strengthening our brands is important to maintaining and expanding our business, as well as to our ability to enter into new markets for our technologies and products. If we fail to promote and maintain these brands successfully, our ability to sustain and expand our business and enter into new markets may suffer. Because we engage in relatively little direct brand advertising, the promotion of our brand depends, among other things, upon hardware device manufacturing partners displaying our trademarks on their products. If these partners choose for any reason not to display our trademarks on their products, or if our partners use our trademarks incorrectly or in an unauthorized manner, the strength of our brand may be diluted or our ability to maintain or increase our brand awareness may be harmed. We generally rely on enforcing our trademark rights to prevent unauthorized use of our brand and technologies. Our ability to prevent unauthorized uses of our brand and technologies would be negatively impacted if our trademark registrations were overturned in the jurisdictions where we do business. Our brand and logo are widely used by consumers and entities, both licensed and unlicensed, in association with digital video compression technology, and if we are not vigilant in preventing unauthorized or improper use of our trademarks, then our trademarks could become generic and we would lose our ability to assert such trademarks against others. We also have trademark applications pending in a number of jurisdictions that may not ultimately be granted, or if granted, may be challenged or invalidated, in which case we would be unable to prevent unauthorized use of our brand and logo in such jurisdiction. We have not filed trademark registrations in all jurisdictions where our brand and logo are used.

We may be subject to legal liability for the provision of third-party products, services, content or advertising.

We periodically enter into arrangements to offer third-party products, services, content or advertising under our brands or via distribution on our websites or in connection with our various products or service offerings. For example, we license or incorporate certain entertainment metadata into our data offerings. Certain of these arrangements involve enabling the distribution of digital content owned by third parties, which may subject us to third party claims related to such products, services, content or advertising, including defamation, violation of privacy laws, misappropriation of publicity rights, violation of United States federal CAN-SPAM legislation, and infringement of intellectual property rights. We require users of our services to agree to terms of use that prohibit, among other things, the posting of content that violates third party intellectual property rights, or that is obscene, hateful or defamatory. We have implemented procedures to enforce such terms of use on certain of our services, including taking down content that violates our terms of use for which we have received notification, or that we are aware of, and/or blocking access by, or terminating the accounts of, users determined to be repeat violators of our terms of use. Despite these measures, we cannot guarantee that such unauthorized content will not exist on our services, that these procedures will reduce our liability with respect to such unauthorized third party conduct or content, or that we will be able to resolve any disputes that may arise with content providers or users regarding such conduct or content. Our agreements with these parties may not adequately protect us from these potential liabilities. It is also possible that, if any information provided directly by us contains errors or is otherwise negligently provided to users, third parties could make claims against us, including, for example, claims for intellectual property infringement. Investigating and defending any of these types of claims is expensive, even if the claims do not result in liability. If any of these claims results in liability, we could be required to pay damages or other penalties, which could harm our business and our operating results.

We may initiate patent infringement or patent interference actions or other litigation to protect our intellectual property, which could be costly and harm our business.

We are currently engaged in litigation, and litigation may be necessary in the future, to enforce our patents and other intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others.

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We, and many of our current and potential competitors, dedicate substantial resources to protection and enforcement of intellectual property rights. We believe that companies will continue to take steps to protect their technologies, including, but not limited to, seeking patent protection. Companies in the technology and content-related industries have frequently resorted to litigation regarding intellectual property rights. Disputes regarding the ownership of technologies and their associated rights are likely to arise in the future and we may be forced to litigate to determine the validity and scope of other parties’ proprietary rights. Any such litigation could be very costly, could distract our management from focusing on operating our business, and might ultimately be unsuccessful. The existence and/or outcome of such litigation could harm our business.

We may be subject to intellectual property infringement claims or other litigation, which are costly to defend and could limit our ability to use certain technologies in the future.

From time to time we receive claims and inquiries from third parties alleging that our internally developed technology, technology we have acquired or technology we license from third parties may infringe other third parties’ proprietary rights (especially patents), including those relating to digital media standards such as MPEG-4, H.264, MP3 and AAC. Third parties have also asserted and most likely will continue to assert claims against us alleging infringement of copyrights, trademark rights or other proprietary rights relating to video or music content, or alleging unfair competition or violations of privacy rights. We have faced such claims in the past, we currently face such claims, and we expect to face similar claims in the future. Regardless of the merits of such claims, any disputes with third parties over intellectual property rights could materially and adversely impact our business, including by resulting in the loss of management time and attention to our core business, the significant cost to defend ourselves against such claims or reducing the willingness of licensees to incorporate our technologies into their products. Additionally, we have also been asked by content owners to stop the display or hosting of copyrighted materials by our users or ourselves through our service offerings, including notices provided to us pursuant to the Digital Millennium Copyright Act. We have and will promptly respond to legitimate takedown notices or complaints, including but not limited to those submitted pursuant to the Digital Millennium Copyright Act, notifying us that we are providing unauthorized access to copyrighted content by removing such content and/or any links to such content from our websites. Nevertheless, we cannot guarantee that our prompt removal of content, including removal pursuant to the provisions of the Digital Millennium Copyright Act, will prevent disputes with content owners, that infringing content will not exist on our services, or that we will be able to resolve any disputes that may arise with content providers or users regarding such infringing content. If any of these claims were to prevail, we could be forced to pay damages, comply with injunctions, or stop distributing our products or providing our services while we re-engineer them or seek licenses to necessary technology, which might not be available on reasonable terms or at all. We could also be subject to claims for indemnification resulting from infringement claims made against our customers, strategic partners or the current owners of businesses that we divested, which could increase our defense costs and potential damages. For example, we have received notices and lawsuits from certain customers requesting indemnification in patent-related lawsuits. We evaluate the requests and assess whether we believe we are obligated to provide such indemnification to such customers on a case by case basis. Customers or strategic partners making such requests could become unwilling or hesitant to do business with us if we decline such requests. An adverse determination with respect to such requests or in any of these events described above could require us to change our business practices and have a material impact on our business and results of operations. Furthermore, these types of disputes can be asserted by our licensees or prospective licensees or by other third parties as part of negotiations with us or in private actions seeking monetary damages or injunctive relief. Any disputes with our licensees or potential licensees or other third parties could harm our reputation and expose us to additional costs and other liabilities.

Litigation could harm our business and result in:

• substantial settlement or related costs, including indemnification of customers;

• diversion of management and technical resources;

• either our customers discontinuing to use or ourselves discontinuing to sell infringing products;

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• our expending significant resources to develop non-infringing technology; and

• our obtaining licenses to infringed technology, which could be costly.

We are involved in the business of powering the discovery and enjoyment of digital entertainment, including over the Internet. There has been, and we believe that there will continue to be, an increasing level of litigation to determine the applicability of current laws to, and impact of new technologies on, the use and distribution of content over the Internet and through new devices. As we develop products and services that protect, provide or enable the provision of content in such ways, the risk of litigation against us may increase.

The effects of the global recession may impact our business, operating results, financial condition or liquidity.

The global recession has caused a general tightening in the credit markets, lower levels of liquidity, and increases in the rates of default and bankruptcy. Additionally, sovereign budget crises among members of the European Union and other countries worldwide have caused increased risk of default to holders of sovereign debt, including commercial banks, and an unprecedented risk about the continuing viability of the Euro as a global currency. These conditions have caused an unprecedented level of intervention from the United States federal government, other foreign governments, central banks and quasi-governmental agencies such as the International Monetary Fund, decreased consumer confidence, overall slower economic activity and extreme volatility in credit, equity and fixed income markets. While the ultimate outcome of these events cannot be predicted, these macroeconomic developments could negatively affect our business, operating results, financial condition or liquidity in a number of ways. For example, if the economic downturn makes it difficult for our customers and suppliers to accurately forecast and plan future business activities, they may delay, decrease or cancel purchases of our solutions or reduce production of their products. As many of our solutions are licensed on a per-unit fee basis, our customers’ decision to decrease production of their products or devices may decrease our licensing revenue and adversely impact our operating results.

Furthermore, as our customers face a weak economy, they may not be able to gain sufficient credit in a timely manner, which could result in an impairment of their ability to place orders with us or to make timely payments to us for previous purchases. If this occurs, our revenue may be reduced, thereby having a negative impact on our results of operations. In addition, we may be forced to increase our allowance for doubtful accounts and our days sales outstanding may increase, which would have a negative impact on our cash position, liquidity and financial condition. We cannot predict the timing or the duration of this or any other economic downturn in the economy and we are not immune to the effects of general worldwide economic conditions.

In addition, financial institution failures may cause us to incur increased expenses or make it more difficult either to utilize our existing debt capacity or otherwise obtain financing for our operations, investing activities (including the financing of any future acquisitions), or financing activities (including an increase in our liability to counterparties under interest rate swap contracts and the timing and amount of any repurchases of our common stock or debt we may make in the future). Our investment portfolio, which includes short-term debt securities, is generally subject to general credit, liquidity, counterparty, market and interest rate risks that may be exacerbated by the recent global financial crisis. If the banking system or the fixed income, credit or equity markets deteriorated or remained volatile, our investment portfolio may be impacted and the values and liquidity of our investments could be adversely affected.

Finally, like other stocks, our stock price can be affected by global economic uncertainties and if investors have concerns that our business, operating results and financial condition will be negatively impacted by a worldwide economic downturn, our stock price could decrease.

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We have indebtedness which could adversely affect our financial position.

As of December 31, 2011, we had total debt with a par value of approximately $1,038.7 million which includes $291.0 million of borrowings under our 2040 Convertible Notes. On February 7, 2011, two of our subsidiaries, Rovi Solutions Corporation and Rovi Guides Inc., jointly borrowed $750 million under a senior secured credit facility consisting of a 5-year $450 million term loan and a 7-year $300 million term loan. Both term loans are guaranteed by us and certain of our domestic and foreign subsidiaries and are secured by substantially all of our, the subsidiary guarantors and the co-borrowers’ assets. The 5-year term loan requires annual amortization payments and matures on February 7, 2016 and the 7-year term loan requires quarterly amortization payments and matures on February 7, 2018. Our indebtedness may:

• limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes;

• limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general business purposes;

• require us to use a substantial portion of our cash flow from operations to make debt service payments;

• limit our flexibility to plan for, or react to, changes in our business and industry;

• place us at a competitive disadvantage compared to our less leveraged competitors; and

• increase our vulnerability to the impact of adverse economic and industry conditions.

Our ability to meet our debt service obligations will depend on our future performance, which will be subject to financial, business, and other factors affecting its operations, many of which are beyond our control.

Covenants in our debt agreements restrict our business in many ways and if we do not effectively manage our covenants, our financial conditions and results of operations could be adversely affected.

On February 7, 2011, two of our subsidiaries, Rovi Solutions Corporation and Rovi Guides Inc., jointly borrowed $750 million under a senior secured credit facility. The senior secured credit facility contains various covenants that limit our ability and/or our restricted subsidiaries’ ability to, among other things:

• incur or assume liens or additional debt or provide guarantees in respect of obligations of other persons;

• issue redeemable preferred stock;

• pay dividends or distributions or redeem or repurchase capital stock;

• prepay, redeem or repurchase certain debt;

• make loans, investments and capital expenditures;

• enter into agreements that restrict distributions from our subsidiaries;

• sell assets and capital stock of our subsidiaries;

• enter into certain transactions with affiliates; and

• consolidate or merge with or into, or sell substantially all of our assets to, another person.

In addition, our senior secured credit facility contains restrictive covenants and requires us to maintain specified financial ratios. Our ability to meet those financial ratios can be affected by events beyond our control, and we may be unable to meet those ratios. A breach of any of these covenants could result in a default under our senior secured credit facility and/or our other indebtedness, which could in turn result in an acceleration of a substantial portion of our indebtedness. In such event, we may be unable to repay all of the amounts that would become due under our indebtedness. If we were unable to repay those amounts, the lenders under our senior

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secured credit facility could proceed against the collateral granted to them to secure that indebtedness. In any case, if a significant portion of our debt was accelerated, we may be forced to seek bankruptcy protection.

We may not be able to generate sufficient cash to service our debt obligations.

Our ability to make payments on and to refinance our indebtedness will depend on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. Our credit agreements restrict our ability to dispose of assets, use the proceeds from any disposition of assets and refinance our indebtedness. We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them and these proceeds may not be adequate to meet any debt service obligations then due.

In addition, our borrowings under our senior secured credit facility are, and are expected to continue to be, at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income would decrease.

Repayment of debt is dependent on cash flow generated by our subsidiaries and their respective subsidiaries.

Rovi Corporation’s subsidiaries, including Rovi Solutions Corporation and Rovi Guides Inc., own a significant portion of our assets and conduct substantially all of our operations. Each subsidiary is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on the 2040 Convertible Notes. Accordingly, repayment of our indebtedness depends, to a significant extent, on the generation of cash flow by the subsidiaries, including Rovi Solutions Corporation and Rovi Guides Inc., the senior secured position of their bank debt, and their ability to make cash available to us, by dividend, debt repayment or otherwise. Because they are not guarantors or a co-issuer of the 2040 Convertible Notes, our subsidiaries do not have any obligation to pay amounts due on those notes or to make funds available for that purpose. Conversely, the ability of Rovi Solutions Corporation and Rovi Guides Inc. to repay their indebtedness under the senior secured credit facility depends, in part, on the generation of cash flow by their respective subsidiaries. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us, Rovi Solutions or Rovi Guides Inc. to make payments in respect of our indebtedness. Distributions from non-U.S. subsidiaries may be subject to foreign withholding taxes and U.S. corporate tax and further reduce the net cash available for principal and interest payments.

Despite our current level of indebtedness, we may still be able to incur more indebtedness. This could increase the risks associated with our indebtedness.

We and our subsidiaries may incur additional indebtedness in the future. The terms of our indentures do not prohibit us or our subsidiaries from incurring additional indebtedness. If we incur any additional indebtedness that ranks equally with existing indebtedness, the holders of that indebtedness will be entitled to share ratably with the holders of our existing debt obligations in any proceeds distributed in connection with any insolvency,

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liquidation, reorganization, dissolution or other winding-up of us. If new indebtedness is added to our current debt levels, the related risks that we and our subsidiaries now face could intensify.

Changes in, or interpretations of, tax rules and regulations, may adversely affect our effective tax rates.

We are subject to income taxes in the U.S. and foreign tax jurisdictions. Our future effective tax rates could be unfavorably affected by changes in tax laws or the interpretation of tax laws, by changes in the amount of revenue or earnings that we derive from international sources in countries with high or low statutory tax rates, or by changes in the valuation of our deferred tax assets and liabilities. Unanticipated changes in our tax rates could affect our future results of operations.

In addition, federal, state, and foreign tax jurisdictions may examine our income tax returns, including income tax returns of acquired companies and acquired tax attributes included therein. We regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. In making such assessments, we exercise judgment in estimating our provision for income taxes. While we believe our estimates are reasonable, we cannot assure you that the final determination from these examinations will not be materially different from that reflected in our historical income tax provisions and accruals. Any adverse outcome from these examinations may have a material adverse effect on our business and operating results, which could cause the market price of our stock to decline.

We may be subject to market risk and legal liability in connection with the data collection capabilities of our various online services.

Many components of our online services include interactive components that by their very nature require communication between a client and server to operate. To provide better consumer experiences and to operate effectively, we collect certain information from users. Collection and use of such information may be subject to United States state and federal privacy and data collection laws and regulations, standards used by credit card companies applicable to merchants processing credit card details, and foreign laws such as the EU Data Protection Directive. We post our privacy policies concerning the collection, use and disclosure of user data, including that involved in interactions between client and server products. Any failure by us to comply with such posted privacy policies, any failure to comply with standards set by credit card companies relating to privacy or data collection, any failure to conform the privacy policy to changing aspects of our business or applicable law, or any existing or new legislation regarding privacy issues could impact the market for our online services, technologies and products and subject us to fines, litigation or other liability.

In addition, the Children’s Online Privacy Protection Act imposes civil and criminal penalties on persons collecting personal information from children under the age of 13. We do not knowingly distribute harmful materials to minors, direct our websites or services to children under the age of 13, or collect personal information from children under the age of 13. However, we are not able to control the ways in which consumers use our technology, and our technology may be used for purposes that violate this or other similar laws. The manner in which such laws may be interpreted and enforced cannot be fully determined, and future legislation similar to this law could subject us to potential liability if we were deemed to be non-compliant with such rules and regulations.

Improper conduct by users could subject us to claims and compliance costs.

The terms of use and end-user license agreements for our products and services prohibit a broad range of unlawful or undesirable conduct. However, we are unable to block access in all instances to users who are determined to gain access to our products or services for improper motives. Claims may be threatened or brought against us using various legal theories based on the nature and content of information or media that may be created, posted online or generated by our users or the use of our technology. This risk includes actions by our users to copy or distribute third-party content. Investigating and defending any of these types of claims could be

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expensive, even if the claims do not ultimately result in liability. In addition, we may incur substantial costs to enforce our terms of use or end-user license agreements and to exclude certain users of our services or products who violate such terms of use or end-user license agreements, or who otherwise engage in unlawful or undesirable conduct.

For our business to succeed, we need to attract and retain qualified employees and manage our employee base effectively.

Our success depends on our ability to hire and retain qualified employees and to manage our employee base effectively. Because of the specialized nature of our business, our future success will depend upon our continuing ability to identify, attract, train and retain highly skilled managerial, technical, sales and marketing personnel, particularly as we enter new markets. Competition for people with the skills that we require is intense, particularly in the San Francisco Bay area ,where our headquarters are located, and Los Angeles where we have significant operations, and the high cost of living in these areas makes our recruiting and compensation costs higher. Moreover, changes in our management or executive leadership team could lead to disruption of our business or distraction of our employees as the organization adapts to such management changes. If we are unable to hire and retain qualified employees, our business and operating results could be adversely affected.

Establishing and maintaining licensing relationships with companies are important to build and support a worldwide entertainment technology licensing ecosystem and to expand our business, and failure to do so could harm our business prospects.

Our future success will depend upon our ability to establish and maintain licensing relationships with companies in related business fields, including:

• semiconductor and equipment manufacturers;

• operators of entertainment content distributors, including PPV and VOD networks;

• consumer electronics, digital PPV/VOD set-top hardware manufacturers, DVD hardware manufacturers and PC manufacturers;

• content right holders;

• retailers and advertisers;

• DRM suppliers; and

• Internet portals and other digital distribution companies.

Substantially all of our license agreements are non-exclusive, and therefore our licensees are free to enter into similar agreements with third parties, including our competitors. Our licensees may develop or pursue alternative technologies either on their own or in collaboration with others, including our competitors.

Some of our third party license arrangements require that we license others’ technologies and/or integrate our solutions with others. In addition, we rely on third parties to report usage and volume information to us. Delays, errors or omissions in this information could harm our business. If these third parties choose not to support integration efforts or delay the integration of our solutions, our business could be harmed.

If we fail to maintain and expand our relationships with a broad range of participants throughout the entertainment industry, including motion picture studios, broadcasters and manufacturers of CE products, our business and prospects could be materially harmed. Relationships have historically played an important role in the entertainment industries that we serve. If we fail to maintain and strengthen these relationships, these entertainment industry participants may not purchase and use our technologies, which could materially harm our business and prospects. In addition to directly providing a substantial portion of our revenue, these relationships

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are also critical to our ability to have our technologies adopted as industry standards. Moreover, if we fail to maintain our relationships, or if we are not able to develop relationships in new markets in which we intend to compete in the future, including markets for new technologies and expanding geographic markets, our business, operating results and prospects could be materially and adversely affected. In addition, if major industry participants form strategic relationships that exclude us, our business and prospects could be materially adversely affected.

It may be more difficult for us, in the future, to have our technologies adopted as individual industry standards if entertainment industry participants collaborate on the development of new or different industry standard technologies.

Increasingly, standards-setting organizations are adopting or establishing technology standards for use in a wide-range of CE products. As a result, it is more difficult for individual companies to have their technologies widely adopted as an informal industry standard. In addition, there are a large number of companies, including companies that typically compete against one another, involved in the development of new technologies for use in consumer entertainment products. As a result, these companies often license their collective intellectual property rights as a group, making it more difficult for any single company to have its technologies adopted widely as a de facto industry standard or to have its technologies adopted as an exclusive, explicit industry standard. Examples of this include MPEG-LA (codecs and DRM licensing); Blu-ray DVD (high definition DVD format); and Digital Living Network Alliance (DLNA) and the Universal Plug and Play (UPnP) Forum (interoperability of consumer electronics devices). If our technologies are not supported by these standards bodies or patent pools, it may be more difficult for us to grow our business in the future. Our major customers may have a large influence on industry standards and the widespread adoption of new technologies. The selection of alternative technologies to ours or to those on which our technologies operate would harm our business.

Because many of our technologies, products and services are designed to comply with industry standards, to the extent we cannot distinguish our technologies, products and services from those sold by our competitors, our current distributors and customers may choose alternate technologies, products and services or choose to purchase them from multiple vendors.

We cannot provide any assurance that the industry standards for which we develop new technologies, products and services will allow us to compete effectively with companies possessing greater financial and technological resources than we have to market, promote and exploit sales opportunities as they arise in the future. Technologies, products and services that are designed to comply with standards may also be viewed as interchangeable commodities by certain customers. We may be unable to compete effectively if we cannot produce technologies and products more quickly or at lower cost than our competitors. Further, any new technologies, products and services developed may not be introduced in a timely manner or in advance of our competitors’ comparable offerings and may not achieve the broad market acceptance necessary to generate significant revenues.

Because a portion of our revenue is generated through OEM customers, sales of these technologies, products and services are tied to OEM product sales.

A portion of the revenue attributable to the products acquired through the Sonic acquisition is derived from sales through OEM customers who either license the technologies, products and services and incorporate them into or bundle them with their products. Temporary fluctuations in the pricing and availability of the OEM customers’ products could negatively impact sales of our technologies, products and services, which could in turn harm our business, financial condition and results of operations. Moreover, sales of these technologies, products and services depend in large part on consumer acceptance and purchase of PCs and CE devices such as DVD players, BD players, DVD recorders, television sets, mobile handsets and other digital media devices marketed by our OEM customers. Consumer acceptance of these OEM products depends significantly on the

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price and ease of use of these devices, among other factors. If the demand for these OEM products is impaired, our OEM sales may suffer a corresponding decline.

OEM customers can be demanding with respect to the features they demand, as well as with respect to quality and testing requirements and economic terms. Because there are a relatively small number of significant OEM customers, if they demand reduced prices, we may not be in a position to refuse such demands, which would adversely impact revenues and results of operations. If particular OEMs demand technologies, products or services that we are unable to deliver, or if they impose higher quality requirements than we are able to satisfy, we could lose those relationships, which would adversely impact our revenues and results of operations. Also, if our competitors offer their OEM customers more favorable terms than we do or if our competitors are able to take advantage of their existing relationships with OEMs, then these OEMs may not include our offerings with their products. Although we have maintained relationships with many of our OEMs for many years, if an OEM agreement with a major customer were terminated and we were unable to replace such relationship or if we are unable to maintain or expand our relationship with OEMs, our business and results of operations would suffer.

The markets for our Advertising platform, web services and Rovi Entertainment Store may not develop and we may fail in our ability to fully exploit these new opportunities if these markets do not develop as we anticipate.

The market for Advertising is at an early stage of development and we cannot assure you that we will succeed in our efforts to develop our Advertising platform as a medium widely accepted by consumers and advertisers. In addition, MSO, DBS and Internet protocol television, or IPTV, providers who have a patent license from us are not required to provide Advertising, although many have. Therefore our ability to derive Advertising revenues from our patent licensees is also dependent on the implementation of Advertising by such licensees.

Our Rovi Entertainment Store is a “white-label” service to companies that want to distribute, either in a sale or rental model, premium entertainment content directly to consumers using Internet Protocol for delivery. There is no assurance that consumers will widely adopt the Rovi Entertainment Store service or that it will become profitable. Online video distribution is a relatively new enterprise, and successful business models for delivering digital media over the Internet are not fully tested. We will invest significant time and money in building and organizing the premium content business, and its success could be jeopardized by difficulties in implementing and maintaining premium content information technology systems and infrastructure and/or by increased operating expenses and capital expenditures required in connection with online premium content offerings. Because we have limited experience with online premium content offerings, we cannot assure you that it will be successful or profitable.

Limitations on control of IPG Inc. may adversely impact our operations.

We hold a 46% interest in IPG Inc., as a joint venture with nonaffiliated third parties, which hold the remaining interest. As a result of such arrangement, we may be unable to control the operations, strategies and financial decisions of IPG Inc. which could in turn result in limitations on our ability to implement strategies that we may favor, or to cause dividends or distributions to be paid. In addition, our ability to transfer our interests in IPG Inc. may be limited under the joint venture arrangement.

Consolidation of the cable and satellite broadcasting industry could adversely affect existing agreements.

We have entered into agreements with a large number of MSOs and DBS providers for the licensing or distribution of our technology, products and services. If consolidation of the cable and satellite broadcasting industry continues, some of these agreements may be affected by mergers, acquisitions or system swaps which could result in an adverse effect on the amount of revenue we receive under these agreements.

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We have limited control over existing and potential customers’ and licensees’ decisions to include our technology in their product offerings.

In general, we are dependent on our customers and licensees—including producers and distributors of content for films and videos—to incorporate our technology into their products. Although we have license agreements with many of these companies, many of these license agreements do not require any minimum purchase commitments, or are on a non-exclusive basis, or do not require incorporation of our technology in their products. If our customers were to determine that the benefits of our technology do not justify the cost of licensing the technology, then demand for our technology would decline. Furthermore, while we may be successful in having one or more industry standards-setting organizations require that our technology be used in order for a product to be compliant with the standards promulgated by such organizations, there is no guarantee that products associated with these standards will be successful in the market. Our licensees and other manufacturers might not utilize our technology in the future. If this were to occur, our business would be harmed.

Our web-based businesses, including Rovi Entertainment Store, are vulnerable to third party operational problems and other risks.

We make certain of our products and services available through web-based retail sites owned by third party resellers. Additionally, our Rovi Entertainment Store provides technology and services used by third party resellers to operate their web-based retail sites. Under these arrangements, either we or our reseller partners typically utilize co-branded sites, provide the infrastructure to handle purchase transactions through secure web sites, and deliver the product (whether via web download or physical fulfillment). Our web store operations are subject to numerous risks, including unanticipated operating problems, reliance on third party computer hardware, software and service providers, system failures and the need to invest in additional computer systems, diversion of sales from other channels, rapid technological change, access to entertainment content for distribution through web stores including conditions and restrictions placed on the content distribution by the owners of such content, liability for online content, credit card and other online payment fraud, and issues relating to the use and protection of customer information. We are subject to operating and certification rules and regulations by governments, payment card associations and payment processors, among others, which may change and make it more expensive, difficult or impossible for us to comply. We rely on the third party resellers who operate these web stores for their smooth operation. Any interruption of these web stores could have a negative effect on our business. If our web store resellers were to withdraw from this business or change their terms of service in ways that were unfavorable to us, there might not be a ready alternative outsourcing organization available, and we might be unprepared to assume operation of the web stores. If any of these events occurs, our results of operations could be harmed.

Qualifying, certifying and supporting our technologies, products and services is time consuming and expensive.

We devote significant time and resources to qualify and support our software products on various PC and CE platforms, including Microsoft and Apple operating systems. In addition, we maintain high-quality standards for products that incorporate our technologies and products through a quality control certification process. To the extent that any previously qualified, certified and/or supported platform or product is modified or upgraded, or we need to qualify, certify or support a new platform or product, we could be required to expend additional engineering time and resources, which could add significantly to our development expenses and adversely affect our operating results.

The success of certain of our solutions depends on the interoperability of our technologies with consumer hardware devices.

To be successful we design certain of our solutions to interoperate effectively with a variety of consumer hardware devices, including personal computers, DVD players and recorders, Blu-ray players, digital still

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cameras, digital camcorders, portable media players, digital TVs, home media centers, set-top boxes, video game consoles, MP3 devices, multi-media storage devices and mobile handsets. We depend on significant cooperation with manufacturers of these devices and the components integrated into these devices, as well as software providers that create the operating systems for such devices, to incorporate certain of our technologies into their product offerings and ensure consistent playback of encoded files. Currently, a limited number of devices are designed to support our technologies. If we are unsuccessful in causing component manufacturers, device manufacturers and software providers to integrate our technologies into their product offerings, our technologies may become less accessible to consumers, which would adversely affect our revenue potential.

Some software we provide may be subject to “open source” licenses, which may restrict how we use or distribute our software or require that we release the source code of certain products subject to those licenses.

Some of the products we support and some of our proprietary technologies incorporate open source software such as open source MP3 codecs that may be subject to the Lesser Gnu Public License or other open source licenses. The Lesser Gnu Public License and other open source licenses typically require that source code subject to the license be released or made available to the public. Such open source licenses typically mandate that software developed based on source code that is subject to the open source license, or combined in specific ways with such open source software, become subject to the open source license. We take steps to ensure that proprietary software we do not wish to disclose is not combined with, or does not incorporate, open source software in ways that would require such proprietary software to be subject to an open source license. However, few courts have interpreted the Lesser Gnu Public License or other open source licenses, and the manner in which these licenses may be interpreted and enforced is therefore subject to some uncertainty. We also take steps to disclose any source code for which disclosure is required under an open source license, but it is possible that we have or will make mistakes in doing so, which could negatively impact our brand or our adoption in the community, or could expose us to additional liability. In addition, we rely on multiple software programmers to design our proprietary products and technologies. Although we take steps to ensure that our programmers (both internal and outsourced) do not include open source software in products and technologies we intend to keep proprietary, we cannot be certain that open source software is not incorporated into products and technologies we intend to keep proprietary. In the event that portions of our proprietary technology are determined to be subject to an open source license, or are intentionally released under an open source license, we could be required to publicly release the relevant portions of our source code, which could reduce or eliminate our ability to commercialize our products and technologies. Also, in relying on multiple software programmers to design products and technologies that we intend, or ultimately end up releasing in the open source community, we may discover that one or multiple such programmers have included code or language that would be embarrassing to us, which could negatively impact our brand or our adoption in the community, or could expose us to additional liability.

We depend on studios to license or make available content for certain of our services and formats.

Our ability to provide our content delivery service depends on studios licensing content for online delivery. The studios have great discretion whether to license their content, and the license periods and the terms and conditions of such licenses vary by studio. If studios change their terms and conditions, are no longer willing or able to provide us licenses, or if we are otherwise unable to obtain premium content on terms that are acceptable, the ability to provide our content delivery service will be adversely affected, which could harm our business and operating results. In addition, a limited number of studios have agreed to make certain video content available in our media format but there is no assurance that we can enter into agreements with additional studios. In the event that we fail to reach agreement with such studios, our format may become less compelling to consumers and to retailers and potentially to CE licensees.

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Our operating results may fluctuate, which may cause us to not be able to sustain our revenue levels or rate of revenue growth on a quarterly or annual basis, which may cause our common stock price to decline.

Our quarterly and annual revenues, expenses and operating results could vary significantly in the future and period-to-period comparisons should not be relied upon as indications of future performance. We may not be able to sustain our revenue levels, or our rate of revenue growth, on a quarterly or annual basis. In addition, we may be required to delay or extend recognition of revenue on more complex licensing arrangements as required under generally accepted accounting principles in the United States. Fluctuations in our operating results have in the past caused, and may in the future cause, the price of our common stock to decline.

Other factors that could affect our operating results include:

• the acceptance of our technologies by system operators and CE manufacturers;

• expenses related to, and the financial impact of, possible acquisitions of other businesses and the integration of such businesses;

• expenses related to, and the financial impact of, the dispositions of businesses, including post-closing indemnification obligations;

• the timing and ability of signing high-value licensing agreements during a specific period;

• the potential that we may not be in a position to anticipate a decline in revenues in any quarter until (i) late in the quarter due to the closing of sales agreements late in the quarter or (ii) after the quarter ends due to the delay inherent in reporting from certain licensees;

• the extent to which new content technologies or formats replace technologies to which our solutions are targeted;

• the pace at which our analog and older products sales decline compared to the pace at which our digital and new product revenues grow, and

• adverse changes in the level of economic activity in the United States or other major economies in which we do business as a result of the threat of terrorism, military actions taken by the United States or its allies, or generally weak and uncertain economic and industry conditions.

Our quarterly operating results may also fluctuate depending upon when we receive royalty reports from certain licensees. We recognize a portion of our license revenue only after we receive royalty reports from our licensees regarding the manufacture of their products that incorporate our technologies. As a result, the timing of our revenue is dependent upon the timing of our receipt of those reports, some of which are not delivered until late in the quarter or after the end of the quarter. This may put us in a position of not being able to anticipate a decline in revenues in any given quarter. In addition, it is not uncommon for royalty reports to include corrective or retroactive royalties that cover extended periods of time. Furthermore, there have been times in the past when we have recognized an unusually large amount of licensing revenue from a licensee in a given quarter because not all of our revenue recognition criteria were met in prior periods. This can result in a large amount of licensing revenue from a licensee being recorded in a given quarter that is not necessarily indicative of the amounts of licensing revenue to be received from that licensee in future quarters, thus causing fluctuations in our operating results.

A significant portion of our revenue is derived from international sales. Economic, political, regulatory and other risks associated with our international business or failure to manage our global operations effectively could have an adverse effect on our operating results.

As of December 31, 2011, we had 5 major locations (defined as a location with more than 50 employees) and employed 624 employees outside the United States. We face challenges inherent in efficiently managing

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employees over large geographic distances, including the need to implement appropriate systems, controls, policies, benefits and compliance programs. Our inability to successfully manage our global organization could have a material adverse effect on our business and results of operations.

We expect that international and export sales will continue to represent a substantial portion of our revenues for the foreseeable future. Our future growth will depend to a large extent on worldwide acceptance and deployment of our solutions.

To the extent that foreign governments impose restrictions on importation of programming, technology or components from the United States, the demand for our solutions in these markets could diminish. In addition, the laws of some foreign countries may not protect our intellectual property rights to the same extent as do the laws of the United States, which increases the risk of unauthorized use of our technologies. Such laws also may not be conducive to copyright protection of digital content, which may make our content protection technology less effective and reduce the demand for it.

Because we sell our products worldwide, our business is subject to the risks associated with conducting business internationally, including:

• foreign government regulation;

• changes in diplomatic and trade relationships;

• changes in, or imposition of, foreign laws and regulatory requirements and the costs of complying with such laws (including consumer and data protection laws);

• changes in, or weakening of copyright and intellectual property (patent) laws;

• difficulty of effective enforcement of contractual provisions in local jurisdictions or difficulty in obtaining export licenses for certain technology;

• import and export restrictions and duties, including tariffs, quotas or taxes and other trade barriers and restrictions;

• fluctuations in our net effective income tax rate driven by changes in the percentage of revenues that we derive from international sources;

• changes in a specific country’s or region’s political or economic condition, including changes resulting from the threat of terrorism;

• difficulty in staffing and managing foreign operations, including compliance with laws governing labor and employment; and

• fluctuations in foreign currency exchange rates.

Our business could be materially adversely affected if foreign markets do not continue to develop, if we do not receive additional orders to supply our technologies or products for use by foreign system operators, CE manufacturers and PPV/VOD providers or if regulations governing our international businesses change. Any changes to the statutes or the regulations with respect to export of encryption technologies could require us to redesign our products or technologies or prevent us from selling our products and licensing our technologies internationally.

We face risks with respect to conducting business in China due to China’s historically limited recognition and enforcement of intellectual property and contractual rights and because of certain political, economic and social uncertainties relating to China.

In addition to other risks associated with our global business, we face risks due to the operations we conduct in China, which could be adversely affected by political, economic and social uncertainties in China. As of

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December 31, 2011, we had 288 employees in China, primarily carrying out research and development activities. Operations in China are subject to greater political, legal and economic risks than operations in other countries. In particular, the political, legal and economic climate in China, both nationally and regionally, is fluid and unpredictable. Our ability to operate in China may be adversely affected by changes in Chinese laws and regulations such as those related to, among other things, taxation, import and export tariffs, environmental regulations, land use rights, intellectual property, employee benefits and other matters. In addition, we may not obtain or retain the requisite legal permits to continue to operate in China, and costs or operational limitations may be imposed in connection with obtaining and complying with such permits. Enforcement of existing laws or agreements may be sporadic and implementation and interpretation of laws inconsistent. Any of the foregoing could limit the remedies available in the event of any claims or disputes with third parties.

In addition, we have direct license relationships with many consumer hardware device manufacturers located in China and a number of the OEMs that license our technologies utilize captive or third-party manufacturing facilities located in China. We expect consumer hardware device manufacturing in China to continue to increase due to its lower manufacturing cost structure as compared to other industrialized countries. As a result, we face additional risks in China, in large part due to China’s historically limited recognition and enforcement of contractual and intellectual property rights. In particular, we have experienced, and expect to continue to experience, problems with China-based consumer hardware device manufacturers underreporting or failing to report shipments of their products that incorporate our technologies, or incorporating our technologies or trademarks into their products without our authorization or without paying us licensing fees. We may also experience difficulty enforcing our intellectual property rights in China, where intellectual property rights are not as respected as they are in the United States, Japan and Europe. Unauthorized use of our technologies and intellectual property rights by China-based consumer hardware device manufacturers may dilute or undermine the strength of our brands. If we cannot adequately monitor the use of our technologies by China-based consumer hardware device manufacturers, or enforce our intellectual property rights in China, our revenue could be adversely affected.

We have made and expect to make significant investments in infrastructure which, if ineffective, may adversely affect our business results.

We have made and expect to make significant investments in infrastructure, tools, systems, technologies and content, including initiatives relating to digital asset and rights management and data warehouses, aimed to create, assist in the development or operation of, or enhance our ability to deliver innovative products and services across multiple media, digital and emerging platforms. These investments may ultimately cost more than is anticipated, their implementation may take longer than expected and they may not meaningfully contribute to or result in successful new or enhanced products, services or technologies.

Some terms of our agreements with licensees could be interpreted in a manner that could adversely affect licensing revenue payable to us under those agreements.

Some of our license agreements contain “most favored nation” clauses. These clauses typically provide that if we enter into an agreement with another licensee on more favorable terms, we must offer some of those terms to our existing licensees. We have entered into a number of license agreements with terms that differ in some respects from those contained in other agreements. These agreements may obligate us to provide different, more favorable, terms to licensees, which could, if applied, result in lower revenues or otherwise adversely affect our business, financial condition, results of operations or prospects. While we believe that we have appropriately complied with the most favored nation terms included in our license agreements, these contracts are complex and other parties could reach a different conclusion that, if correct, could have an adverse effect on our financial condition or results of operations.

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Changes in the nature or level of customer support we provide customers of our technology, product and service offerings could cause us to defer the recognition of revenue, which could adversely impact our short-term operating results.

Our technologies, products and services contain advanced features and functionality that may require us to increase the levels of, or revise the nature of, our end user support. Our customers may also require us to provide various benefits over longer service terms. To the extent that we offer a greater degree of customer support and ongoing services, we may be required to defer a greater percentage of revenues into future periods, which could harm short-term operating results.

Our products could be susceptible to errors, defects, or unintended performance problems that could result in lost revenues, liability or delayed or limited market acceptance.

We develop and offer complex solutions, which we license to customers. The performance of these products typically involves working with sophisticated software, computing and communications systems. Due to the complexity of these products, and despite our quality assurance testing, the products may contain undetected defects or errors that may affect the proper use or application of such products by the customer. Because our products are embedded in digital content and other software, our solutions’ performance could unintentionally jeopardize our customers’ product performance. Any such defects, errors, or unintended performance problems in existing or new products, and any inability to meet customer expectations in a timely manner, could result in loss of revenue or market share, failure to achieve market acceptance, diversion of development resources, injury to our reputation, increased insurance costs and increased service costs, any of which could materially harm our business.

In addition, we rely on customers and third party replicators to properly use our products to protect the software and applications to which our technology may be applied. Any improper use or application of the software by customers or third party replicators may render our technologies useless and result in losses from claims arising out of such improper use of the products.

Because customers rely on our products as used in their software and applications, defects or errors in our products may discourage customers from purchasing our products. These defects or errors could also result in product liability or warranty claims. Although we attempt to reduce the risk of losses resulting from these claims through warranty disclaimers and limitation of liability clauses in our agreements, these contractual provisions may not be enforceable in every instance. Furthermore, although we maintain errors and omissions insurance, this insurance may not adequately cover these claims. If a court refused to enforce the liability-limiting provisions of our contracts for any reason, or if liabilities arose that were not contractually limited or adequately covered by insurance, our business could be materially harmed.

In protecting copyrights and other intellectual property rights of our customers, our products affect consumer use of our customers’ products. Consumers may view this negatively and discontinue or threaten to discontinue purchase or use of our customers’ products unless our customers stop using our technologies. This may cause a decline in demand for our products or legal actions against us by our customers or consumers.

Government regulations may adversely affect our business.

The satellite transmission, cable and telecommunications industries are subject to pervasive federal regulation, including FCC licensing and other requirements. These industries are also often subject to extensive regulation by local and state authorities. While these regulations do not apply directly to us, they affect cable television providers and other multi-channel video programming distributors, or MVPDs, which are the primary customers for certain of our products and services. FCC regulations prohibit MVPDs (except DBS providers) from deploying after July 1, 2007, consumer electronic navigation devices (e.g., set-top boxes) with combined security and non-security functions (the “integration ban”). The FCC has granted a number of requests for waiver

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of the integration ban, and denied several petitions for waivers or deferrals. Petitions for reconsideration of the decisions denying waivers are pending before the FCC. Further developments with respect to these issues or other related FCC action could impact the availability and/or demand for “plug and play” devices, including set-top boxes, all of which could affect demand for IPGs incorporated in set-top boxes or CE devices and correspondingly affect our license fees.

Legislative initiatives seeking to weaken copyright law or new governmental regulation or new interpretation of existing laws that cause resulting legal uncertainties could harm our business.

Consumer rights advocates and other constituencies continuously challenge copyright law, notably the U.S. Digital Millennium Copyright Act of 1998, or DMCA, through both legislative and judicial actions. Legal uncertainties surrounding the application of the DMCA may adversely affect our business. If copyright law is compromised, or devices that can circumvent our technology are permitted by law and become prevalent, this could result in reduced demand for our technologies, and our business would be harmed.

Many laws and regulations are pending and may be adopted in the United States, individual states and local jurisdictions and other countries with respect to the Internet. These laws may relate to many areas that impact our business, including copyright and other intellectual property rights, digital rights management, property ownership and taxation. These types of regulations are likely to differ between countries and other political and geographic divisions. Other countries and political organizations are likely to impose or favor more and different regulation than that which has been proposed in the United States, thus furthering the complexity of regulations. In addition, state and local governments may impose regulations in addition to, inconsistent with, or stricter than federal regulations. Changes to or the interpretation of these laws could increase our costs, expose us to increased litigation risk, substantial defense costs and other liabilities or require us or our customers to change business practices. It is not possible to predict whether or when such legislation may be adopted, and the adoption of such laws or regulations, and uncertainties associated with their validity, interpretation, applicability and enforcement, could materially and adversely affect our business.

Business interruptions could adversely affect our future operating results.

The provision of certain of our products and services depends on the continuing operation of communications and transmission systems and mechanisms, including satellite, cable, wire, over the air broadcast communications and transmission systems and mechanisms. These communication and transmission systems and mechanisms are subject to significant risks and any damage to or failure of these systems and mechanisms could result in an interruption of the provision of our products and services.

Several of our major business operations are subject to interruption by earthquake, fire, power shortages, terrorist attacks and other hostile acts, and other events beyond our control. The majority of our research and development activities, our corporate headquarters, our principal information technology systems, and other critical business operations are located near major seismic faults. Our operating results and financial condition could be materially harmed in the event of a major earthquake or other natural or man-made disaster that disrupts our business. The communications and transmission systems and mechanisms that we depend on are not fully redundant, and our disaster recovery planning cannot account for all eventualities.

If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements could be impaired, which could increase our operating costs and affect our ability to operate our business.

We have a complex business that is international in scope. Ensuring that we have adequate internal financial and accounting controls and procedures in place to help ensure that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. We are continually in the process of documenting, reviewing and, if appropriate, improving our internal controls and

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procedures in connection with Section 404 of the Sarbanes-Oxley Act of 2002, which requires annual management assessments of the effectiveness of our internal control over financial reporting and a report by our independent registered public accountants on the effectiveness of our internal controls over financial reporting. If we or our independent registered public accountants identify areas for further attention or improvement, implementing any appropriate changes to our internal controls may require specific compliance training of our directors, officers and employees, entail substantial costs in order to modify our existing accounting systems, and take a significant period of time to complete. We have in the past identified, and may in the future identify, significant deficiencies in the design and operation of our internal controls, which have been or will in the future need to be remediated. Furthermore, our independent registered public accountants may interpret the Section 404 requirements and the related rules and regulations differently from how we interpret them, or our independent registered public accountants may not be satisfied with our internal control over financial reporting or with the level at which these controls are documented, operated or reviewed in the future. Finally, in the event we make a significant acquisition, or a series of smaller acquisitions, we may face significant challenges in implementing the required processes and procedures in the acquired operations. As a result, our independent registered public accountants may decline or be unable to report on the effectiveness of our internal controls over financial reporting or may issue a qualified report in the future. This could result in an adverse reaction in the financial markets due to investors’ perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements.

We will incur costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could affect our operating results.

We have incurred, and will continue to incur, significant legal, accounting and other expenses associated with corporate governance and public company reporting requirements, including requirements under the Sarbanes-Oxley Act of 2002, as well as rules implemented by the SEC and NASDAQ. As long as the SEC requires the current level of compliance for public companies of our size, we expect these rules and regulations to require significant legal and financial compliance costs and to make some activities time-consuming and costly. These rules and regulations may make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage than was previously available. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as our executive officers.

We may be subject to assessment of sales and other taxes for the sale of our products, license of technology or provision of services.

We generally do not collect sales or other taxes on the sale of our products, license of technology or provision of services in states and countries other than those in which we have offices or employees. Our business would be harmed if one or more states or any foreign country required us to collect sales or other taxes from past sales of products, licenses of technology or provision of services, particularly because we would be unable to go back to customers to collect sales taxes for past sales and would likely have to pay such taxes out of our own funds.

The price of our common stock may be volatile.

The market price of our common stock has been, and in the future could be, significantly affected by factors such as:

• actual or anticipated fluctuations in operating results;

• announcements of technical innovations;

• new products or new contracts;

• announcements by competitors or their customers;

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• announcements by our customers;

• governmental regulatory and copyright action;

• developments with respect to patents or proprietary rights;

• announcements regarding acquisitions or divestitures;

• announcements regarding litigation or regulatory matters;

• changes in financial estimates or coverage by securities analysts;

• changes in interest rates which affect the value of our investment portfolio;

• changes in tax law or the interpretation of tax laws; and

• general market conditions.

Announcements by satellite television operators, cable television operators, major content providers or others regarding CE business combinations, evolving industry standards, consumer rights activists’ “wins” in government regulations or the courts, motion picture production or distribution or other developments could cause the market price of our common stock to fluctuate substantially.

There can be no assurance that our historic trading prices, or those of technology companies in general, will be sustained. In the past, following periods of volatility in the market price of a company’s securities, some companies have been named in class action suits.

Further, the general stock market instability and economic uncertainty may adversely affect the global financial markets, which could cause the market price of our common stock to fluctuate substantially.

Our telephone and computer networks are subject to security and stability risks that could harm our business and reputation and expose us to litigation or liability.

Online business activities depend on the ability to transmit confidential information and licensed intellectual property securely over private and public networks. Any compromise of our ability to transmit such information and data securely or reliably, and any costs associated with preventing or eliminating such problems, could harm our business. Online transmissions are subject to a number of security and stability risks, including:

• our own or licensed encryption and authentication technology, and access and security procedures, may be compromised, breached or otherwise be insufficient to ensure the security of customer information or intellectual property;

• we could experience unauthorized access, computer viruses, system interference or destruction, “denial of service” attacks and other disruptive problems, whether intentional or accidental, that may inhibit or prevent access to our websites or use of our products and services;

• someone could circumvent our security measures and misappropriate our, our partners’ or our customers’ proprietary information or content or interrupt operations, or jeopardize our licensing arrangements, which are contingent on our sustaining appropriate security protections;

• our computer systems could fail and lead to service interruptions or downtime for our ecommerce websites; or

• we may need to grow, reconfigure or relocate our data centers in response to changing business needs, which may be costly and lead to unplanned disruptions of service.

The occurrence of any of these or similar events could damage our business, hurt our ability to distribute products and services and collect revenue, threaten the proprietary or confidential nature of our technology, harm

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our reputation, and expose us to litigation or liability. Because some of our technologies and businesses are intended to inhibit use of or restrict access to our customers’ intellectual property, we may become the target of hackers or other persons whose use of or access to our customers’ intellectual property is affected by our technologies. We may be required to expend significant capital or other resources to protect against the threat of security breaches, hacker attacks or system malfunctions or to alleviate problems caused by such breaches, attacks or failures.

Our Internet-based product and service offerings rely on a variety of systems, networks and databases, many of which are maintained by us at our data centers. We do not have complete redundancy for all of our systems, and we do not maintain real-time back-up of our data, so in the event of significant system disruption, particularly during peak periods, we could experience loss of data processing capabilities, which could cause us to lose customers and could harm our operating results. Notwithstanding our efforts to protect against “down time” for products and services, we do occasionally experience unplanned outages or technical difficulties. In order to provide our Internet-based products and services, we must protect the security of our systems, networks, databases and software.

We utilize non-GAAP reporting in our quarterly earnings press releases.

We publish non-GAAP financial measures in our quarterly earnings press releases along with a reconciliation of non-GAAP financial measures to those measures compiled in accordance with accounting principles generally accepted in the United States (“GAAP”). The reconciling items have adjusted GAAP net income and GAAP earnings per share for certain non-cash, non-operating or non-recurring items and are described in detail in each such quarterly earnings press release. We believe that this presentation may be more meaningful to investors in analyzing the results of operations and income generation as this is how our business is managed. The market price of our stock may fluctuate based on future non-GAAP results if investors base their investment decisions upon such non-GAAP financial measures. If we decide to curtail use of non-GAAP financial measures in our quarterly earnings press releases, the market price of our stock could be affected if investors analyze our performance in a different manner.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

The following table lists our principal locations.

Location	Approximate Square Footage	Lease Expiration
Santa Clara, California (Corporate Headquarters)	131,000	January 2017
Radnor, Pennsylvania	70,000	January 2015
Burbank, California	62,000	June 2019
San Diego, California	48,000	March 2014
Tulsa, Oklahoma	40,000	June 2014
Shanghai, China	35,000	August 2014
Ann Arbor, Michigan	34,000	April 2015
San Francisco, California	20,000	May 2013

Most U.S. sales, marketing and technical personnel for all product divisions are in these locations, with a small number of individuals operating out of their home offices. We believe that our existing facilities are adequate to meet current requirements and that additional or substitute space will be available as needed to accommodate any expansion of operations.

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We also lease space for sales, marketing and technical staff in Playa Vista, California; Wheat Ridge, Colorado; Schaumburg, Illinois; Bedford and Cambridge, Massachusetts; New York, New York; London and Maidenhead, United Kingdom; Tomsk, Russia; Hangzhou, China; Tokyo, Japan; Seoul, South Korea; Hsinchu, Taiwan; Luxemburg and Germany.

ITEM 3. LEGAL PROCEEDINGS

The Company is involved in legal proceedings related to intellectual property rights and other matters. The following legal proceedings include those of the Company and its subsidiaries.

Indemnifications

DirecTV, Inc. v. Finisar Corporation. In April 2005, Gemstar received a notice of a potential claim for indemnification from DirecTV Group, Inc. (“DirecTV”) as a result of a lawsuit filed by Finisar Corporation (“Finisar”) against DirecTV in the United States District Court for the Eastern District of Texas. Finisar alleged that several aspects of the DirecTV satellite transmission system, including aspects of its advanced electronic program guide (“EPG”) and the storage, scheduling, and transmission of data for the EPG, infringed a Finisar patent. On July 7, 2006, the Court awarded Finisar approximately $117 million. In addition, the Court ordered DirecTV to pay approximately $1.60 per activated set-top box in licensing fees going forward in lieu of an injunction until the expiration of Finisar’s patent in 2012. The parties both filed appeals to the Federal Circuit, which subsequently ruled that the trial court’s construction of certain terms of the patent was too broad, vacated the jury’s verdict of infringement, held that one of the seven patent claims at issue is invalid, and left standing the remaining six claims for reconsideration by the trial court. The appeals court also reversed the jury’s finding that DirecTV’s infringement was willful. The trial court subsequently ruled in DirecTV’s favor on its summary judgment motion that the remaining claims of the subject patent were invalid, and in January 2010, the court of appeals confirmed that ruling. The Company has not established a reserve with respect to this matter in its Consolidated Financial Statements.

Comcast Cable Communications Corp., LLC v. Finisar Corporation, in the United States District Court for the Northern District of California. In support of a potential claim for indemnification, Comcast Cable Communications Corp., LLC (“Comcast”) put the Company on notice that it had received communications from Finisar asserting infringement of U.S. Patent 5,404,505 (the “‘505 patent”). On July 7, 2006, Comcast filed a declaratory judgment action in the Northern District of California asking the Court to rule, among other things, that it does not infringe the ‘505 patent and/or that the patent is invalid. On May 15, 2008, Finisar entered into a covenant and stipulation with Comcast, filed with the California Court, that it would not assert any claim of the ‘505 patent against Comcast or certain related entities, other than claim 25. On July 11, 2008, the Court ruled on Comcast’s summary judgment motion, finding that claim 25 is invalid, and therefore finding that Comcast’s non-infringement motion is moot. Comcast has not taken any further action insofar as its potential indemnity claim against the Company is concerned.

Litigation

Sonic Acquisition Litigation

Vassil Vassilev v. Sonic Solutions, et al., Matthew Barnes v. Habinger [sic] et al., Diana Willis v. Sonic Solutions, et al., Mark Chropufka v. Sonic Solutions, et al. and Joann Thompson v. Sonic Solutions, et al., filed in California Superior Court for the County of Marin. On January 3, 2011, a putative class action lawsuit entitled Vassil Vassilev v. Sonic Solutions, et al. was filed in California Superior Court for the County of Marin by an individual purporting to be a shareholder of Sonic Solutions against Sonic Solutions, the members of its board of directors, the Company and Sparta Acquisition Sub, arising out of the proposed transaction between the Company and Sonic. On January 10, 14 and 18, 2011, three substantially similar putative class action lawsuits were filed in the same court against the same defendants, entitled Matthew Barnes v. Habinger [sic] et al., Mark

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Chropufka v. Sonic Solutions, et al. and Diana Willis v. Sonic Solutions, et al., respectively (the “Lawsuits”). The Lawsuits allege that the members of Sonic’s board of directors breached their fiduciary duties of care and loyalty by, inter alia, failing to maximize shareholder value and by approving the merger transaction via an unfair process. The Lawsuits allege that the Company and Sparta Acquisition Sub aided and abetted the breach of fiduciary duties. In January 2011, the above actions were consolidated and an amended consolidated complaint was filed adding allegations of omissions in the Schedule 14D-9 Recommendation Statement filed by Sonic on January 14, 2011 and seeking to enjoin the acquisition of Sonic by the Company, to rescind the transaction in the event it is consummated, to impose a constructive trust, and monetary damages, fees and costs in an unspecified amount.

On January 25, 2011, another substantially similar putative class action lawsuit was filed in the same court against the same defendants, entitled Joann Thompson v. Sonic Solutions, et al. On January 28, 2011, the parties to the consolidated action reached an agreement in principle to settle. The proposed settlement, which is subject to court approval following notice to the class and a hearing, disposes of all causes of action asserted in the consolidated action and in Thompson v. Sonic Solutions, et. al. on behalf of all class members who do not elect to opt out of the settlement. Class members who elect to opt out, if any, may continue to pursue causes of action against the defendants. On November 29, 2011, the plaintiff in the Thompson action filed a voluntary request for dismissal, which the court granted on the same date. The court granted final approval of the settlement in February 2012.

In addition to the items listed above, the Company is party to various legal actions, claims and proceedings as well as other actions, claims and proceedings incidental to its business. The Company has established loss provisions only for matters in which losses are probable and can be reasonably estimated. Some of the matters pending against the Company involve potential compensatory, punitive or treble damage claims, or sanctions, that if granted, could require the Company to pay damages or make other expenditures in amounts that could have a material adverse effect on its financial position or results of operations. At this time, management has not reached a determination that the matters listed above or any other litigation, individually or in the aggregate, are expected to result in liabilities that will have a material adverse effect on our financial position or results of operations or cash flows.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information and Holders

The common stock of Rovi Corporation has been listed on the NASDAQ Global Select Market under the symbol “ROVI” since July 16, 2009. Macrovision Solutions Corporation was trading under the symbol “MVSN” prior to changing its name to Rovi Corporation on July 15, 2009. As part of Macrovision Solutions Corporation’s assumption of the ownership on May 2, 2008 of both Gemstar and Macrovision Corporation (See Note 1 to the Consolidated Financial Statements) Macrovision Corporation’s stock was delisted. The following table sets forth, for the periods indicated, the reported high and low sales prices for the common stock of Rovi Corporation:

	High		Low
2011
First Quarter	$	69.50	$	51.11
Second Quarter	$	60.84	$	46.00
Third Quarter	$	59.31	$	41.28
Fourth Quarter	$	51.83	$	23.20
2010
First Quarter	$	38.50	$	27.60
Second Quarter	$	40.06	$	33.17
Third Quarter	$	53.00	$	37.41
Fourth Quarter	$	62.50	$	47.47

As of February 14, 2012, there were 341 holders of record of our common stock, based upon information furnished by American Stock Transfer & Trust Company, the transfer agent for our securities. The number of beneficial stockholders is substantially greater than the number of holders of record as a large portion of our common stock is held through brokerage firms. As of February 14, 2012, there were 109,831,234 shares of common stock outstanding.

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Stock Performance Graph

The graph below shows a comparison of the cumulative total stockholder return on our common stock with the cumulative total return on the NASDAQ Composite Index (the “NASDAQ”), the S&P 500 Composite Index (the “S&P 500”) and the Russell 2000 Index (“Russell 2000”) from May 2, 2008 through December 31, 2011. The graph assumes an investment of $100 in our common stock and in each of the market indices, and further assumes the reinvestment of all dividends. The comparisons in the graph below are based on historical data and are not intended to forecast the possible future performance of our common stock.

	Rovi Corporation		NASDAQ Composite Index		S&P 500		Russell 2000 Index
May 2, 2008	$	100	$	100	$	100	$	100
December 31, 2008	$	76	$	64	$	64	$	69
December 31, 2009	$	191	$	92	$	79	$	86
December 31, 2010	$	372	$	107	$	89	$	108
December 31, 2011	$	148	$	105	$	89	$	102

Dividend Policy

We have not paid any cash dividends in the last two years and do not anticipate paying any cash dividends on our common stock in the foreseeable future. At this time, we intend to retain all earnings for use in our business operations and to pay down debt.

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The following table provides information about Company purchases of its equity securities during the quarter ended December 31, 2011:

Period	Total Number of Share Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (1)
October 1, 2011 to October 31, 2011		—		—		—		87.4
November 1, 2011 to November 30, 2011		834,587	$	29.96		834,587		375.0
December 1, 2011 to December 31, 2011		—		—		—		375.0
Total		834,587	$	29.96		834,587		375.0

(1) In December 2010, the Company’s Board of Directors authorized the repurchase of up to $400.0 million of the Company’s common stock. In November 2011, the Company’s Board of Directors authorized the repurchase of up to $400.0 million of the Company’s common stock. The November 2011 $400.0 million authorization includes any amounts which were outstanding under previously authorized stock repurchase programs and does not have an expiration date.

In May 2011, the Company’s Board of Directors authorized the repurchase of up to $300.0 million of the Company’s debt outstanding. This repurchase authorization includes any amounts which were outstanding under previously authorized debt repurchase programs. During November 2011, the Company repurchased a portion of its convertible notes with a par value of $62.0 million for $62.4 million. During December 2011, the Company repurchased convertible notes with a par value of $13.2 million for $13.3 million. As of December 31, 2011, $210.1 million remained available for debt repurchases under the Company’s existing debt repurchase authorization.

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ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial data and other operating information. The financial data does not purport to indicate results of operations as of any future date or for any future period. The financial data is derived from our consolidated financial statements and should be read in conjunction with the consolidated financial statements, related notes and other financial information included herein. For further discussion of factors that could affect comparability of these consolidated financial statements, see the notes following the table.

On May 2, 2008, the Company acquired Gemstar-TV Guide International, Inc. (“Gemstar”) in a cash and stock transaction. Upon consummation of this transaction on May 2, 2008, Macrovision Solutions Corporation, a Delaware corporation founded in 2007, assumed ownership of both Gemstar and Macrovision Corporation. On April 30, 2009, the Company acquired substantially all of the assets of Muze, Inc. (“Muze”) in a cash transaction. On February 17, 2011, the Company acquired Sonic Solutions (“Sonic”) in a cash and stock transaction and on February 28, 2011, the Company acquired SideReel, Inc. (“SideReel”) in a cash transaction. The Company’s results of operations include the operations of Gemstar, Muze, Sonic and SideReel from those dates forward.

	Year Ended December 31,
	2011			2010			2009			2008			2007
	(in thousands, except per share data)
Consolidated Statements of Operations Data:
Revenues	$	690,810		$	541,490		$	480,450		$	327,440		$	144,943
Costs and expenses:
Cost of revenues		107,487			99,129			65,258			44,304			9,238
Research and development		162,693			95,687			91,984			65,911			13,204
Selling, general and administrative		186,210			142,197			132,939			114,563			55,316
Depreciation		20,038			18,758			18,368			13,797			5,090
Amortization of intangible assets		110,280			80,395			81,934			59,139			5,981
Restructuring and asset impairment charges		20,800			—			53,619			—			4,546
Total costs and expenses		607,508			436,166			444,102			297,714			93,375
Operating income from continuing operations		83,302			105,324			36,348			29,726			51,568
Interest expense		(53,776	)		(42,935	)		(52,028	)		(54,834	)		(15,446	)
Interest income and other, net		4,859			1,770			4,558			11,242			23,199
(Loss) gain on interest rate swaps and caps, net		(4,314	)		34,197			—			—			—
Loss on debt redemption		(11,514	)		(16,806	)		(8,687	)		—			—
Gain on sale of strategic investments		—			5,895			—			5,238			—
Impairment losses on strategic investments		—			—			—			—			(5,000	)
Income (loss) from continuing operations before income taxes		18,557			87,445			(19,809	)		(8,628	)		54,321
Income tax expense (benefit)		8,818			(139,213	)		(1,421	)		(23,409	)		14,468
Income (loss) from continuing operations, net of tax		9,739			226,658			(18,388	)		14,781			39,853
Discontinued operations, net of tax		(51,025	)		(13,774	)		(34,563	)		(128,841	)		(14,537	)
Net (loss) income	$	(41,286	)	$	212,884		$	(52,951	)	$	(114,060	)	$	25,316
Basic earnings per common share:
Basic income (loss) per share from continuing operations	$	0.09		$	2.20		$	(0.18	)	$	0.17		$	0.75
Basic loss per share from discontinued operations	$	(0.47	)	$	(0.14	)	$	(0.34	)	$	(1.49	)	$	(0.27	)
Basic net earnings per share	$	(0.38	)	$	2.06		$	(0.52	)	$	(1.32	)	$	0.48
Shares used in computing basic net earnings per common share		108,923			102,658			100,860			85,334			52,470
Diluted earnings per common share:
Diluted income (loss) per share from continuing operations	$	0.09		$	2.07		$	(0.18	)	$	0.17		$	0.74
Diluted loss per share from discontinued operations	$	(0.45	)	$	(0.13	)	$	(0.34	)	$	(1.49	)	$	(0.27	)
Diluted net earnings per share	$	(0.36	)	$	1.94		$	(0.52	)	$	(1.32	)	$	0.47
Shares used in computing diluted net earnings per common share		113,131			109,175			100,860			85,357			53,104

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	December 31,
	2011		2010		2009		2008		2007
	(in thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents, short and long-term investments and restricted cash	$	485,480	$	696,167	$	336,284	$	362,057	$	439,289
Working capital		463,051		387,935		289,962		561,313		435,552
Total assets		2,946,767		2,457,283		2,151,139		2,636,184		922,951
Long-term liabilities		1,099,573		484,186		514,479		950,068		262,142
Total stockholders’ equity		1,692,752		1,748,333		1,520,269		1,515,195		576,731

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following commentary should be read in conjunction with the Consolidated Financial Statements and related notes contained elsewhere in this Form 10-K.

Overview

We are focused on powering the discovery and enjoyment of digital entertainment by providing a broad set of integrated solutions that are embedded in our customers’ products and services and used by end consumers to simplify and guide and enhance their interaction with digital entertainment. Our offerings can be categorized as providing opportunities for content discovery, video delivery and advertising. Content discovery solutions include interactive program guides (“IPGs”), recommendations and search capability, device management, media recognition technologies and licensing of our extensive database of descriptive information about television, movie, music, books, and game content. Video Delivery solutions include video compression-decompression technology (“codecs”), the Rovi Entertainment Store video delivery solution, content authoring solutions, and content protection technologies and services. Advertising solutions include IPG advertising, the Rovi Advertising Network and advertising on Rovi operated consumer websites. In addition to offering Company developed IPGs, our customers may also license our patents and deploy their own IPG or a third party IPG. Our solutions are deployed by companies in the consumer electronics, cable and satellite, entertainment and online distribution markets and utilized by consumers globally.

We group our revenue into the following categories – (i) service providers, (ii) CE manufacturers, and (iii) Other. We include in service provider revenues any revenue related to an IPG deployed by a service provider in a subscriber household whether the ultimate payment for that IPG comes from the service provider or from a manufacturer of a set-top box. Revenue related to an IPG deployed in a set-top box sold at retail is included in CE manufacturers. We also include in service provider revenues advertising revenue generated from our service provider IPGs and consumer websites such as AllRovi.com and SideReel.com. CE manufacturers includes license revenue received from consumer electronics companies for our IPG, DivX , ACP, VCR Plus+ and media recognition technologies as well as license revenue for our IPG patents, Rovi Cloud Services and advertising revenue from our CE IPGs or the Rovi Ad Network. Other includes the Rovi Entertainment Store, MainConcept, content authoring solutions as well as our business of licensing our extensive database of descriptive information about television, movie, music and video game content and our entertainment company content protection products.

On February 17, 2011, we acquired Sonic Solutions (“Sonic”) for approximately $763.1 million in cash and stock. We believe the Sonic acquisition not only enhances our offerings to our business customers, but also facilitates the next step forward in our strategy of providing connected consumers the capability to find content they are seeking using our technologies and metadata, as well as to enjoy that content from multiple sources on any device.

On February 1, 2012, we sold our Roxio Consumer Software business. The results of the Roxio Consumer Software business have been reclassified to discontinued operations.

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Comparison of Years Ended December 31, 2011 and 2010 from continuing operations

The following tables present our 2011 results from continuing operations compared to the prior year (in thousands):

	Year Ended December 31,
	2011			2010			Change $			Change %
Revenues:
CE manufacturers	$	317,766		$	216,625			101,141			47	%
Service providers		299,883			267,458			32,425			12	%
Other		73,161			57,407			15,754			27	%
Total revenues		690,810			541,490			149,320			28	%
Costs and expenses:
Cost of revenues		107,487			99,129			8,358			8	%
Research and development		162,693			95,687			67,006			70	%
Selling, general and administrative		186,210			142,197			44,013			31	%
Depreciation		20,038			18,758			1,280			7	%
Amortization of intangible assets		110,280			80,395			29,885			37	%
Restructuring and asset impairment charges		20,800			—			20,800			NM
Total operating expenses		607,508			436,166			171,342			39	%
Operating income from continuing operations		83,302			105,324			(22,022	)		-21	%
Interest expense		(53,776	)		(42,935	)		(10,841	)		25	%
Interest income and other, net		4,859			1,770			3,089			175	%
(Loss) gain on interest rate swaps and caps, net		(4,314	)		34,197			(38,511	)		-113	%
Loss on debt redemption		(11,514	)		(16,806	)		5,292			-31	%
Gain on sale of strategic investments		—			5,895			(5,895	)		-100	%
Income from continuing operations before taxes		18,557			87,445			(68,888	)		-79	%
Income tax expense (benefit)		8,818			(139,213	)		148,031			-106	%
Income from continuing operations, net of tax		9,739			226,658			(216,919	)		-96	%
Loss from discontinued operations, net of tax		(51,025	)		(13,774	)		(37,251	)		270	%
Net (loss) income	$	(41,286	)	$	212,884			(254,170	)		-119	%

Net Revenue

CE Manufacturers Revenue

For the year ended December 31, 2011, revenue from the sale of our products and licensing of our patents to CE manufacturers increased by 47% compared to the prior year. This increase was primarily due to $79.7 million in revenue from the addition of the acquired Sonic products and increases in IPG patent and product revenue, primarily due to new agreements signed in the current year. These increases were partially offset by the continued decline in ACP revenue. Going forward, we anticipate increases in sales of our digital products, as well as licensing of our patents to CE manufacturers, to be offset by continued declines in our revenue from analog products such as ACP.

Service Providers Revenue

For the year ended December 31, 2011, revenue from service providers increased by 12% compared to the prior year. These increases were primarily due to an increase in IPG product revenues which benefited from continued domestic digital subscriber growth and rate increases on renewed agreements. Also contributing to the

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growth was an increase in IPG advertising revenue. We expect revenue from licensing our IPG products and patents to continue to grow in the future from licensing additional solutions, from increased international licensing, from increased licensing to our existing customers to broaden their licenses into the Online and Mobile fields of use, from continued digital subscriber growth and from increased IPG advertising revenue.

Other Revenue

Other revenue consists primarily of the Rovi Entertainment Store, licensing of our underlying media content/metadata, MainConcept codecs and licensing of our content protection technologies to entertainment companies. For the year ended December 31, 2011, Other revenue increased compared to the prior year primarily due to the Rovi Entertainment Store and MainConcept products acquired in the Sonic acquisition, which occurred in February 2011, contributing $21.1 million in revenue for the year ended December 31, 2011. This increase was offset by the continued decline in content protection revenue from entertainment companies. Going forward we expect revenue from the Rovi Entertainment Store to continue to grow as we improve the service and sign-up additional licensees. These increases will be partially offset by the continued decline in content protection revenue from entertainment companies.

Cost of Revenues

For the year ended December 31, 2011, cost of revenues increased from the prior year primarily due to costs related to the acquired Sonic operations and an increase in patent litigation costs. These increases were partially offset by the prior year including $28.5 million in costs associated with indemnification and other claims in excess of reserves established in purchase accounting in conjunction with the Gemstar acquisition. These primarily related to the resolution of the DirecTV and Thomson matters (see Note 16 to the Consolidated Financial Statements).

Research and Development

For the year ended December 31, 2011, research and development expenses increased from the prior year primarily due to costs related to the acquired Sonic operations and an increase in cash and stock related compensation expense driven by increased headcount.

Selling, General and Administrative

For the year ended December 31, 2011, selling, general and administrative expenses increased from the prior year primarily due to costs related to the acquired Sonic operations. Also contributing to the increase was an increase in stock compensation expense and costs related to the Sonic transaction and integration activities.

Depreciation

For the year ended December 31, 2011, depreciation increased from the prior year primarily due to the Sonic acquisition.

Amortization of Intangible Assets

For the year ended December 31, 2011, amortization of intangible assets increased from the prior year primarily due to amortization related to the intangible assets acquired in the Sonic and SideReel acquisitions.

Restructuring and Asset Impairment Charges

In conjunction with the Sonic acquisition, the Company implemented restructuring activities to create cost efficiencies for the combined Company. These restructuring actions resulted in a charge to continuing operations

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of $7.3 million which included $4.1 million in severance, $0.6 million in stock compensation expense due to the contractual acceleration of restricted stock and options, $1.4 million in facilities abandonment charges and $1.2 million in asset impairment charges.

On July 1, 2011, we sold our BD+ technology assets for up to $25 million based on the achievement of certain milestones, with $2.0 million paid initially. In connection with the sale, the Company recorded a $13.5 million impairment charge related to the BD+ intangible assets.

Interest Expense

For the year ended December 31, 2011, interest expense increased compared to the same period in the prior year due to an increase in average debt outstanding. On February 7, 2011, the Company borrowed $750 million under a credit facility consisting of a 5-year $450 million term loan and a 7-year $300 million term loan (See Note 7 to the Consolidated Financial Statements).

Interest Income and Other, Net

The increase in interest income and other, net, for the year ended December 31, 2011, as compared to the prior year, is primarily due to the prior year including a $1.0 million loss from the sale of the Guideworks LLC joint venture. Also contributing to the increase is $0.4 million decrease in net foreign exchange losses as compared to the prior year.

(Loss) Gain on Interest Rate Swaps and Caps, Net

The loss on interest swaps and caps, net for the year ended December 31, 2011, was primarily due to a decrease in the fair value of the swaps we entered into in November 2011 with a notional amount of $300 million. The fair value of these swaps declined due to a decrease in the forward USD-LIBOR-BBA rate. As we pay fixed and receive floating under these swaps the fair value of the swaps declined. The increase in the fair value of the interest rate swaps for the year ended December 31, 2010, was due to a decrease in the expected forward six month USD – LIBOR. We have not designated any of our interest rate swaps and caps as hedges and therefore record the changes in fair value of these instruments in our consolidated statements of operations (see Note 9 to the Consolidated Financial Statements).

Loss on Debt Redemption

During the year ended December 31, 2011, we repurchased a total of $106.3 million in par value of the 2.625% convertible senior notes (the “2011 Convertible Notes”) due in 2011 for $221.1 million. During the year ended December 31, 2011, we repurchased a total of $169.0 million in par value of the 2.625% convertible senior notes (the “2040 Convertible Notes”) due in 2040 for $203.2 million. In connection with the repurchases, we recorded $11.5 million in losses on debt redemption during the year ended December 31, 2011 (see Note 7 to the Consolidated Financial Statements).

During 2010, we spent $207.2 million to pay-off and retire our term loan. We realized a $12.3 million loss on redemption, primarily due to writing off the remaining note issuance costs. In addition, we repurchased $105.0 million in par value of our 2011 Convertible Notes for $160.1 million. In connection with these repurchases, we recorded a $4.5 million loss on debt redemption which represents the difference between the carrying value of the 2011 Convertible Notes retired and the amount allocated to the liability component of the notes and the write-off of the related note issuance costs (see Note 7 to the Consolidated Financial Statements).

Gain on Sale of Strategic Investment

During the year ended December 31, 2010, we sold a strategic investment and realized a $5.9 million gain.

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Income Taxes

Income tax expense for the year ended December 31, 2011, of $8.8 million is primarily attributable to foreign withholding tax and the net effect of the change in our deferred tax asset valuation allowance resulting from our acquisitions of Sonic and SideReel and the sale of BD+.

During the three months ended March 31, 2010, we entered into a closing agreement with the Internal Revenue Service through its Pre-Filing Agreement (PFA) program confirming that the Company recognized an ordinary tax loss of approximately $2.4 billion from the 2008 sale of its TV Guide Magazine business. To account for the PFA closing agreement, we (i) recorded a discrete tax benefit for the release of $576.9 million of reserves for uncertain tax positions previously netted against our deferred tax assets, (ii) reduced the deferred tax asset originally established in connection with the tax loss by $115 million to reflect the PFA closing agreement and (iii) established a valuation allowance of $347 million against our deferred tax assets as a result of determining that it is more likely than not that our deferred tax assets would not be realized (see Note 14 to the Consolidated Financial Statements).

The income tax benefit for the year ended December 31, 2010, of $139.2 million is primarily attributable to the PFA closing agreement described above plus an additional $17.3 million decrease in net tax contingency reserves.

Discontinued Operations

Discontinued operations for the year ended December 31, 2011 includes the Roxio Consumer Software business and expenses we recorded for indemnification claims related to another former Software business which was disposed of in 2008 (see Note 5 to Consolidated Financial Statements). The loss in discontinued operations for the year ended December 31, 2011, was primarily due to recording a $40.6 million impairment charge to reduce the carrying value of the intangible assets of the Roxio Consumer Software business to fair value.

Discontinued operations for the year ended December 31, 2010, includes expenses and reserves we recorded for indemnification claims related to a former Software business which was disposed of in 2008 (see Note 5 to the Consolidated Financial Statements) and the results of our Norpak subsidiary which was disposed of in September 2010.

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Comparison of Years Ended December 31, 2010 and 2009 from continuing operations

The following tables present our 2010 results from continuing operations compared to the prior year (in thousands):

	Year Ended December 31,
	2010			2009			Change $			Change %
Revenues:
Service providers	$	267,458		$	230,727			36,731			16	%
CE manufacturers		216,625			199,905			16,720			8	%
Other		57,407			49,818			7,589			15	%
Total revenues		541,490			480,450			61,040			13	%
Costs and expenses:
Cost of revenues		99,129			65,258			33,871			52	%
Research and development		95,687			91,984			3,703			4	%
Selling, general and administrative		142,197			132,939			9,258			7	%
Depreciation		18,758			18,368			390			2	%
Amortization of intangible assets		80,395			81,934			(1,539	)		-2	%
Restructuring and asset impairment charges		—			53,619			(53,619	)		-100	%
Total operating expenses		436,166			444,102			(7,936	)		-2	%
Operating income from continuing operations		105,324			36,348			68,976			190	%
Interest expense		(42,935	)		(52,028	)		9,093			-17	%
Interest income and other, net		1,770			4,558			(2,788	)		-61	%
Gain on interest rate swaps and caps, net		34,197			—			34,197			NM
Loss on debt redemption		(16,806	)		(8,687	)		(8,119	)		93	%
Gain on sale of strategic investment		5,895			—			5,895			NM
Income (loss) from continuing operations before taxes		87,445			(19,809	)		107,254			-541	%
Income tax benefit		(139,213	)		(1,421	)		(137,792	)		9697	%
Income (loss) from continuing operations, net of tax		226,658			(18,388	)		245,046			-1333	%
Loss from discontinued operations, net of tax		(13,774	)		(34,563	)		20,789			-60	%
Net income (loss)	$	212,884		$	(52,951	)		265,835			-502	%

Net Revenue

Service Providers Revenue

For the year ended December 31, 2010, revenue from service providers increased by 16% compared to the prior year. This increase was primarily due to increases in IPG patent and product licensing revenues. IPG revenues benefited from new international IPG patent licensees as well as from digital subscriber growth both internationally and domestically.

CE Manufacturers Revenue

For the year ended December 31, 2010, revenue from the sale of our products and licensing of our patents to CE manufacturers increased by 8% compared to the prior year. This increase was primarily due to an increase in IPG patent and product revenues driven by new IPG license agreements and increased IPG shipments by existing licensees. Also contributing to the increase was a slight increase in ACP revenue.

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Other Revenue

Other revenue consists primarily of licensing of our underlying media content/metadata and licensing of our content protection technologies to entertainment companies. For the year ended December 31, 2010, Other revenue increased compared to the same periods in the prior year primarily due to increased revenue from our data business and the Muze acquisition, which occurred in April 2009.

Cost of Revenues

For the year ended December 31, 2010, cost of revenues increased from the prior year primarily due to an increase in patent litigation and prosecution costs and approximately $28.5 million in costs associated with indemnification and other claims in excess of reserves established in purchase accounting in conjunction with the Gemstar acquisition. These primarily relate to the resolution of the DirecTV and Thomson, Inc. matters (see Note 16 to the Consolidated Financial Statements).

Research and Development

For the year ended December 31, 2010, research and development expenses increased from the prior year primarily due to increased cash and stock related compensation expense driven by increased headcount partially offset by savings from exiting Guideworks (see Note 1 to the Consolidated Financial Statements).

Selling, General and Administrative

For the year ended December 31, 2010, selling, general and administrative expenses increased from the prior year primarily due to increased stock compensation expense and $5.2 million in Sonic transaction costs and other due diligence costs. Stock compensation expense increased primarily due to options and restricted shares granted in the second half of 2009 and in 2010, as well as increased participation in the Company’s employee stock purchase plan.

Restructuring and Asset Impairment Charges

During the second quarter of 2009, we completed extensive consumer research regarding our brands. This consumer research indicated that the brands acquired by us did not represent the future vision of the Company and did not carry a positive connotation in the market. We determined these results to be an indicator of potential impairment of our trademark intangible assets. We determined the fair value of our trademark intangible assets to be $8.3 million and recorded a $43.1 million impairment charge during the second quarter of 2009. In addition, during the second quarter of 2009, we recorded $0.9 million in restructuring charges related to the Muze acquisition and $1.6 million in other asset impairment charges (see Notes 6 and 11 to the Consolidated Financial Statements).

In the first quarter of 2009, in conjunction with the disposition of the Media Properties (see Note 1 to the Consolidated Financial Statements), management approved several actions resulting in a restructuring and asset impairment charge of $8.4 million. During the first quarter of 2009, we reversed the remaining $0.4 million in liabilities related to the fiscal 2007 restructuring plan (see Note 11 to the Consolidated Financial Statements).

Interest Expense

For the year ended December 31, 2010, interest expense decreased compared to the same period in the prior year due to a decrease in note issuance cost amortization, due to the repayment of the term loan, and lower average outstanding debt balances.

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Interest Income and Other, Net

The decrease in interest income for the year ended December 31, 2010, as compared to the prior year, is primarily due to a $1.0 million loss recorded in connection with the sale of our interest in the Guideworks joint venture, a decrease in interest income due to a decline in prevailing interest rates and net foreign exchange losses in the current year versus net foreign exchange gains during the prior year.

Gain on Interest Rate Swaps and Caps, Net

This represents an increase in the fair value of our interest rate swaps partially offset by a decrease in the fair value of our interest rate caps. The increase in the fair value of the interest rate swaps was due to a decrease in the expected forward six month USD – LIBOR rates. We have not designated any of our interest rate swaps and caps as hedges and therefore record the changes in fair value of these instruments in our consolidated statements of operations (see Note 9 to the Consolidated Financial Statements).

Loss on Debt Redemption

During 2010, we spent $207.2 million to pay off and retire our term loan. We realized a $12.3 million loss on redemption, primarily due to writing off the remaining note issuance costs. In addition, we repurchased $105.0 million in par value of our 2011 Convertible Notes for $160.1 million. In connection with these repurchases, we recorded a $4.5 million loss on debt redemption which represents the difference between the carrying value of the 2011 Convertible Notes retired and the amount allocated to the liability component of the notes and the write-off of the related note issuance costs (see Note 7 to the Consolidated Financial Statements).

On August 5, 2009, we redeemed our $100 million 11% senior notes (“11% Senior Notes”) at par plus accrued interest and a $2.8 million make-whole payment representing the discounted value of interest which the note holders would have received through November 15, 2009, the first date the Senior Notes could be retired without a premium. In connection with the redemption of the Senior Notes, we recorded an $8.7 million loss on debt redemption. This loss is comprised of the $2.8 million make-whole payment discussed above, the write-off of $5.6 million in note issuance costs and $0.3 million in fees associated with the note redemption (see Note 7 to the Consolidated Financial Statements).

Gain on Sale of Strategic Investment

During the year ended December 31, 2010, we sold a strategic investment and realized a $5.9 million gain.

Income Taxes

During the three months ended March 31, 2010, we entered into a closing agreement with the Internal Revenue Service through its Pre-Filing Agreement (PFA) program confirming that the Company recognized an ordinary tax loss of approximately $2.4 billion from the 2008 sale of its TV Guide Magazine business. To account for the PFA closing agreement, we (i) recorded a discrete tax benefit for the release of $576.9 million of reserves for uncertain tax positions previously netted against our deferred tax assets, (ii) reduced the deferred tax asset originally established in connection with the tax loss by $115 million to reflect the PFA closing agreement and (iii) established a valuation allowance of $347 million against our deferred tax assets as a result of determining that it is more likely than not that our deferred tax assets would not be realized (see Note 14 to the Consolidated Financial Statements).

The income tax benefit for the year ended December 31, 2010, of $139.2 million is primarily attributable to the PFA closing agreement described above plus an additional $17.3 million decrease in net tax contingency reserves.

Our income tax benefit in 2009 of $1.4 million was primarily impacted by the geographic source of our profits and an increase in accrued tax contingency reserves.

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Discontinued Operations

Discontinued operations for the year ended December 31, 2010, includes expenses and reserves we recorded for indemnification claims related to a former Software business which was disposed of in 2008 (see Note 5 to the Consolidated Financial Statements) and the results of our Norpak subsidiary which was disposed of in September 2010.

Discontinued operations for the year ended December 31, 2009, is primarily income tax expense arising from the sale of TVG Network, TV Guide Network and TV Guide Online.

Costs and Expenses

Cost of revenues consists primarily of service costs, royalty expense, patent prosecution, patent maintenance and patent litigation costs and an allocation of overhead and facilities. Research and development expenses are comprised primarily of employee compensation and benefits, consulting costs and an allocation of overhead and facilities costs. Selling and marketing expenses are comprised primarily of employee compensation and benefits, travel, advertising and an allocation of overhead and facilities costs. General and administrative expenses are comprised primarily of employee compensation and benefits, travel, accounting, tax and corporate legal fees and an allocation of overhead and facilities costs.

Critical Accounting Policies and Use of Estimates

The discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements. These Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to revenue recognition, allowance for doubtful accounts, equity-based compensation, goodwill and intangible assets, impairment of long lived assets and income taxes. Our estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

We have identified the accounting policies below as critical to our continuing business operations and the understanding of our results of operations.

Revenue Recognition

On January 1, 2010, we adopted Accounting Standards Update 2009-13, Revenue Recognition (Topic 605): Multiple Deliverable Arrangements, (“ASU 2009-13”) and Accounting Standards Update 2009-14, Software (Topic 985)—Certain Revenue Arrangements That Include Software Elements (“ASU 2009-14”). ASU 2009-13 modifies the requirements for determining whether a deliverable in a multiple element arrangement can be treated as a separate unit of accounting by removing the criteria that objective and reliable evidence of fair value exists for the undelivered elements. The new guidance requires consideration be allocated to all deliverables based on their relative selling price using vendor specific objective evidence (VSOE) of selling price, if it exists; otherwise selling price is determined based on third-party evidence (TPE) of selling price. If neither VSOE nor TPE exist, management must use its best estimate of selling price (ESP) to allocate the arrangement consideration. We adopted this update under the prospective method and have applied the guidance to agreements entered into or materially modified after January 1, 2010.

The adoption of ASU 2009-13 may have a material impact on our revenue in any given period subsequent to adoption. For example, at times, we enter into IPG patent license agreements in which we provide a licensee a release for past infringement as well as the right to ship an unlimited number of units over a set period for a flat

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fee. Under the previous multiple element guidance, we generally would not be able to provide objective and reliable evidence of the fair value of the go-forward license arrangement (the undelivered element) and therefore would have recognized all revenue for such agreement ratably over the term of the agreement. Applying the guidance in the update, we would use ESP to allocate the consideration between the release for past infringement and the go-forward patent license. As the revenue recognition criteria for the past infringement would generally be satisfied upon the execution of the agreement, the amount of consideration allocated to the past infringement would be recognized in the quarter the agreement is executed and the amount allocated to the go-forward license agreement would be recognized ratably over the term.

ASU 2009-14 excludes tangible products containing software components and non-software components that function together to deliver the product’s essential functionality from the scope of ASC 985-605, Software-Revenue Recognition. We adopted ASU 2009-14 on a prospective basis and applied the new guidance to revenue arrangements entered into or materially modified after January 1, 2010. The adoption of ASU 2009-14 did not have a material impact on our financial position or results from operations.

We recognize revenue when persuasive evidence of an arrangement exists, we have delivered the product or performed the service, the fee is fixed or determinable and collectability is reasonable assured. However, determining whether and when some of these criteria have been satisfied often involves assumptions and judgments that can have a significant impact on the timing and amount of revenue we report. For example, for multiple element arrangements, we must: (1) determine whether and when each element has been delivered and whether the delivered element has stand-alone value to the customer (2) determine the fair value of each element using the selling price hierarchy of VSOE, TPE or ESP, as applicable; and (3) allocate the total consideration among the various elements based on the relative selling price method.

We account for cash consideration (such as sales incentives) given to our customers or resellers as a reduction of revenue, rather than as an operating expense unless we receive a benefit that is separate from the customer’s purchase and for which we can reasonably estimate the fair value of the benefit.

Amounts for fees collected or invoiced and due relating to arrangements where revenue cannot be recognized are reflected on our balance sheet as deferred revenue and recognized when the applicable revenue recognition criteria are satisfied.

CE and Service Provider Licensing

We license our proprietary IPG technology, codec technology and ACP technology to CE manufacturers, integrated circuit makers, service providers and others. We generally recognize revenue from licensing our technology on a per-unit shipped model with CE manufacturers or a per-subscriber model with service providers. Our recognition of revenues from per-unit license fees is based on units reported shipped by the manufacturer. CE manufacturers normally report their unit shipments to us in the quarter immediately following that of actual shipment by the licensee. We have established significant experience and relationships with certain ACP technology licensing customers to reasonably estimate current period volume for purposes of making a revenue accrual. Accordingly, revenue from these customers is recognized in the period the customer ships the units. Revenues from per-subscriber fees are recognized in the period the services are provided by a licensee, as reported to us by the licensee. Revenues from annual or other license fees are recognized based on the specific terms of the license arrangement. For instance, some of our large CE IPG and codec technology licensees have entered into agreements for which they have the right to ship an unlimited number of units over a specified term for a flat fee. We record the fees associated with these arrangements on a straight-line basis over the specified term. At times, we enter into IPG patent license agreements in which we provide a licensee a release for past infringement as well as the right to ship an unlimited number of units over a future period for a flat fee. In this type of arrangement, we generally would use ESP to allocate the consideration between the release for past infringement and the go-forward patent license. As the revenue recognition criteria for the past infringement would generally be satisfied upon the execution of the agreement, the amount of consideration allocated to the

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past infringement would be recognized in the quarter the agreement is executed and the amount allocated to the go-forward license agreement would be recognized ratably over the term. In addition, we also enter into agreements in which the licensee pays us a one-time fee for a perpetual license to our ACP technology. Provided that collectability is reasonably assured, we record revenue related to these agreements when the agreement is executed as we have no continuing obligation and the amounts are fixed and determinable.

We also generate advertising revenue through our IPGs and other platforms. Advertising revenue is recognized when the related advertisement is provided. All advertising revenue is recorded net of agency commissions and revenue shares with service providers and CE manufacturers.

Rovi Entertainment Store Video Delivery Solution

We recognize service fees we receive from retailers and others for operating their storefronts on a straight-line basis over the period we are providing services. We recognize transaction revenue from the sale or rental of individual content titles in the period when the content is purchased and delivered. Transaction revenue is recorded on a gross basis when we are the principal in the transaction and is recorded net of payments to content owners and others when we are acting as an agent. We are generally the principal when we are the merchant of record and are the licensor of the content offered through the storefront.

Discontinued Opertions—Roxio Consumer Software Products

Except in the case of consignment arrangements, we recognize revenue from the sale of packaged software products when title transfers to the distributor or retailer. When we sell packaged software products to distributors and retailers on a consignment basis, we recognize revenue upon sell-through to an end customer.

Our distributor arrangements often provide distributors with certain product rotation rights. We estimate returns based on our historical return experience and other factors such as channel inventory levels and the introduction of new products. These allowances are recorded as a reduction of revenues and as an offset to accounts receivable to the extent we have legal right of offset, otherwise they are recorded in accrued expenses and other current liabilities. If future returns patterns differ from past returns patterns, for example due to reduced demand for our products, we may be required to increase these allowances in the future and may be required to reduce future revenues.

We also license our software to OEMs who include it with the PCs they sell. We generally receive a per-unit royalty and recognize this revenue upon receipt of the customer royalty report.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts to reserve for potentially uncollectible trade receivables. We specifically analyze accounts receivable and historical bad debts experience, customer creditworthiness, current economic trends, international situations (such as currency devaluation), and changes in our customer payment history when evaluating the adequacy of the allowance for doubtful accounts. We review our trade receivables by aging category to identify significant customers with known disputes or collection issues. For accounts not specifically identified, we provide reserves based on historical bad debt loss experience. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Equity-Based Compensation

We determine the fair value of stock options and employee stock purchase plan shares using the Black-Scholes option pricing model which uses a number of complex and subjective variables. These variables include

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our expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends. We estimate the volatility of our common stock by using a combination of historical volatility and implied volatility in market traded options.

The Black-Scholes option pricing model was developed for use in estimating the fair value of short-lived exchange traded options that have no vesting restrictions and are fully transferable. Existing valuation models, including the Black-Scholes and lattice binomial models, may not provide reliable measures of the fair values of our equity-based compensation. Consequently, there is a risk that our estimates of the fair values of our equity-based compensation awards on the grant dates may bear little resemblance to the actual values realized upon the exercise, expiration, early termination or forfeiture of those equity-based payments in the future. Certain equity-based payments, such as employee stock options, may expire worthless or otherwise result in zero intrinsic value as compared to the fair values originally estimated on the grant date and reported in our financial statements. Alternatively, value may be realized from these instruments that are significantly higher than the fair values originally estimated on the grant date and reported in our financial statements.

Classification and Fair Value Measurement of Auction Rate Securities

We hold investments in auction rate securities having contractual maturities of greater than one year and interest rate reset features of between 7 and 35 days. These auction rate securities were priced and subsequently traded as short-term investments because of the interest rate reset feature. As a result of adverse conditions in the financial markets, the auction rate securities we hold have failed to trade at recent auctions due to insufficient bids from buyers.

The fair values of these securities are estimated utilizing a discounted cash flow analysis or other type of valuation model rather than at par. These analyses are highly judgmental and consider, among other items, the likelihood of redemption, credit quality, duration, insurance wraps and expected future cash flows. These securities were also compared, when possible, to other observable market data with similar characteristics to the securities held by us.

Temporary declines in fair value for our available-for-sale auction rate securities, which we attribute to market liquidity issues rather than credit issues, are recorded in accumulated other comprehensive income. Any future fluctuation in fair value related to these instruments that we deem to be temporary, including any recoveries of previous write-downs, would be recorded to accumulated other comprehensive income. If we determine that any future valuation adjustment is other than temporary, we will record a charge to earnings as appropriate.

Goodwill and Other Intangible Assets

Goodwill represents the excess of cost over fair value of the net assets of an acquired business. Goodwill and intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives.

On October 1, 2011, we adopted Accounting Standards Update 2011-8, Intangibles – Goodwill and Other Topics (Topic 350)(“ASU 2011-8”). ASU 2011-8 allows us to first assess qualitative factors to determine whether events or circumstances lead to the determination that the fair value of a reporting unit is less than its carrying value. If, after assessing the totality of events or circumstances, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. The adoption of ASU 2011-8 did not have a material impact on our results of operations or financial position.

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Goodwill and intangible assets not subject to amortization are tested annually for impairment, and are tested for impairment more frequently if events and circumstances indicate that the assets might be impaired. In connection with our Goodwill impairment analysis performed annually in our fourth quarter, we are required to perform an assessment of whether there is an indication that goodwill is impaired. To accomplish this, we first assess qualitative factors to determine whether events or circumstances lead to the determination that the fair value of a reporting unit is less than its carrying value. If, after assessing the totality of events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we perform the two-step impairment test. The first step of the two-step impairment analysis is to determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units. We determine the fair value of each reporting unit using the discounted cash flow approach and a market based approach. To the extent the carrying amount of a reporting unit exceeds its fair value, we would be required to perform the second step of the impairment analysis, as this is an indication that the reporting unit goodwill may be impaired. In this step, we compare the implied fair value of the reporting unit goodwill with the carrying amount of the reporting unit goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to all of the assets (recognized and unrecognized) and liabilities of the reporting unit. The residual fair value after this allocation is the implied fair value of the reporting unit’s goodwill. To the extent the implied fair value of goodwill of each reporting unit is less than its carrying amount we would be required to recognize an impairment loss. The process of evaluating the potential impairment of goodwill is subjective and requires judgment at many points during the test including future revenue forecasts and discount rates.

Impairment of Long-Lived Assets

Long-lived assets, such as property and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and would no longer be depreciated. The assets and liabilities of a disposal group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet.

Income Taxes

We account for income taxes using the asset and liability method. Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current year and for deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. From time to time, we enter into transactions in which the tax consequences may be subject to uncertainty. In determining our tax provision for financial reporting purposes, we establish reserves for uncertain tax positions unless such positions are determined to be “more likely than not” of being sustained upon examination, based on their technical merits. We must make significant assumptions, judgments and estimates to determine our current provision for income taxes and also our deferred tax assets and liabilities and any valuation allowance to be recorded against a deferred tax asset. Our judgments, assumptions and estimates relative to the current provision take into account current tax laws, our interpretation of current tax laws and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Changes in tax law or our interpretation of tax laws and the resolution of current and future tax audits could significantly impact the amount provided for income taxes in our consolidated financial statements.

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Liquidity and Capital Resources

We finance our operations primarily from cash generated by operations. Net cash provided by our continuing operating activities decreased to $237.0 million for the year ended December 31, 2011, from $316.3 million in the prior year. Cash from operating activities decreased from the prior year primarily due to the prior year including $128.5 million in income tax refunds for tax carryback claims, partially offset by an increase in revenue. The availability of cash generated by our operations in the future could be affected by other business risks including, but not limited to, those factors referenced under the caption “Risk Factors” contained in this Form 10-K.

Net cash used in investing activities from continuing operations decreased to $311.0 million for the year ended December 31, 2011, from $341.6 million in the prior year. The year ended December 31, 2011, included using $433.7 million (net of cash acquired) to acquire Sonic, SideReel and DigiForge, partially offset by $145.6 million in net marketable securities sales. During the year ended December 31, 2010, we made $359.5 million in net marketable securities purchases, made $15.4 million in capital expenditures and acquired MediaUnbound for approximately $5.9 million. These uses of cash were partially offset by $36.8 million being released from escrow related to the sale of one of the Media Properties. We anticipate that capital expenditures to support the growth of our business and strengthen our operations infrastructure will be between $23 million and $28 million for the full year 2012.

Net cash provided by financing activities from continuing operations decreased to $0.4 million for the year ended December 31, 2011, from $62.2 million in the prior year. During the year ended December 31, 2011, we entered into a $750 million senior secured credit facility which provided $733.0 million in cash, net of discounts and issuance costs. During the same period we used cash to repurchase $169.0 million in par value of our 2040 Convertible Notes for $203.2 million, repurchase $106.3 million in par value of our 2011 Convertible Notes for $221.1 million and repurchase $337.6 million of our common stock. In addition, we paid $28.4 million upon the conversion of the remainder of the 2011 Convertible Notes. During the year ended December 31, 2010, we issued $460 million in convertible debt ($446.5 million, net of issuance costs) and paid $207.2 million to pay off and retire our term loan. In addition, we repurchased $105.0 million in par value of our 2011 Convertible Notes for $160.1 million and repurchased $109.9 million of our common stock. We also received $84.8 million in cash from the exercise of employee stock options and the purchase of shares through our employee stock purchase plan.

As discussed in Note 7 of the Consolidated Financial Statements, in March 2010, we issued $460.0 million in 2.625% convertible senior notes due in 2040 at par. The 2040 Convertible Notes may be converted, under certain circumstances, based on an initial conversion rate of 21.1149 shares of common stock per $1,000 principal amount of notes (which represents an initial conversion price of approximately $47.36 per share). As of December 31, 2011, $291.0 million par value of the 2040 Convertible Notes remain outstanding.

Prior to November 15, 2039, holders may convert their 2040 Convertible Notes into cash and our common stock, at the applicable conversion rate, under any of the following circumstances: (i) during any fiscal quarter after the calendar quarter ending June 30, 2010, if the last reported sale price of our common stock for at least 20 trading days during the 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the applicable conversion price in effect on each applicable trading day; (ii) during the five business-day period after any ten consecutive trading-day period (the “measurement period”) in which the trading price per note for each day of such measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such day; (iii) upon the occurrence of specified corporate transactions, as described in the indenture, or (iv) if we call any or all of the notes for redemption, at any time prior to the close of business on the third scheduled trading day prior to that redemption date. From November 15, 2039 until the close of business on the scheduled trading day immediately preceding the maturity date of February 15, 2040, holders may convert their 2040 Convertible Notes into cash and shares of our common stock, if any, at the applicable conversion rate, at any time, regardless of the

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foregoing circumstances. On or after February 20, 2015, we have the right to call for redemption all, or a portion, of the 2040 Convertible Notes at 100% of the principal amount of notes to be redeemed, plus accrued interest to, but excluding, the redemption date. Holders have the right to require us to repurchase the 2040 Convertible Notes on February 20, 2015, 2020, 2025, 2030 and 2035 for cash equal to 100% of the principal amount of the notes to be repurchased, plus accrued interest to, but excluding, the repurchase date.

Upon conversion, a holder will receive the conversion value of the 2040 Convertible Notes converted based on the conversion rate multiplied by the volume weighted average price of our common stock over a specified observation period following the conversion date. The conversion value of each 2040 Convertible Note will be paid in cash up to the aggregate principal amount of the 2040 Convertible Notes to be converted and shares of common stock to the extent the conversion value exceeds the principal amount of the converted note. Upon the occurrence of a fundamental change (as defined in the indenture), the holders may require us to repurchase for cash all or a portion of their 2040 Convertible Notes at a price equal to 100% of the principal amount of the 2040 Convertible Notes being repurchased plus accrued interest, if any. In addition, following certain corporate events that occur prior to February 20, 2015, the conversion rate will be increased for holders who elect to convert their notes in connection with such a corporate event in certain circumstances.

In December 2010, our Board of Directors authorized the repurchase of up to $400.0 million of our common stock. This authorization includes any amounts which were outstanding under previously authorized stock repurchase programs. During the nine months ended September 30, 2011, we repurchased 6.0 million shares of our common stock for $312.6 million. In November 2011, the Company’s Board of Directors authorized the repurchase of up to $400 million of the Company’s common stock. This $400 million authorization includes any amounts which were outstanding under previously authorized stock repurchase programs. In November 2011, we repurchased 0.8 million shares of our common stock for $25.0 million and had $375.0 million remaining under the November stock repurchase authorization. In December 2010, our Board of Directors authorized the repurchase of up to $200.0 million of our convertible notes. In February 2011, our Board of Directors replaced the December authorization with a new repurchase authorization of up to $300 million of debt outstanding. In May 2011, our Board of Directors replaced the February authorization with a new repurchase authorization of up to $300.0 million of debt outstanding. During the year ended December 31, 2011, we paid $424.4 million to repurchase debt under our debt repurchase program, of which $89.9 million was repurchased under the May 2011 authorization with the remainder being repurchased under prior authorizations. As of December 31, 2011, we have $210.1 million remaining under our existing debt repurchase authorization.

On February 7, 2011, two of our subsidiaries, Rovi Solutions Corporation and Rovi Guides Inc., jointly borrowed $750 million under a senior secured credit facility consisting of a 5-year $450 million term loan (“Term Loan A”) and a 7-year $300 million term loan (“Term Loan B”). Both term loans are guaranteed by us and certain of our domestic and foreign subsidiaries and are secured by substantially all of our assets. Term Loan A requires annual amortization payments and matures on February 7, 2016 and the Term Loan B requires quarterly amortization payments and matures on February 7, 2018. Term Loan A bears interest, at our election, at either prime rate plus 1.5% per annum or 3 month LIBOR plus 2.5% per annum and was issued at a discount of $2.8 million to par value. Term Loan B bears interest, at our election, at either prime plus 2.0% per annum or 3 month LIBOR plus 3.0% per annum, with a LIBOR floor of 1.0% and was issued at a $0.8 million discount to par value. The senior secured credit facility includes financial performance covenants (a maximum total leverage ratio and a minimum interest coverage ratio), provisions for optional and mandatory repayments (an annual excess cash flow payment and payments due upon sale of assets, among others), restrictions on the issuance of new indebtedness, restrictions on certain payments (repurchases of Company stock and dividends payments, among others) and other representations, warranties and covenants which are customary for a secured credit facility. As of December 31, 2011, the Term Loan A and Term Loan B carrying values were $447.7 million and $297.1 million, net of discount, respectively.

As of December 31, 2011, we had $136.8 million in cash and cash equivalents, $283.4 million in short-term investments and $65.3 million in long-term marketable securities. Of these amounts, $271.9 million is held by

65

our foreign subsidiaries. Due to our net operating loss carryforwards, we could repatriate the cash and investments held by our foreign subsidiaries back to the United States with a minimal tax impact.

We believe that our current cash, cash equivalents and marketable securities and our annual cash flow from operations will be sufficient to meet our working capital, capital expenditure and debt requirements for the foreseeable future.

Contractual Obligations

The following table summarizes our contractual obligations at December 31, 2011 (in thousands):

	Payments due by period
Contractual Obligations (3)	Total		Less Than 1 year		1-3 years		3-5 years		More Than 5 years
Long-term debt obligations (1)	$	1,038,740	$	25,500	$	73,500	$	656,990	$	282,750
Interest expense associated with long-term debt obligations		138,793		31,937		60,953		34,233		11,670
Purchase obligations		32,579		22,720		9,859		—		—
Operating lease obligations(2)		88,130		23,499		35,879		20,108		8,644
	$	1,298,242	$	103,656	$	180,191	$	711,331	$	303,064

(1) Includes current portion as well. The 2040 Convertible Notes have been included in the above table at the first put / call date which is February 2015. In addition, the 2040 Convertible Notes may be converted by the noteholders prior to their maturity under certain circumstances. See above for additional details.

(2) Operating leases in the above table have been included on a gross basis. The Company has agreements to receive approximately $22.1 million under operating subleases.

(3) We are unable to reliably estimate the timing of future payments related to uncertain tax positions, therefore, $64.0 million of income taxes payable has been excluded from the table above.

Recently Issued Accounting Pronouncements

See Note 2 to the Consolidated Financial Statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to financial market risks, including changes in interest rates, foreign currency exchange rates and security investments. Changes in these factors may cause fluctuations in our earnings and cash flows. We evaluate and manage the exposure to these market risks as follows:

Fixed Income Investments. We have an investment portfolio of money market funds and fixed income securities, including those classified as cash equivalents, short-term investments and long-term marketable investment securities of $434.7 million as of December 31, 2011. Most of these securities are subject to interest rate fluctuations. An increase in interest rates could adversely affect the market value of our fixed income securities while a decrease in interest rates could adversely affect the amount of interest income we receive.

Our investment portfolio consists principally of money market mutual funds, U.S. Treasury and agency securities, corporate bonds, commercial paper and auction rate securities. We regularly monitor the credit risk in our investment portfolio and take appropriate measures to manage such risks prudently in accordance with our investment policies.

As a result of adverse conditions in the financial markets, auction rate securities may present risks arising from liquidity and/or credit concerns. At December 31, 2011, the fair value of our auction rate securities portfolio

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totaled approximately $14.3 million. Our auction rate securities portfolio is comprised solely of AAA rated federally insured student loans, municipal and educational authority bonds. The auction rate securities we hold have failed to trade for over one year due to insufficient bids from buyers. This limits the short-term liquidity of these securities.

We limit our exposure to interest rate and credit risk, however, by establishing and strictly monitoring clear policies and guidelines for our fixed income portfolios. The primary objective of these policies is to preserve principal while at the same time maximizing yields, without significantly increasing risk. A hypothetical 50 basis point increase in interest rates would result in a $0.7 million decrease in the fair value of our fixed income available-for-sale securities as of December 31, 2011.

While we cannot predict future market conditions or market liquidity, we believe that our investment policies provide an appropriate means to manage the risks in our investment portfolio.

Foreign Currency Exchange Rates. Due to our reliance on international and export sales, we are subject to the risks of fluctuations in currency exchange rates. Because a substantial majority of our international and export revenues, as well as expenses, are typically denominated in U.S. dollars, fluctuations in currency exchange rates could cause our products to become relatively more expensive to customers in a particular country, leading to a reduction in sales or profitability in that country. Many of our subsidiaries operate in their local currency, which mitigates a portion of the exposure related to the respective currency collected.

Indebtedness. We have convertible notes with a par value of $291.0 million. In February 2011, two of our subsidiaries jointly borrowed $750 million under a senior secured credit facility. Our borrowings under our senior secured credit facility are, and are expected to continue to be, at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same. The terms of these debt instruments are more fully described in Note 7 to the Consolidated Financial Statements.

Interest Rate Swaps and Caps. In connection with the issuance of the 2040 Convertible Notes, we entered into interest rate swaps with a notional amount of $460.0 million under which we pay a weighted average floating rate of 6 month USD – LIBOR minus 0.342%, set in arrears, and receive a fixed rate of 2.625%. In November 2010, we entered into additional swaps with a notional amount of $460.0 million under which we pay a fixed rate which gradually increases from 0.203% for the six month settlement period ending in February 2011, to 2.619% for the six month settlement period ending in February 2015 and receive a floating rate of 6 month USD – LIBOR minus 0.342%, set in arrears. These swaps expire in February 2015. In October 2011, we entered into additional swaps with a notional amount of $300.0 million. These swaps have an effective date of June 2013, and under these swaps we pay a fixed interest rate which gradually increases from 0.81 % for the three month settlement period ending September 2013, to 2.65% for the final settlement period ending January 2016 and receive a floating rate of USD-LIBOR-BBA. These swaps expire in January 2016.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is submitted in a separate section of this report beginning on F-1 of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

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ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Exchange Act Rule 13a-15(e). Based on this evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. Our internal control over financial reporting includes those policies and procedures that:

• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles in the United States, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Our management assessed the effectiveness of our system of internal control over financial reporting as of December 31, 2011. In making this assessment, we used the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our assessment and the criteria set forth by COSO, we believe that Rovi maintained effective internal control over financial reporting as of December 31, 2011.

The effectiveness of our internal control over financial reporting as of December 31, 2011 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included herein.

Inherent Limitations on Effectiveness of Controls

Our system of internal control over financial reporting was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

All internal control systems, no matter how well designed and operated, can provide only reasonable assurance with respect to financial statement preparation and presentation. Our management does not expect that our disclosure controls and procedures will prevent all error and fraud. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within the company have been detected, even with respect to those systems of internal control that are determined to be effective. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of these inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Our system contains self-monitoring mechanisms, and actions are taken to correct deficiencies as they are identified.

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Audit Committee Oversight

The Audit Committee of the Board of Directors, which is comprised solely of independent directors, has oversight responsibility for our financial reporting process and the audits of our consolidated financial statements and internal control over financial reporting. The Audit Committee meets regularly with management and with our internal auditors and independent registered public accounting firm (collectively, the “accountants”) to review matters related to the quality and integrity of our financial reporting, internal control over financial reporting (including compliance matters related to our Code of Personal and Business Conduct and Ethics), and the nature, extent, and results of internal and external audits. Our accountants have full and free access and report directly to the Audit Committee. The Audit Committee recommended, and the Board of Directors approved, that the audited consolidated financial statements be included in this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

During the quarter ended December 31, 2011, there have been no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, these controls.

ITEM 9B. OTHER INFORMATION

None.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Rovi Corporation and subsidiaries

We have audited Rovi Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Rovi Corporation and subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Rovi Corporation and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Rovi Corporation and subsidiaries as of December 31, 2011 and 2010 and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss), and cash flows for each of the three years in the period ended December 31, 2011 of Rovi Corporation and subsidiaries and our report dated February 23, 2012 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Los Angeles, California

February 23, 2012

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information regarding directors, the Company’s Audit Committee, Corporate Governance and Nominating Committee, stockholder nominations to our Board, and Section 16(a) beneficial ownership reporting compliance is incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the close of our fiscal year ended December 31, 2011. The information regarding executive officers appears under the heading “Executive Officers of the Registrant” in Item 1 of this Form 10-K and is also incorporated by reference in this section.

Code of Conduct. In February 2004, we adopted our Code of Personal and Business Conduct and Ethics (the “Code of Conduct”) as required by applicable securities laws, rules of the SEC and the listing standards of Nasdaq. The Code of Conduct applies to all of our directors and employees, including the principal executive officer, principal financial officer and principal accounting officer. A copy of such code of conduct and ethics was filed as an Exhibit to our Annual Report on Form 10-K for the year ended December 31, 2003. If we make any substantive amendments to the code of conduct and ethics or grant any waiver, including implicit waiver, from a provision of the code of conduct and ethics to our principal executive officer, principal financial officer or principal accounting officer, we will disclose the nature of such amendment or waiver on our website at www.rovicorp.com or in a current report on Form 8-K that will be publicly filed.

Corporate Governance Guidelines and Committee Charters. In February 2009, we adopted amended Corporate Governance Guidelines to assist the Board in following corporate practices that serve the best interest of the company and its stockholders. From time to time, we have further amended such Guidelines as we believe appropriate and in the best interest of the company and its stockholders. Our currently effective Corporate Governance Guidelines and the charters of each of our audit committee, compensation committee and corporate governance and nominating committee are available at our website at www.rovicorp.com.

ITEM 11. EXECUTIVE COMPENSATION

Information for this item is incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the close of our fiscal year ended December 31, 2011.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information for this item is incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the close of our fiscal year ended December 31, 2011.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information for this item is incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the close of our fiscal year ended December 31, 2011.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information for this item is incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the close of our fiscal year ended December 31, 2011.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this report:

1. Financial Statements

	Page
•     Report of Independent Registered Public Accounting Firm		F-2
•     Consolidated Balance Sheets		F-3
•     Consolidated Statements of Operations		F-4
•     Consolidated Statements of  Stockholders’ Equity and Comprehensive Income (Loss)		F-5
•     Consolidated Statements of Cash Flows		F-6
•     Notes to Consolidated Financial Statements		F-7

2. Financial Statement Schedules

All schedules are either included in the Notes to Consolidated Financial Statements or are omitted because they are not applicable.

3. Exhibits

Exhibits

		Incorporated by Reference						Filed Herewith
Exhibit Number	Exhibit Description	Form		Date		Number
2.01	Agreement and Plan of Mergers, dated as of December 6, 2007, among Macrovision Corporation, Saturn Holding Corp, Galaxy Merger Sub, Inc., Mars Merger Sub, Inc. and Gemstar-TV Guide International, Inc		8-K		5/5/08		2.1
2.02	Asset Purchase Agreement dated February 13, 2008 by and among Macrovision Corporation and Flexco Holding Company, Inc. (a Delaware corporation later renamed Flexera Software Inc.).		8-K		2/21/08		10.1
2.03	Agreement and Plan of Merger and Reorganization dated as of December 22, 2010, among Rovi Corporation, Sparta AcquisitionSub, Inc. and Sonic Solutions		8-K		12/27/10		2.1
3.01	Certificate of Incorporation of Rovi Corporation, as amended, on July 15, 2009		10-Q		8/6/09		3.01
3.02	Bylaws of Rovi Corporation		8-K		5/8/09		3.01
4.01	Form of Common Stock Certificate		S-3		7/15/08		4.1
4.02	Warrant Letter Agreement dated August 23, 2006 from JPMorgan Chase Bank, National Association to Macrovision Corporation.		8-K		5/5/08		4.5
4.03	Indenture, dated as of March 17, 2010, by and between the Company and Bank of New York Mellon Trust Company, N.A. as trustee		8-K		3/18/10		4.1

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		Incorporated by Reference						Filed Herewith
Exhibit Number	Exhibit Description	Form		Date		Number
4.04	Form of Note representing the Rovi Corporation 2.625% Convertible Senior Notes due 2040 (included in the Indenture referenced in Exhibit 4.03)		8-K		3/18/10		4.1
4.05	Credit Agreement, dated as of February 7, 2011, among Rovi Solutions Corporation and Rovi Guides, Inc., as borrowers, Rovi Corporation, as guarantor, the subsidiary guarantors, the lenders from time to time party thereto, Morgan Stanley Senior Funding, Inc. and J.P. Morgan Securities LLC, as joint lead arrangers and joint bookrunners, Morgan Stanley Senior Funding, Inc., as syndication agent, Bank of America, N.A., as documentation agent, and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent.		8-K		2/8/11		10.1
10.01	Rovi Corporation 2008 Equity Incentive Plan, as amended**		8-K		5/24/11		10.01
10.02	Rovi Corporation 2008 Employee Stock Purchase Plan**		S-8		7/23/08		10.02
10.03	Rovi Corporation 2000 Equity Incentive Plan**		DEF14A		3/16/06		Annex A
10.04	Sonic Solutions 2004 Equity Compensation Plan, as amended and restated July 2010**		S-8		3/17/11		—
10.05	Form of Notice of Stock Option Grant/Nonstatutory Stock Option Agreement pursuant to 2000 and 2008 Equity Incentive Plans								X
10.06	Form of Notice of Stock Option Grant/Nonstatutory Stock Option Agreement (Director grant form) pursuant to 2008 Equity Incentive Plan								X
10.07	Form of Notice of Restricted Stock Award/Restricted Stock Award Agreement pursuant to 2008 Equity Incentive Plan								X
10.08	Form of Notice of Restricted Stock Award/Restricted Stock Award Agreement (Director grant form) pursuant to 2008 Equity Incentive Plan								X
10.09	Form of Notice of Restricted Stock Unit/Restricted Stock Unit Agreement pursuant to 2008 Equity Incentive Plan								X
10.10	Form of Notice of Stock Option Grant/Nonstatutory Stock Option Agreement pursuant to 2004 Equity Compensation Plan								X
10.11	Form of Notice of Restricted Stock Award/Restricted Stock Award Agreement pursuant to 2004 Equity Compensation Plan								X
10.12	Form of Notice of Restricted Stock Unit/Restricted Stock Unit Agreement pursuant to 2004 Equity Compensation Plan								X

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		Incorporated by Reference						Filed Herewith
Exhibit Number	Exhibit Description	Form		Date		Number
10.13	2011 Senior Executive Company Incentive Plan**		8-K		2/11/11		10.1
10.14	Lease Between WB Airport Technology, L.L.C. (“Landlord”) and Macrovision Corporation (“Tenant”) dated August 2, 2001		10-Q		11/13/01		10.39
10.15	First Amendment to Lease between WB Airport Technology, L.L.C. (“Landlord”) and Macrovision Corporation (“Tenant”) dated December 13, 2004		10-K		3/31/05		10.09
10.16	Second Amendment to Lease between WB Airport Technology, L.L.C. (“Landlord”) and Macrovision Corporation (“Tenant”) dated December 13, 2004		10-K		3/31/05		10.10
10.17	Lease between WB Airport Technology, L.L.C. (“Landlord”) and Macrovision Corporation (“Tenant”) dated December 13, 2004		10-K		3/31/05		10.11
10.18	Offer letter to Thomas Carson dated December 14, 2011**		8-K		12/16/11		10.1
10.19	Amended and Restated Executive Severance and Arbitration Agreement with Thomas Carson dated December 14, 2011**		8-K		12/16/11		10.2
10.20	Executive Succession Planning Agreement dated May 25, 2011 by and between Alfred J. Amoroso and Rovi Corporation**		8-K		5/25/11		10.1
10.21	Form of Indemnification Agreement entered into by Rovi Corporation with each of its directors and executive officers		10-K		3/2/09		10.15
10.22	Executive Severance and Arbitration Agreement with James Budge dated August 6, 2007**		10-Q		8/8/07		10.06
10.23	Form of Executive Severance and Arbitration Agreement**		10-Q		8/8/07		10.05
10.24	Charter of the Audit Committee of the Board of Directors		10-K		2/15/11		10.20
14.01	Code of Personal and Business Conduct and Ethics		10-K		3/12/04		14.01
21.01	List of subsidiaries								X
23.01	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm								X
31.01	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002								X
31.02	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002								X
32.01	Section 1350 Certification								X
32.02	Section 1350 Certification								X
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Document

* XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement or Prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

** Management contract or compensatory plan or arrangement.

74

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized on this 23rd day of February, 2012.

ROVI CORPORATION
By:	/S/    THOMAS CARSON
	Thomas Carson
	President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant, and in the capacities and on the date indicated.

Name	Title	Date
Principal Executive Officer:
/s/    THOMAS CARSON Thomas Carson	President, Chief Executive Officer and Director	February 23, 2012
Principal Financial Officer:
/s/    JAMES BUDGE James Budge	Chief Financial Officer	February 23, 2012
Principal Accounting Officer:
/s/    PETER C. HALT Peter C. Halt	Chief Accounting Officer	February 23, 2012
Additional Directors:
/s/    ANDREW K. LUDWICK Andrew K. Ludwick	Chairman of the Board of Directors	February 23, 2012
/s/    ALFRED J. AMOROSO Alfred J. Amoroso	Director	February 23, 2012
/s/    ALAN L. EARHART Alan L. Earhart	Director	February 23, 2012
/s/    JAMES E. MEYER James E. Meyer	Director	February 23, 2012
/s/    JAMES P. O’SHAUGHNESSY James P. O’Shaughnessy	Director	February 23, 2012
/s/    RUTHANN QUINDLEN Ruthann Quindlen	Director	February 23, 2012

75

ROVI CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	PAGE
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss)		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-7

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Rovi Corporation and subsidiaries

We have audited the accompanying consolidated balance sheets of Rovi Corporation and subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss), and cash flows for each of the three years in the period ended December 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Rovi Corporation and subsidiaries at December 31, 2011 and 2010, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.

As described in Note 2 to the financial statements, in 2010, the Company changed its method of accounting for multiple element arrangements affecting revenue recognition as required by Accounting Standards Update 2009-13, Revenue Recognition (Topic 605): Multiple Deliverable Arrangements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Rovi Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2012 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Los Angeles, California

February 23, 2012

F-2

ROVI CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	December 31,
	2011			2010
ASSETS
Current assets:
Cash and cash equivalents	$	136,780		$	200,195
Short-term investments		283,433			295,120
Trade accounts receivable, net		126,752			78,672
Taxes receivable		2,976			6,811
Deferred tax assets, net		32,152			15,403
Prepaid expenses and other current assets		15,056			12,639
Assets held for sale		20,344			—
Total current assets		617,493			608,840
Long-term marketable investment securities		65,267			200,852
Property and equipment, net		43,203			39,205
Finite-lived intangible assets, net		815,049			702,385
Other assets		41,610			48,785
Goodwill		1,364,145			857,216
Total assets	$	2,946,767		$	2,457,283
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	107,037		$	74,512
Deferred revenue		16,460			15,577
Current portion of long-term debt		25,500			130,816
Liabilities held for sale		5,445			—
Total current liabilities		154,442			220,905
Taxes payable, less current portion		63,980			56,566
Long-term debt, less current portion		969,598			378,083
Deferred revenue, less current portion		4,041			3,995
Long-term deferred tax liabilities, net		36,267			26,249
Other non current liabilities		25,687			19,293
Total liabilities		1,254,015			705,091
Commitments and contingencies (Note 16)
Redeemable equity component of convertible debt		—			3,859
Stockholders’ equity:
Common stock, $0.001 par value, 250,000,000 shares authorized; 122,519,604 shares issued and 109,453,371 outstanding as of December 31, 2011, and 111,315,257 shares issued and 106,081,282 outstanding as of December 31, 2010, at par		123			112
Treasury stock, 13,066,233 shares at December 31, 2011 and 5,233,975 shares at December 31, 2010, at cost		(482,479	)		(134,931	)
Additional paid-in capital		2,114,402			1,781,986
Accumulated other comprehensive loss		(313	)		(1,139	)
Retained earnings		61,019			102,305
Total stockholders’ equity		1,692,752			1,748,333
Total liabilities and stockholders’ equity	$	2,946,767		$	2,457,283

See accompanying notes to consolidated financial statements.

F-3

ROVI CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Year ended December 31,
	2011			2010			2009
Revenues	$	690,810		$	541,490		$	480,450
Costs and expenses:
Cost of revenues		107,487			99,129			65,258
Research and development		162,693			95,687			91,984
Selling, general and administrative		186,210			142,197			132,939
Depreciation		20,038			18,758			18,368
Amortization of intangible assets		110,280			80,395			81,934
Restructuring and asset impairment charges		20,800			—			53,619
Total costs and expenses		607,508			436,166			444,102
Operating income from continuing operations		83,302			105,324			36,348
Interest expense		(53,776	)		(42,935	)		(52,028	)
Interest income and other, net		4,859			1,770			4,558
(Loss) gain on interest rate swaps and caps, net		(4,314	)		34,197			—
Loss on debt redemption		(11,514	)		(16,806	)		(8,687	)
Gain on sale of strategic investment		—			5,895			—
Income (loss) from continuing operations before income taxes		18,557			87,445			(19,809	)
Income tax expense (benefit)		8,818			(139,213	)		(1,421	)
Income (loss) from continuing operations, net of tax		9,739			226,658			(18,388	)
Discontinued operations, net of tax		(51,025	)		(13,774	)		(34,563	)
Net (loss) income	$	(41,286	)	$	212,884		$	(52,951	)
Basic earnings per common share:
Basic income (loss) per share from continuing operations	$	0.09		$	2.20		$	(0.18	)
Basic loss per share from discontinued operations	$	(0.47	)	$	(0.14	)	$	(0.34	)
Basic net earnings per share	$	(0.38	)	$	2.06		$	(0.52	)
Shares used in computing basic net earnings per share		108,923			102,658			100,860
Diluted earnings per common share:
Diluted income (loss) per share from continuing operations	$	0.09		$	2.07		$	(0.18	)
Diluted loss per share from discontinued operations	$	(0.45	)	$	(0.13	)	$	(0.34	)
Diluted net earnings per share	$	(0.36	)	$	1.94		$	(0.52	)
Shares used in computing diluted net earnings per share		113,131			109,175			100,860

See accompanying notes to consolidated financial statements.

F-4

ROVI CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except share data)

	Common stock				Treasury Stock						Additional paid-in capital			Accumulated other comprehensive income (loss)			Retained earnings (Accumulated deficit)			Total Stockholders’ Equity
	Shares		Amount		Shares			Amount
Balances as of December 31, 2008		102,972,546	$	103		(2,262,975	)	$	(25,068	)	$	1,602,667		$	(4,879	)	$	(57,628	)	$	1,515,195
Comprehensive income (loss):
Net income (loss)																		(52,951	)		(52,951	)
Foreign currency translation adjustment, net of tax															1,905						1,905
Unrealized gain (loss) in investments, net of tax															896						896
Total comprehensive income (loss)																					(50,150	)
Issuance of common stock upon exercise of options		1,563,001		2								27,485									27,487
Issuance of common stock under employee stock purchase plan		483,838										5,346									5,346
Issuance of restricted stock, net		701,436		1								(1	)								—
Equity-based compensation												22,391									22,391
Balances as of December 31, 2009		105,720,821	$	106		(2,262,975	)	$	(25,068	)	$	1,657,888		$	(2,078	)	$	(110,579	)	$	1,520,269
Comprehensive income (loss):
Net income (loss)																		212,884			212,884
Foreign currency translation adjustment, net of tax															1,144						1,144
Unrealized gain (loss) in investments, net of tax															(205	)					(205	)
Total comprehensive income (loss)																					213,823
Issuance of common stock upon exercise of options		4,042,549		4								73,873									73,877
Issuance of common stock under employee stock purchase plan		907,608		1								10,922									10,923
Issuance of restricted stock, net		639,615		1								(1	)								—
Equity-based compensation												34,383									34,383
Conversion of convertible debt		4,664										237									237
Equity component of convertible debt, net of tax												56,947									56,947
Convertible debt repurchase												(56,721	)								(56,721	)
Reclass redeemable equity component of convertible debt												(3,859	)								(3,859	)
Repurchase of warrant and sale of call option, net												5,834									5,834
Excess tax benefit associated with stock plans												2,483									2,483
Stock repurchase						(2,971,000	)		(109,863	)											(109,863	)
Balances as of December 31, 2010		111,315,257	$	112		(5,233,975	)	$	(134,931	)	$	1,781,986		$	(1,139	)	$	102,305		$	1,748,333
Comprehensive income (loss):
Net income (loss)																		(41,286	)		(41,286	)
Foreign currency translation adjustment, net of tax															304						304
Unrealized gain (loss) in investments, net of tax															522						522
Total comprehensive income (loss)																					(40,460	)
Issuance of common stock upon exercise of options		1,996,022		2								41,823									41,825
Issuance of common stock under employee stock purchase plan		839,237		1								14,205									14,206
Issuance of restricted stock, net		1,274,682		1								(1	)								—
Acquisitions		5,904,436		6								356,749									356,755
Exercise of warrants		701,474		1								(1	)								—
Conversion of convertible debt		488,496																			—
Exercise of convertible bond call option						(807,935	)														—
Equity-based compensation												64,051									64,051
Convertible debt repurchase												(170,231	)								(170,231	)
Tax benefit from convertible debt repurchase												7,972									7,972
Reclass redeemable equity component of convertible debt												3,859									3,859
Excess tax benefit associated with stock plans												319									319
Repurchase of warrant and sale of call option, net						(185,247	)		(9,976	)		13,671									3,695
Stock repurchase						(6,839,076	)		(337,572	)											(337,572	)
Balances as of December 31, 2011		122,519,604	$	123		(13,066,233	)	$	(482,479	)	$	2,114,402		$	(313	)	$	61,019		$	1,692,752

See accompanying notes to consolidated financial statements.

F-5

ROVI CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year ended December 31
	2011			2010			2009
Cash flows from operating activities:
Net (loss) income	$	(41,286	)	$	212,884		$	(52,951	)
Adjustments to reconcile net income (loss) to net cash provided by operations:
Loss from discontinued operations, net of tax		51,025			13,774			34,563
Change in fair value of interest rate swaps and caps, net of premium		16,727			(33,160	)		—
Depreciation		20,038			18,758			18,368
Amortization of intangible assets		110,280			80,395			81,934
Amortization of note issuance costs and convertible note discount		19,727			26,099			20,782
Equity-based compensation		62,333			34,298			22,289
Restructuring and asset impairment charge		15,318			—			48,872
Loss on debt redemption		11,514			16,494			5,633
Deferred taxes		(13,121	)		(2,677	)		(20,530	)
Gain on sale of strategic investments		—			(5,895	)		—
Other, net		7,924			2,072			—
Changes in operating assets and liabilities, net of assets and liabilities acquired:
Accounts receivable, net		(25,466	)		(7,057	)		12,364
Deferred revenue		(1,566	)		(1,913	)		1,663
Prepaid expenses, other current assets and other assets		3,931			(6,843	)		2,444
Income taxes		4,779			(17,455	)		(17,440	)
Accounts payable, accrued expenses, and other long-term liabilities		(5,154	)		(13,454	)		(705	)
Net cash provided by operating activities of continuing operations		237,003			316,320			157,286
Net cash provided by (used in) operating activities of discontinued operations		9,912			(2,383	)		1,130
Net cash provided by operating activities		246,915			313,937			158,416
Cash flows from investing activities:
Purchases of long and short-term marketable investment securities		(390,803	)		(628,966	)		(84,354	)
Sales or maturities of long and short-term marketable investments		536,425			269,457			113,571
Payments for acquisitions, net of cash acquired		(433,733	)		(5,922	)		(23,970	)
Proceeds from dispositions of businesses, net of costs to sell		2,000			—			266,205
Purchases of property and equipment		(22,965	)		(15,431	)		(19,745	)
Other investing, net		(1,906	)		2,404			(110	)
Change in restricted cash					36,838			(36,838	)
Net cash (used in) provided by investing activities of continuing operations		(310,982	)		(341,620	)		214,759
Net cash used in investing activities of discontinued operations		—			(5	)		(30	)
Net cash (used in) provided by investing activities		(310,982	)		(341,625	)		214,729
Cash flows from financing activities:
Purchase of treasury stock		(337,572	)		(109,863	)		—
Payments under capital lease and debt obligations		(455,060	)		(367,576	)		(440,344	)
Sale of convertible bond call option and repurchase of warrant, net		3,695			5,834			—
Proceeds from issuance of debt, net of issuance costs		732,978			446,517			—
Excess tax benefit on stock option exercises		319			2,483			—
Proceeds from exercise of options and employee stock purchase plan		56,031			84,800			32,833
Net cash provided by (used in) financing activities of continuing operations		391			62,195			(407,511	)
Net cash used in financing activities of discontinued operations		—			—			(114	)
Net cash provided by (used in) financing activities		391			62,195			(407,625	)
Effect of exchange rate changes on cash		261			278			702
Net (decrease) increase in cash and cash equivalents		(63,415	)		34,785			(33,778	)
Cash and cash equivalents at beginning of year		200,195			165,410			199,188
Cash and cash equivalents at end of year	$	136,780		$	200,195		$	165,410
Supplemental disclosures:
Income taxes paid	$	16,625		$	15,128		$	36,996
Income tax refunds received	$	1,625		$	134,132		$	64
Interest paid	$	34,504		$	13,251		$	37,179

See accompanying notes to consolidated financial statements.

F-6

ROVI CORPORATION

Notes to Consolidated Financial Statements

(1) Basis of Presentation

Description of Business

Rovi Corporation (the “Company”), a Delaware corporation, was formed in 2007. On May 2, 2008, Macrovision Corporation acquired Gemstar-TV Guide International, Inc. (“Gemstar”). Upon consummation of this transaction, the Company assumed ownership of both Gemstar and Macrovision Corporation. The common stock of Macrovision Corporation and Gemstar were de-registered and Macrovision Corporation stockholders were provided one share in Rovi Corporation for each share of Macrovision Corporation common stock owned as of the closing.

Rovi Corporation and its subsidiaries’ (collectively “Rovi” or the “Company”) offerings include interactive program guides (IPGs), embedded licensing technologies (such as recommendations and search capability), media recognition technologies and licensing of the Company’s database of descriptive information about television, movie, music, books, and game content and analog content protection technologies (“ACP”) and services. The Company also offers advertising services across all its products. In addition to offering Company developed IPGs, our customers may also license our patents and deploy their own IPG or a third party IPG. With the acquisition of Sonic Solutions (“Sonic”) (see Note 4), the Company’s offerings now also include the RoxioNow video delivery solution (now known as the Rovi Entertainment Store), DivX and MainConcept video compression-decompression technology (“codecs”) and the Sonic professional products. The Company’s solutions are deployed by companies in the consumer electronics, cable and satellite, entertainment and online distribution markets and utilized by consumers across the globe.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Rovi Corporation and its wholly and majority-owned subsidiaries after elimination of intercompany accounts and transactions.

During the fourth quarter of 2011, the Company made a determination that it would pursue selling its Roxio Consumer Software business. The results of operations and cash flows of the Roxio Consumer Software business have been reclassified to discontinued operations for all periods presented (See Note 5 and Note 18). On September 17, 2010, the Company sold its Canadian subsidiary, Norpak Corporation (“Norpak”), which manufactured equipment for embedding data in a television signal. On January 27, 2009, the Company sold its TVG Network business and on February 28, 2009, the Company sold its TV Guide Network and TV Guide Online businesses. Together, TVG Network, TV Guide Network and TV Guide Online are collectively referred to as the “Media Properties”. The results of operations and cash flows of the Roxio Consumer Software business, Norpak and the Media Properties have been classified as discontinued operations for all periods presented (See Note 5).

On February 26, 2010, the Company sold its 49% interest in the Guideworks LLC joint venture (“Guideworks”) to Comcast Corporation (“Comcast”) and simultaneously purchased Comcast’s interest in the patents which had been developed by Guideworks. Guideworks was a research and development joint venture with Comcast that developed interactive program guide solutions, which are distributed by the Company under the i-Guide brand. Under these agreements, the Company received a net payment of $4.6 million and realized a $1.0 million loss on sale of its interest in Guideworks. The Company had been recording its 49% interest in Guideworks as an operating expense in accordance with Accounting Standards Codification (“ASC”) 730-20, Research and Development Arrangements. Included in research and development expenses for the years ended December 31, 2010 and 2009 are $1.7 million and $11.7 million, respectively, in expenses related to Guideworks.

F-7

Reclassifications

Certain financial statement items for prior periods have been reclassified to conform to the 2011 presentation.

Use of Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported results of operations during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to revenue recognition, allowance for doubtful accounts, investments, equity-based compensation, goodwill and other intangible assets, long-lived assets and income taxes. Actual results could differ from those estimates.

(2) Summary of Significant Accounting Policies

Cash, Cash Equivalents and Investments

The Company considers investments with original maturities from the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market funds. All other liquid investments with maturities over three months and less than 12 months are classified as short-term investments. All marketable securities with maturities over one year or those for which the Company’s intent is to retain them for more than twelve months are classified as long-term marketable investment securities.

Management determines the appropriate classification of investment securities at the time of purchase and re-evaluates such designation as of each balance sheet date. Available-for-sale securities are carried at fair value, with unrealized gains and losses reported in accumulated other comprehensive income, as a separate component of stockholders’ equity. Trading securities are carried at fair value, with changes in fair value reported as part of interest and other income, net in the Consolidated Statements of Operations.

Realized gains and losses and declines in value judged to be other-than-temporary for available-for-sale securities are reported in interest income and other, net as incurred. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale and trading are included in interest income and other, net.

In December 2008, the Company entered into an agreement (the “Agreement”) with UBS AG, which provides (1) the Company the right (“ ARS Put Option”) to sell certain auction rate securities back to UBS AG at par, at the Company’s sole discretion, anytime during the period from June 30, 2010 through July 2, 2012, and (2) UBS AG the right to purchase certain auction rate securities or sell them on the Company’s behalf at par anytime through July 2, 2012. The Company elected to measure the ARS Put Option under the fair value option and simultaneously, the Company transferred these auction rate securities from available-for-sale to trading investment securities. As of December 31, 2010, UBS AG had repurchased all of the Company’s auction rate securities which were covered by the ARS Put Option. The Company’s auction rate securities which were not purchased from UBS AG continue to be classified as available-for-sale securities.

Allowance for Doubtful Accounts

The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible trade receivables. The Company reviews its trade receivables by aging category to identify significant customers with known disputes or collection issues. For accounts not specifically identified, the Company provides reserves based on historical bad debt loss experience.

F-8

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the respective assets. Computer equipment and software are depreciated over three years. Furniture and fixtures are depreciated over five years. Leasehold improvements and assets recorded under capital leases are amortized on a straight-line basis over the shorter of the assets’ useful lives or lease terms.

Joint Ventures and Other Investments

Investments of 50% or less in entities in which the Company has the ability to exercise significant influence over operations are accounted for using the equity method.

Deferred Revenue

Deferred revenue represents cash amounts received from customers under certain license agreements for which the revenue earnings process has not been completed.

Comprehensive Income

Comprehensive income includes net income (loss), foreign currency translation adjustments and unrealized gains and losses, net of related taxes, on marketable investment securities that have been excluded from the determination of net income (loss). The Company has reported the components of comprehensive income on its Consolidated Statements of Stockholders’ Equity.

Revenue Recognition

On January 1, 2010, the Company adopted Accounting Standards Update 2009-13, Revenue Recognition (Topic 605): Multiple Deliverable Arrangements, (“ASU 2009-13”) and Accounting Standards Update 2009-14, Software (Topic 985)—Certain Revenue Arrangements That Include Software Elements (“ASU 2009-14”). ASU 2009-13 modifies the requirements for determining whether a deliverable in a multiple element arrangement can be treated as a separate unit of accounting by removing the criteria that objective and reliable evidence of fair value exists for the undelivered elements. The new guidance requires consideration be allocated to all deliverables based on their relative selling price using vendor specific objective evidence (VSOE) of selling price, if it exists; otherwise selling price is determined based on third-party evidence (TPE) of selling price. If neither VSOE nor TPE exist, management must use its best estimate of selling price (ESP) to allocate the arrangement consideration. The Company adopted this update under the prospective method and has applied the new guidance to agreements entered into or materially modified after January 1, 2010.

The adoption of ASU 2009-13 may have a material impact on the Company’s revenue in any given period subsequent to adoption. For example, at times, the Company enters into IPG patent license agreements in which it provides a licensee a release for past infringement as well as the right to ship an unlimited number of units over a set period for a flat fee. Under the previous multiple element guidance, the Company generally would not be able to provide objective and reliable evidence of the fair value of the go-forward license arrangement (the undelivered element) and therefore would have recognized all revenue for such agreement ratably over the term of the agreement. Applying the guidance in the update, the Company would use ESP to allocate the consideration between the release for past infringement and the go-forward patent license. As the revenue recognition criteria for the past infringement would generally be satisfied upon the execution of the agreement, the amount of consideration allocated to the past infringement would be recognized in the quarter the agreement is executed and the amount allocated to the go-forward license agreement would be recognized ratably over the term. For the year ended December 31, 2010, the adoption of ASU 2009-13 increased revenue, income before income taxes and net income by $9.4 million each, and diluted EPS by $0.09, as compared to application of the previous guidance.

F-9

ASU 2009-14 excludes tangible products containing software components and non-software components that function together to deliver the product’s essential functionality from the scope of ASC 985-605, Software-Revenue Recognition. The Company adopted ASU 2009-14 on a prospective basis and applied the new guidance to revenue arrangements entered into or materially modified after January 1, 2010. The adoption of ASU 2009-14 did not have a material impact on the Company’s financial position or results from operations.

The Company’s revenue from continuing operations primarily consists of license fees for IPG products and patents, license fees for the Company’s codec technology, royalty fees on copy-protected products, license fees for the Company’s content protection technologies and license fees for entertainment metadata. The Company recognizes revenue when the following conditions are met: (i) there is persuasive evidence that an arrangement exists, (ii) delivery has occurred or service has been rendered, (iii) the price is fixed or determinable and (iv) collection is reasonably assured.

Revenue arrangements with multiple deliverables are divided into separate units of accounting when the delivered item has value to the customer on a stand-alone basis. The Company then determines the fair value of each element using the selling price hierarchy of VSOE, TPE or ESP, as applicable; and allocates the total consideration among the various elements based on the relative selling price method. The allocation of value may impact the amount and timing of revenue recorded in the Consolidated Statement of Operations during a given period.

The Company accounts for cash consideration (such as sales incentives) that it gives to its customers or resellers as a reduction of revenue, rather than as an operating expense unless the Company receives a benefit that is separate from the customer’s purchase from the Company and for which it can reasonably estimate the fair value.

Amounts for fees collected or invoiced and due relating to arrangements where revenue cannot be recognized are reflected on the Company’s balance sheet as deferred revenue and recognized when the applicable revenue recognition criteria are satisfied.

CE and Service Provider Licensing

The Company licenses its proprietary IPG technology, codec technology and ACP technology to consumer electronics (“CE”) manufacturers, integrated circuit makers, service providers and others. The Company generally recognizes revenue from licensing technology on a per-unit shipped model with CE manufacturers or a per-subscriber model with service providers. The Company’s recognition of revenues from per-unit license fees is based on units reported shipped by the manufacturer. CE manufacturers normally report their unit shipments to the Company in the quarter immediately following that of actual shipment by the manufacturer. The Company has established significant experience and relationships with certain ACP technology licensing customers to reasonably estimate current period volume for purposes of making an accurate revenue accrual. Accordingly, revenue from these customers is recognized in the period the customer shipped the units. Revenues from per-subscriber fees are recognized in the period the services are provided by a licensee, as reported to the Company by the licensee. Revenues from annual or other license fees are recognized based on the specific terms of the license arrangement. For instance, some of the Company’s large CE IPG and codec technology licensees have entered into agreements for which they have the right to ship an unlimited number of units over a specified term for a flat fee. The Company records the fees associated with these arrangements on a straight-line basis over the specified term. The Company at times enters into IPG patent license agreements in which it provides a licensee a release for past infringement as well as the right to ship an unlimited number of units over a future period for a flat fee. In this type of arrangement, the Company generally would use ESP to allocate the consideration between the release for past infringement and the go-forward patent license. As the revenue recognition criteria for the past infringement would generally be satisfied upon the execution of the agreement, the amount of consideration allocated to the past infringement would be recognized in the quarter the agreement is executed and the amount allocated to the go-forward license agreement would be recognized ratably over the

F-10

term. In addition, the Company enters into agreements in which the licensee pays the Company a one-time fee for a perpetual license to its ACP technology. Provided that collectability is reasonably assured, the Company records revenue related to these agreements when the agreement is executed as the Company has no continuing obligation and the amounts are fixed and determinable.

The Company also generates advertising revenue through its IPGs and other platforms. Advertising revenue is recognized when the related advertisement is provided. All advertising revenue is recorded net of agency commissions and revenue shares with service providers and CE manufacturers.

Rovi Entertainment Store Video Delivery Solution

The Company recognizes service fees it receives from retailers and others for operating their storefronts on a straight-line basis over the period it is providing services. The Company recognizes transaction revenue from the sale or rental of individual content titles in the period when the content is purchased and delivered. Transaction revenue is recorded on a gross basis when the Company is the principal in the transaction and is recorded net of payments to content owners and others when the Company is acting as an agent. The Company is generally the principal in the transaction when it is the merchant of record and is licensing the content distribution rights.

Discontinued Operations—Roxio Consumer Software Products

Except in the case of consignment arrangements, the Company recognizes revenue from the sale of its packaged software products when title transfers to the distributor or retailer. When the Company sells packaged software products to distributors and retailers on a consignment basis, it recognizes revenue upon sell-through to an end customer.

The Company’s distributor arrangements often provide distributors with certain product rotation rights. The Company estimates returns based on its historical return experience and other factors such as channel inventory levels and the introduction of new products. These allowances are recorded as a reduction of revenues and as an offset to accounts receivable to the extent the Company has legal right of offset, otherwise they are recorded in accrued expenses and other current liabilities. If future returns patterns differ from past returns patterns, for example due to reduced demand for the Company’s product, the Company may be required to increase these allowances in the future and may be required to reduce future revenues.

The Company also licenses its software to OEMs who include it with the PCs they sell. The Company generally receives a per-unit royalty and recognizes this revenue upon receipt of the customer royalty report.

Cost of Revenues

Cost of revenues consists primarily of data costs, royalty expenses, patent prosecution, patent maintenance and patent litigation costs.

Equity-Based Compensation

Equity-based compensation cost is measured at the grant date based on the fair value of the award. The Company recognizes compensation costs for shares that are expected to vest, on a straight-line basis, over the requisite service period of the award.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying

F-11

amounts of existing assets and liabilities and their respective tax bases and operating loss and tax carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits of which future realization is not evaluated to be more likely than not.

From time to time, the Company engages in transactions in which the tax consequences may be subject to uncertainty. Significant judgment is required in assessing and estimating the tax consequences of these transactions. In determining the Company’s tax provision for financial reporting purposes, the Company establishes a reserve for uncertain tax positions unless such positions are determined to be “more likely than not” of being sustained upon examination, based on their technical merits.

Taxes Collected from Customers

The Company applies the net basis presentation for taxes collected from customers and remitted to governmental authorities.

Foreign Currency Translation

The translation of the accounts of Company subsidiaries with a foreign currency other than the United States Dollar is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for revenues and expense accounts using an average exchange rate for the respective periods. Adjustments resulting from such translation are included in comprehensive income. Gains or losses resulting from foreign currency transactions included in the Consolidated Statements of Operations were not material in any of the periods presented.

Business and Concentration of Credit Risk and Fair Value of Financial Instruments

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents, marketable securities, interest rate swaps and caps and trade accounts receivable. The Company places its cash and cash equivalents, marketable securities and money market funds with various high credit quality institutions.

The Company performs ongoing credit evaluations of its customers as necessary. As a percentage of net revenues from continuing operations, the Company did not have any customers that were equal to or greater than 10% of net revenue for the year ended December 31, 2011 or 2010. In 2009, the Company generated revenue from one customer which exceeded 10% of its net revenue from continuing operations. As of December 31, 2011 and 2010, the Company did not have any customers whose receivable exceeded 10% of its gross accounts receivable.

Earnings Per Share

ASC 260 defines unvested share-based payment awards that contain nonforfeitable rights to dividends as participating securities that should be included in computing EPS using the two-class method. The Company’s non-vested restricted stock awards granted prior to June 30, 2009, qualify as participating securities.

Basic net EPS is computed using the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period except for periods of loss from continuing operations, for which no common share equivalents are included because their effect would be anti-dilutive. Dilutive common equivalent shares consist of common stock issuable upon exercise of stock options and non-participating restricted stock using the treasury stock method.

F-12

The calculation of earnings per common share and diluted earnings per common share is presented below (in thousands, except per share data):

	December 31,
	2011			2010			2009
Basic income (loss) per common share
Income (loss) from continuing operations	$	9,739		$	226,658		$	(18,388	)
Income allocated to participating securities		(18	)		(1,125	)		—
Income (loss) allocated to common shareholders from continuing operations	$	9,721		$	225,533		$	(18,388	)
Discontinued operations	$	(51,025	)	$	(13,774	)	$	(34,563	)
Loss allocated to participating securities		96			68			—
Discontinued operations allocated to common shareholders	$	(50,929	)	$	(13,706	)	$	(34,563	)
Net (loss) income	$	(41,286	)	$	212,884		$	(52,951	)
Loss (income) allocated to participating securities		78			(1,057	)		—
Net (loss) income allocated to common shareholders	$	(41,208	)	$	211,827		$	(52,951	)
Weighted average basic common shares outstanding		108,923			102,658			100,860
Income (loss) per common share from continuing operations	$	0.09		$	2.20		$	(0.18	)
Loss per common share from discontinued operations		(0.47	)		(0.14	)		(0.34	)
Net earnings per common share	$	(0.38	)	$	2.06		$	(0.52	)
Diluted income (loss) per common share
Income (loss) from continuing operations	$	9,739		$	226,658		$	(18,388	)
Income allocated to participating securities		(18	)		(1,058	)		—
Income (loss) allocated to common shareholders from continuing operations	$	9,721		$	225,600		$	(18,388	)
Discontinued operations	$	(51,025	)	$	(13,774	)	$	(34,563	)
Loss allocated to participating securities		92			64			—
Discontinued operations allocated to common shareholders	$	(50,933	)	$	(13,710	)	$	(34,563	)
Net (loss) income	$	(41,286	)	$	212,884		$	(52,951	)
Loss (income ) allocated to participating securities		74			(994	)		—
Net (loss) income allocated to common shareholders	$	(41,212	)	$	211,890		$	(52,951	)
Weighted average basic common shares outstanding		108,923			102,658			100,860
Dilutive potential common shares		4,208			6,517			—
Weighted average diluted common shares outstanding		113,131			109,175			100,860
Income (loss) per common share from continuing operations	$	0.09		$	2.07		$	(0.18	)
Loss per common share from discontinued operations		(0.45	)		(0.13	)		(0.34	)
Net earnings per common share	$	(0.36	)	$	1.94		$	(0.52	)

F-13

The following weighted average potential common shares were excluded from the computation of diluted net earnings per share as their effect would have been anti-dilutive:

	December 31,
	2011		2010		2009
	(In thousands)
Stock options		1,754		1,219		7,933
Restricted stock		462		213		188
Warrants (1)		—		—		7,955
Convertible senior notes (1)		—		9,713		8,486
Total weighted average potential common shares excluded from diluted net earnings per share		2,216		11,145		24,562

(1) See Note 7 for additional details.

Goodwill and Other Intangibles from Acquisitions

On October 1, 2011, the Company adopted Accounting Standards Update 2011-8, Intangibles – Goodwill and Other Topics (Topic 350) (“ASU 2011-8”). ASU 2011-8 allows the Company to first assess qualitative factors to determine whether events or circumstances lead to the determination that the fair value of a reporting unit is less than its carrying value. If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. The adoption of ASU 2011-8 did not have a material impact on our results of operations or financial position.

Goodwill is reviewed for impairment annually, or more frequently, if facts and circumstances warrant a review. The provisions require the Company to first assess qualitative factors to determine whether events or circumstances lead to the determination that the fair value of a reporting unit is less than its carrying value. If, after assessing the totality of events or circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company performs the two-step impairment test. In the first step of the two-step impairment test, the fair value of each reporting unit is compared to its carrying value. If the fair value exceeds the carrying value, goodwill is not impaired and no further testing is performed. The second step is performed if the carrying value exceeds the fair value. The implied fair value of the reporting unit’s goodwill must be determined and compared to the carrying value of the goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, an impairment loss equal to the difference will be recorded.

Intangible assets with definite lives are amortized over their estimated useful life, generally three to eighteen years, and reviewed for impairment when events and circumstances indicate that the intangible asset might be impaired.

Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed of, Excluding Goodwill and Indefinite-Lived Intangible Assets

The Company records impairment losses on long-lived assets, excluding goodwill and indefinite-lived intangible assets, used in operations when events and circumstances indicate that long-lived assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. If required, the impairment recognized is the difference between the fair value of the asset and its carrying amount.

F-14

Software Development Costs

Capitalization of software development costs begins upon the establishment of technological feasibility, which is generally the completion of a working prototype that has been certified as having no critical bugs and is a release candidate or when alternative future use exists. To date, software development costs incurred between completion of a working prototype and general availability of the related product have not been material and have not been capitalized.

Research and Development

Expenditures for research and development are expensed as incurred. The Company had no capitalized research and development costs as of December 31, 2011 and 2010.

Advertising Expenses

The Company expenses all advertising costs as incurred and for its continuing operations classifies these costs under selling, general and administrative expense. Advertising expenses for the years ended December 31, 2011, 2010 and 2009, were $12.4 million, $13.0 million and $9.7 million, respectively.

(3) Financial Statement Details

Property and Equipment, Net (in thousands):

	December 31,
	2011			2010
Computer software and equipment	$	107,366		$	86,670
Leasehold improvements		18,553			18,123
Furniture and fixtures		6,235			5,602
		132,154			110,395
Less accumulated depreciation and amortization		(88,951	)		(71,190	)
Property and equipment, net	$	43,203		$	39,205

Depreciation expense for our continuing operations for the years ended December 31, 2011, 2010 and 2009 were $20.0 million, $18.8 million, and $18.4 million, respectively.

Accounts Payable and Accrued Expenses (in thousands):

	December 31,
	2011		2010
Accounts payable	$	1,452	$	3,462
Accrued compensation		34,249		30,149
Interest payable		4,665		5,854
Other accrued liabilities		66,671		35,047
Accounts payable and accrued expenses	$	107,037	$	74,512

Interest Income and Other, Net (in thousands):

	Year ended December 31,
	2011			2010			2009
Interest income	$	2,775		$	2,698		$	3,232
Foreign currency (loss) gains		(205	)		(640	)		972
Other income (expense)		2,289			(288	)		354
Interest income and other, net	$	4,859		$	1,770		$	4,558

F-15

Allowance for Doubtful Accounts (in thousands):

Continuing Operations

	Balance at Beginning of Period		Additions			Deductions		Balance at End of Period
2011	$	2,141	$	731		$	183	$	2,689
2010	$	3,127	$	(545	)	$	441	$	2,141
2009	$	2,879	$	687		$	439	$	3,127

(4) Acquisitions

2011 Acquisitions

Sonic Acquisition

On February 17, 2011, the Company acquired Sonic in a cash and stock transaction. Sonic was a leading developer of technologies, products and services that enable the creation, management, and enjoyment of digital media content across a wide variety of technology platforms. The Sonic acquisition enhances the Company’s offerings and facilitates the next step forward in its strategy of allowing consumers who have found content they are seeking using its guides, technologies and metadata, to enjoy that content in multiple environments from multiple sources on any device. The combination of the Company and Sonic also provides the opportunity for cost savings. The Company believes these factors support the amount of goodwill recorded in connection with the transaction.

The Company is accounting for the transaction under the acquisition method of accounting in accordance with the provisions of ASC Topic 805 Business Combinations (ASC 805). The total purchase price for Sonic was approximately $763.1 million and was comprised of the following (in thousands, except share and per share amounts):

Cash consideration paid to acquire the common stock of Sonic	$	398,146
Fair value of 5.8 million shares of Rovi common stock exchanged for the common stock of Sonic (1)		348,193
Cash consideration paid to terminate vested in the money Sonic employee stock options		8,242
Fair value of 0.1 million shares of Rovi common stock exchanged to terminate vested in the money Sonic employee stock options (1)		6,840
Fair value of vested Sonic employee stock options assumed		1,722
Total purchase price	$	763,143

(1) Based on the Company’s February 17, 2011, closing common stock price of $60.13 per share.

Under the acquisition method, the total estimated purchase price of the acquired company is allocated to the assets acquired and the liabilities assumed based on their fair values. The Company has made significant estimates and assumptions in determining the allocation of the purchase price.

F-16

The Company’s purchase price allocation is as follows (in thousands, except lives):

	Weighted Average Estimated Useful Life (In Years)
Cash and cash equivalents					$	22,127
Short-term investments						2,254
Trade accounts receivable						27,020
Property and equipment						2,895
Goodwill						476,093
Identifiable intangible assets:
Developed technology		6	$	105,900
Trademarks/tradenames		10		17,700
Customer relationships		6		146,400
Studio relationships and content library		4		9,700
Total identifiable intangible assets						279,700
Prepaid and other assets						15,755
Accounts payable and other liabilities						(51,118	)
Deferred tax liabilities, net						(8,248	)
Deferred revenue						(3,335	)
Total purchase price					$	763,143

The developed technology intangible assets relate to Sonic’s products across all of their product lines that have reached technological feasibility, primarily the Rovi Entertainment Store technology, Roxio’s developed software products and the DivX codec technology and player application. Trademarks/tradenames are primarily related to the Roxio and DivX brandname. Customer relationships represent existing contracted relationships with CE manufacturers, retailers, distributors and others. Studio relationships and content library primarily relate to Rovi Entertainment Store’s relationships with the studios and digitized content library. The estimated fair values of the developed technology, trademarks/tradenames and customer relationships were primarily determined using either the relief-from-royalty or excess earnings methods. The rates utilized to discount net cash flows to their present values ranged from 8%-11% and were determined after consideration of the overall enterprise rate of return and the relative risk and importance of the assets to the generation of future cash flows. The estimated fair values of the studio relationships and content library were determined under the cost method. The Company did not record any in process research and development assets as Sonic’s major technology projects are either substantially complete or primarily represent improvements and additional functionality to existing products for which a substantial risk of completion does not exist.

Developed technology, trademarks/tradenames and studio relationships and content library will be amortized on a straight-line basis over their estimated useful lives. As the majority of the cash flows generated by the customer relationships occur in the first four years of the intangible assets’ estimated useful life, the customer relationship intangible assets are being amortized based on the proportion of the expected future cash flow generated by the assets in each year to the total future cash flow expected to be generated by the asset. Approximately $28.5 million of the acquired goodwill is expected to be deductible for tax purposes.

For the year ended December 31, 2011, the Company incurred approximately $2.3 million in transaction costs related to the Sonic acquisition. These costs are included in selling, general and administrative expenses on the Company’s Consolidated Statement of Operations. For the period from acquisition to December 31, 2011, the acquired Sonic operations that remain in continuing operations generated approximately $100.8 million of revenue. The Company has not disclosed the earnings of the acquired Sonic operations as it is impracticable since the Sonic operations have been integrated into the Company’s existing operations.

F-17

SideReel Acquisition

On February 28, 2011, the Company acquired SideReel, Inc. (“SideReel”) for approximately $35.5 million in cash. SideReel provides an advertising supported website to help consumers find, track and watch online popular network and cable TV shows, movies, and Web TV series.

DigiForge Acquisition

On June 1, 2011, the Company acquired the assets of DigiForge, LLC (“DigiForge”) for approximately $14.7 million. DigiForge provides professional services to the cable industry and was acquired to increase the Company’s professional service capabilities.

2010 Acquisitions

On March 1, 2010, the Company paid approximately $5.9 million for substantially all of the assets of MediaUnbound, Inc. The Company acquired these assets to enhance and expand its media search and recommendations capability.

2009 Acquisitions

On April 30, 2009, the Company acquired substantially all of the assets of Muze for approximately $17.0 million in cash. Muze provides metadata on video, music, games and books to retailers, Internet destinations, software producers, consumer electronics manufacturers and mobile service providers in the United States and Europe. The Company acquired Muze to expand its worldwide entertainment metadata portfolio and enhance its technology platform for delivering metadata.

The Company also paid approximately $8.3 million for a music metadata distribution business in the Asia Pacific region. This transaction closed on July 1, 2009.

Unaudited Pro Forma Financial Information

The unaudited pro forma financial information presented below (in thousands, except per share amounts) assumes the acquisition of Sonic had occurred on January 1, 2010. The pro forma information presented is for illustrative purposes only and is not necessarily indicative of the results of operations that would have been realized if the acquisition had been completed on the date indicated, nor is it indicative of future operating results. The pro forma financial information does not include any adjustments for operating efficiencies or cost savings.

	Year ended December 31,
	2011			2010
Net revenue	$	715,699		$	638,757
Operating income (1)	$	89,560		$	44,092
Income (loss) from continuing operations, net of tax (1)(2)(3)	$	(8,126	)	$	163,209
Basic earnings (loss) per share from continuing operations	$	(0.07	)	$	1.50
Diluted earnings (loss) per share from continuing operations	$	(0.07	)	$	1.41

(1) Operating income for the year ended December 31, 2010, includes a $28.5 million charge related to costs associated with indemnification and other claims in excess of reserves established in purchase accounting in conjunction with the Gemstar acquisition (See Note 16).

(2) The Company’s historical results for the year ended December 31, 2010, included a $139.2 million income tax benefit, primarily related to entering into a closing agreement with the Internal Revenue Service through its Pre-Filing Agreement program confirming that the Company recognized an ordinary tax loss from the 2008 sale of its TV Guide Magazine business (See Note 14).

F-18

(3) As a result of recording deferred tax liabilities related to its acquisition of Sonic, the Company determined that its deferred tax valuation allowance should be reduced by $22.2 million during the three months ended March 31, 2011. As the pro forma financial information assumes the acquisition of Sonic had occurred on January 1, 2010, and this deferred tax valuation allowance reduction is non-recurring in nature and is directly related to the transaction, the $22.2 million tax benefit has been removed from the pro forma financial information for the year ended December 31, 2011.

(5) Discontinued Operations and Assets Held for Sale

Roxio Consumer Software

During the fourth quarter of 2011, the Company made a determination that it would pursue selling its Roxio Consumer Software business (See Note 18). The Company has therefore reclassified the assets and liabilities to be assumed by the buyer to held for sale as of December 31, 2011, and recorded the operations and cash flows of the Roxio Consumer Software business as discontinued operations. In connection with moving the Roxio assets to held for sale the Company recorded a $40.6 million impairment to the goodwill and finite-lived intangible assets of the Roxio Consumer Software business to reduce the carrying value of the asset group to fair value less costs to sell. The fair value of the Roxio Consumer Software business was based upon the negiotiated selling price of the business (See Note 18).

Assets and Liabilities held for sale included the following as of December 31, 2011 (in thousands):

	December 31, 2011
Trade accounts receivable, net	$	7,076
Inventory, net		2,183
Prepaid expenses		960
Property and equipment, net		200
Intangible assets		9,925
Accrued liabilities		(1,700	)
Deferred revenue		(3,745	)
Total net assets held for sale	$	14,899

Previous Software Business

In 2011 and 2010, the Company recorded $1.5 million and $11.7 million in expenses related to indemnification for intellectual property infringement claims relating to the Company’s previous software business, which included FLEXnet, InstallShield and AdminStudio software tools, which was sold in 2008.

Norpak

On September 17, 2010, the Company sold its Canadian subsidiary, Norpak Corporation (“Norpak”), which manufactured equipment for embedding data in a television signal for $11.8 million. The sales price was paid entirely out of cash on Norpak’s balance sheet. In connection with the sale, the Company recorded a $1.6 million loss on disposal.

TV Guide Network and TV Guide Online

On February 28, 2009, the Company sold its TV Guide Network and TV Guide Online business units for approximately $242 million in cash, of which $36.8 million was deposited in a 15-month escrow account as a source of recovery in the event the buyer had an indemnifiable claim. The $36.8 million that was in escrow was released to the Company in June of 2010.

F-19

TVG Network

On January 27, 2009, the Company sold its TVG Network business unit for approximately $50.7 million. Included in the net assets sold was $11.9 million in cash.

All Discontinued Operations

The results of operations of the Company’s discontinued operations consist of the following (in thousands):

	Year Ended December 31,
	2011			2010			2009
Net revenue:
TV Guide Network / TV Guide Online	$	—		$	—		$	20,319
TVG Network		—			—			2,616
Norpak		—			2,600			3,461
Roxio Consumer Software		52,566			—			—
Pre-tax (loss) income:
Previous Software	$	(1,496	)	$	(11,732	)	$	—
TV Guide Network / TV Guide Online		—			—			1,825
TVG Network		—			—			(694	)
Norpak		—			(617	)		(317	)
Roxio Consumer Software		(49,529	)		—			—
Pre-tax loss on disposal of business units		—			(1,632	)		(3,661	)
Income tax benefit (expense)		—			207			(31,716	)
Loss from discontinued operations, net of tax	$	(51,025	)	$	(13,774	)	$	(34,563	)

(6) Goodwill and Other Intangible Assets

The Company assesses its goodwill for impairment annually as of October 1, or more frequently if circumstances indicate impairment may have occurred. To accomplish this, the Company determines the fair value of its reporting unit using a discounted cash flow approach and / or a market approach and compares it to the carrying amount of the reporting unit at the date of the impairment analysis. After the disposition of the Media Properties, the Company only has one reporting unit and therefore the Company’s publicly traded equity is a key input in determining the fair value of this reporting unit. When the Company conducted its annual impairment analysis in 2011, its fair value exceeded its GAAP equity by approximately $3.0 billion. In connection with classifiying the Roxio Consumer Software business to held for sale the Company conducted an additional goodwill impairment analysis as of December 31, 2011. As of December 31, 2011 the Company’s fair value exceeded its GAAP equity by approximately $1.0 billion. A significant decline in the value of the Company’s publicly traded equity and /or a significant decrease in the Company’s future business prospects could require the Company to record a goodwill and / or intangible asset impairment charge in the future. The Company did not record any goodwill impairment charges to its continuing operations for any of the periods presented.

Goodwill information is as follows for continuing operations (in thousands):

	Balance at Beginning of Period		Goodwill Acquired		Foreign Currency Translation			Reclassified to Assets Held for Sale			Balance at End of Period
2011	$	857,216	$	510,998	$	(307	)	$	(3,762	)	$	1,364,145
2010	$	854,065	$	2,853	$	298		$	—		$	857,216
2009	$	828,185	$	22,256	$	3,624		$	—		$	854,065

F-20

During the second quarter of 2009, the Company completed extensive consumer research regarding its brands. This consumer research indicated that the brands acquired by the Company did not represent the future vision of the Company and did not carry a positive connotation in the market. The Company determined these results to be an indicator of potential impairment of its trademark intangible assets. The Company determined the fair value of its trademark intangible assets using the relief-from-royalty method. The relief-from-royalty method uses Level 3 inputs to estimate the after-tax savings enjoyed by owning the assets as opposed to paying a third party for its use. The Company determined the fair value of its trademark and intangible assets to be $8.3 million and recorded a $43.1 million impairment charge during the second quarter of 2009. This impairment charge is included in restructuring and asset impairment charges on the Consolidated Statements of Operations.

The following tables summarize the Company’s intangible assets for its continuing operations subject to amortization as of December 31, 2011 and 2010 (in thousands):

	December 31, 2011
	Gross Costs		Accumulated Amortization			Net
Developed technology and patents	$	895,420	$	(267,913	)	$	627,507
Existing contracts and customer relationships		167,524		(34,426	)		133,098
Content databases		63,687		(24,790	)		38,897
Trademarks / Tradenames		25,300		(9,753	)		15,547
	$	1,151,931	$	(336,882	)	$	815,049
	December 31, 2010
	Gross Costs		Accumulated Amortization			Net
Developed technology and patents	$	828,923	$	(197,540	)	$	631,383
Existing contracts and customer relationships		47,634		(15,737	)		31,897
Content databases		51,674		(15,849	)		35,825
Trademarks / Tradenames		8,300		(5,020	)		3,280
	$	936,531	$	(234,146	)	$	702,385

The following table summarizes the Company’s estimated amortization expense through the year 2016 and thereafter (in thousands):

Year ending December 31,	Amortization Expense
2012	$	109,054
2013		100,817
2014		94,366
2015		86,697
2016		84,692
Thereafter		339,423
Total amortization expense	$	815,049

(7) Debt

Convertible Senior Notes Due 2040

In March 2010, the Company issued $460.0 million in 2.625% convertible senior notes (the “2040 Convertible Notes”) due in 2040 at par. The 2040 Convertible Notes may be converted, under the circumstances described below, based on an initial conversion rate of 21.1149 shares of common stock per $1,000 principal amount of notes (which represents an initial conversion price of approximately $47.36 per share).

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Prior to November 15, 2039, holders may convert their 2040 Convertible Notes into cash and the Company’s common stock, at the applicable conversion rate, under any of the following circumstances: (i) during any fiscal quarter after the calendar quarter ending June 30, 2010, if the last reported sale price of the Company’s common stock for at least 20 trading days during the 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the applicable conversion price in effect on each applicable trading day; (ii) during the five business-day period after any ten consecutive trading-day period (the “measurement period”) in which the trading price per note for each day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such day; (iii) upon the occurrence of specified corporate transactions, as described in the indenture, or (iv) if the Company calls any or all of the notes for redemption, at any time prior to the close of business on the third scheduled trading day prior to that redemption date. From November 15, 2039 until the close of business on the scheduled trading day immediately preceding the maturity date of February 15, 2040, holders may convert their 2040 Convertible Notes into cash and shares of the Company’s common stock at the applicable conversion rate, at any time, regardless of the foregoing circumstances. After February 20, 2015, the Company has the right to call for redemption all, or a portion, of the 2040 Convertible Notes at 100% of the principal amount of notes to be redeemed, plus accrued interest to, but excluding, the redemption date. Holders have the right to require the Company to repurchase the 2040 Convertible Notes on February 20, 2015, 2020, 2025, 2030 and 2035 for cash equal to 100% of the principal amount of the notes to be repurchased, plus accrued interest to, but excluding, the repurchase date.

Upon conversion, a holder will receive the conversion value of the 2040 Convertible Notes converted based on the conversion rate multiplied by the volume weighted average price of the Company’s common stock over a specified observation period following the conversion date. The conversion value of each 2040 Convertible Note will be paid in cash up to the aggregate principal amount of the 2040 Convertible Notes to be converted and shares of common stock to the extent the conversion value exceeds the principal amount of the converted note. Upon the occurrence of a fundamental change (as defined in the indenture), the holders may require the Company to repurchase for cash all or a portion of their 2040 Convertible Notes at a price equal to 100% of the principal amount of the 2040 Convertible Notes being repurchased plus accrued interest, if any. In addition, following certain corporate events that occur prior to February 20, 2015, the conversion rate will be increased for holders who elect to convert their notes in connection with such a corporate event in certain circumstances.

In accordance with ASC Topic 470, related to accounting for convertible debt instruments that may be settled in cash upon conversion, the Company has separately accounted for the liability and equity components of the 2040 Convertible Notes to reflect its non-convertible debt borrowing rate of 7.75%, at the time the instrument was issued, when interest cost is recognized. The debt discount is being amortized through February 2015, which represents the first date the 2040 Convertible notes can be called by the Company or put to the Company by the noteholders. During the year ended December 31, 2011, the Company repurchased a total of $169.0 million in par value of the 2040 Convertible Notes for $203.2 million. The Company allocated $147.4 million of the purchase price to the liability component, and the remaining $55.8 million to the equity component of the 2040 Convertible Notes. In connection with the repurchase, the Company recorded a $8.3 million loss on debt redemption during the year December 31, 2011.

As of December 31, 2011 and 2010, the principal amount of the Company’s 2040 Convertible Notes was $291.0 million and $460 million, respectively. As of December 31, 2011 and 2010, the unamortized discount on the 2040 Convertible Notes was $40.7 million and $81.9 million, respectively, resulting in a carrying amount of $250.3 million and $378.1 million, respectively. During the year ended December 31, 2011 and 2010, the Company recorded $14.4 million and $12.9 million of interest expense for the 2040 Convertible Notes related to the amortization of the discount.

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Convertible Senior Notes Due 2011

In August 2006, Rovi Solutions, a wholly-owned subsidiary of the Company, issued $240.0 million in 2.625% convertible senior notes (the “2011 Convertible Notes”) due in 2011 at par. During the year ended December 31, 2011, the Company repurchased a total of $106.3 million in par value of the 2011 Convertible Notes for $221.1 million. The Company allocated $106.8 million of the purchase price to the liability component and the remaining $114.3 million to the equity component of the 2011 Convertible Notes. In connection with the repurchases, the Company recorded $3.2 million in losses on debt redemption during the year ended December 31, 2011. During the year ended December 31, 2010, the Company repurchased a total of $105.0 million in par value of the 2011 Convertible Notes for $160.1 million. In addition, during 2010 noteholders also elected to convert 2011 Convertible Notes with a par value of $0.3 million. The Company allocated $99.9 million of the purchase price and conversion value to the liability component and the remaining $56.7 million to the equity component of the 2011 Convertible Notes. In connection with the repurchases and conversions, the Company recorded a $4.5 million loss on debt redemption during the year ended December 31, 2010. In August 2011, the remaining 2011 Convertible Notes with a par value of $28.4 million were converted by the noteholders. In connection with the conversion, the Company issued 0.5 million shares of its common stock and paid $28.4 million in cash to the noteholders.

In accordance with ASC 470, the Company separately accounted for the liability and equity component of the 2011 Convertible Notes to reflect its non-convertible debt borrowing rate of 7.4%, at the time the instrument was issued, when interest cost is recognized. As of December 31, 2010, the principal amount of the Company’s 2011 Convertible Notes was $134.7 million. As of December 31, 2010, the unamortized discount on the 2011 Convertible Notes was $3.9 million, resulting in a carrying amount of $130.8 million. During the years ended December 31, 2011, 2010 and 2009, the Company recorded $1.5 million, $7.9 million and $9.4 million, respectively, of interest expense for the 2011 Convertible Notes related to the amortization of the discount.

Concurrently with the issuance of the 2011 Convertible Notes, the Company entered into a convertible bond call option whereby the Company had options to purchase up to 7.96 million shares of the Company’s common stock at a price of approximately $28.28 per share. In connection with the repurchase of a portion of the 2011 Convertible Notes during the year ended December 31, 2011, the Company unwound a portion of the convertible bond call option, and in the process, received $85.6 million in cash and 0.2 million shares of its common stock with a fair value of $10.0 million. In connection with the repurchase of a portion of the 2011 Convertible Notes in 2010, the Company unwound a portion of the convertible bond call option and in the process received $29.0 million. These payments and the fair value of the common stock received have been recorded as an increase to additional paid-in-capital and the common stock received has been recorded as treasury stock. In August 2011, the Company exercised the remaining convertible bond call options and received a net share settlement of 0.8 million shares of its common stock.

In addition, concurrent with the issuance of 2011 Convertible Notes, the Company sold warrants to purchase up to 7.96 million shares of its common stock at a price of $32.9248 per share. The warrants expire on various dates from August 16, 2011 through the 104^th scheduled trading day following August 16, 2011, and must be settled in net shares. In connection with the repurchase of a portion of the 2011 Convertible Notes during the year ended December 31, 2011, the Company unwound a portion of the warrants for $81.9 million in cash. In connection with the repurchase of a portion of the 2011 Convertible Notes in 2010, the Company unwound a portion of the warrants for $23.2 million in cash. These payments have been recorded as a decrease to additional paid-in-capital. During the year ended December 31, 2011, the Company issued 0.3 million shares of its common stock in connection with the exercise of a portion of the warrants. As of December 31, 2011, warrants to purchase up to 0.1 million shares of the Company’s common stock under the terms described above remain outstanding.

Senior Secured Term Loan

On February 7, 2011, two of the Company’s subsidiaries, Rovi Solutions Corporation and Rovi Guides Inc., jointly borrowed $750 million under a senior secured credit facility consisting of a 5-year $450 million term loan

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(“Term Loan A”) and a 7-year $300 million term loan (“Term Loan B”). Both term loans are guaranteed by Rovi Corporation and certain of its domestic and foreign subsidiaries, and are secured by substantially all of the Company’s assets. Term Loan A requires annual amortization payments and matures on February 7, 2016 and Term Loan B requires quarterly amortization payments and matures on February 7, 2018. Term Loan A bears interest, at the Company’s election, at either prime rate plus 1.5% per annum or 3 month LIBOR plus 2.5% per annum and was issued at a discount of $2.8 million to par value. Term Loan B bears interest, at the Company’s election, at either prime plus 2.0% per annum or 3 month LIBOR plus 3.0% per annum, with a LIBOR floor of 1.0% and was issued at a $0.8 million discount to par value. The senior secured credit facility includes financial performance covenants (a maximum total leverage ratio and a minimum interest coverage ratio), provisions for optional and mandatory repayments (an annual excess cash flow payment and payments due upon sale of assets, among others), restrictions on the issuance of new indebtedness, restrictions on certain payments (repurchases of Company stock and dividends payments, among others) and other representations, warranties and covenants which are customary for a secured credit facility. As of December 31, 2011, the Term Loan A and Term Loan B carrying values were $447.7 million and $297.1 million, net of discount, respectively. The Company incurred $13.5 million in debt issuance costs related to Term Loan A and Term Loan B, which are being amortized to interest expense using the effective interest method.

Debt Repurchase Program

In December 2010, the Company’s Board of Directors authorized the repurchase of up to $200.0 million of its convertible notes. During the year ended December 31, 2010, the Company paid $160.1 million to repurchase a portion of the 2011 Convertible notes. In February 2011, the Company’s Board of Directors replaced the December 2010 authorization with a new repurchase authorization of up to $300.0 million of debt outstanding. In May 2011, the Company’s Board of Directors replaced the February 2011 authorization with a new repurchase authorization of up to $300.0 million of debt outstanding. During the year ended December 31, 2011, the Company paid $424.4 million to repurchase debt under its debt repurchase program, of which $89.9 million was repurchased under the May 2011 authorization with the remainder being repurchased under prior authorization. As of December 31, 2011, the Company has $210.1 million remaining under its existing debt repurchase authorization.

2008 Senior Secured Term Loan

In connection with the Gemstar acquisition, the Company borrowed $550.0 million under a five year senior secured term loan credit facility (the “2008 Term Loan”). During the first quarter of 2010, the Company paid $207.2 million to pay off and retire the remaining balance of the 2008 Term Loan. In connection with retiring the 2008 Term Loan, the Company recorded a $12.3 million loss on debt redemption, primarily due to writing off the remaining note issuance costs.

The aggregate amount of debt payments due in each of the next five years and thereafter is as follows (in thousands):

2012	$	25,500
2013		25,500
2014		48,000
2015 (1)		338,990
2016		318,000
Thereafter		282,750
Total	$	1,038,740

(1) The 2040 Convertible Notes have been included in the above table based on the first put / call date which is February 2015 (see above for additional information)

F-24

(8) Investments

The following is a summary of cash, available-for-sale and other investment securities (in thousands) as of December 31, 2011:

	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Cash	$	50,766	$	—	$	—		$	50,766
Cash equivalents - Money markets		86,014		—		—			86,014
Total cash and cash equivalents	$	136,780	$	—	$	—		$	136,780
Available-for-sale investments:
Auction rate securities	$	15,700		—	$	(1,386	)	$	14,314
Corporate debt securities		158,729		117		(206	)		158,640
Foreign government obligations		37,764		17		(24	)		37,757
U.S. Treasury/Agencies		137,940		80		(31	)		137,989
Total available-for-sale investments	$	350,133	$	214	$	(1,647	)	$	348,700
Total cash, cash equivalents and investments								$	485,480

The following is a summary of cash, available-for-sale and other investment securities (in thousands) as of December 31, 2010:

	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Cash	$	45,700	$	—	$	—		$	45,700
Cash equivalents - Money markets		154,495		—		—			154,495
Total cash and cash equivalents	$	200,195	$	—	$	—		$	200,195
Available-for-sale investments:
Auction rate securities	$	16,800	$	—	$	(1,801	)	$	14,999
Corporate debt securities		186,218		263		(191	)		186,290
Foreign government obligations		11,792		10		(52	)		11,750
U.S. Treasury/Agencies		283,073		166		(306	)		282,933
Total available-for-sale investments	$	497,883	$	439	$	(2,350	)	$	495,972
Total cash, cash equivalents and investments								$	696,167

As of December 31, 2011, the fair value of available-for-sale debt investments, by contractual maturity, was as follows (in thousands):

Due in 1 year or less	$	283,433
Due in 1-2 years		50,953
Due in 2-3 years		—
Due in greater than 3 years		14,314
Total	$	348,700

F-25

The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2011 and 2010 (in thousands):

	December 31, 2011
	Less than 12 Months					12 Months or Longer					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Description of Securities
Auction rate securities	$	—	$	—		$	14,314	($	1,386	)	$	14,314	($	1,386	)
Corporate securities		86,111		(206	)		—		—			86,111		(206	)
Foreign government obligations		21,139		(24	)		—		—			21,139		(24	)
U.S. Treasuries / Agencies		19,514		(18	)		3,409		(13	)		22,923		(31	)
	December 31, 2010
	Less than 12 Months					12 Months or Longer					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Description of Securities
Auction rate securities	$	—	$	—		$	14,999	$	(1,801	)	$	14,999	$	(1,801	)
Corporate securities		89,170		(191	)		—		—			89,170		(191	)
Foreign government obligations		10,483		(52	)		—		—			10,483		(52	)
U.S. Treasuries / Agencies		127,990		(306	)		—		—			127,990		(306	)

Market values were determined for each individual security in the investment portfolio. The Company attributes the unrealized losses in its auction rate securities portfolio to liquidity issues rather than credit issues. The Company’s available-for-sale auction rate securities portfolio at December 31, 2011 is comprised solely of AAA rated investments, in federally insured student loans and municipal and educational authority bonds. Due to the Company’s belief that the market for such securities may take in excess of twelve months to fully recover and because the Company has the ability and intent to hold these investments until the market recovers, the Company has classified these investments as long-term marketable securities on the Consolidated Balance Sheet at December 31, 2011. The Company continues to earn interest on all of its auction rate security instruments.

During 2010, the Company sold a strategic investment and realized a gain of $5.9 million.

(9) Interest Rate Swaps and Caps

In March 2010, in connection with the issuance of the 2040 Convertible Notes, the Company entered into interest rate swaps with a notional amount of $460.0 million under which it pays a weighted average floating rate of 6 month USD – LIBOR minus 0.342%, set in arrears, and receives a fixed rate of 2.625%. These swaps expire in February 2015. In addition, in connection with the then remaining balance of the 2011 Convertible Notes, the Company also entered into interest rate swaps with a notional amount of $185.0 million under which it paid a weighted average floating rate of 6 month USD – LIBOR plus 1.241%, set in arrears, and received a fixed rate of 2.625%. These swaps expired in August 2011. The Company entered into these swaps as it believed interest rates would increase in the future at a slower pace than the market then anticipated, thus allowing it to reduce its overall interest expense related to the convertible debt. The Company also purchased interest rate caps for $4.0 million with notional amounts that range from $270.0 million to $200.0 million from 2012 to 2015. The Company will receive payments under these interest rate caps if 6 month USD-LIBOR, on the reset dates, exceeds 6% from February 2012 to February 2013, 5% from February 2013 to February 2014, or 4% from February 2014 to February 2015.

In November 2010, after future interest rate expectations decreased, the Company entered into additional swaps with a notional amount of $460.0 million under which it pays a fixed rate which gradually increases from 0.203% for the six-month settlement period ending in February 2011, to 2.619% for the six-month settlement

F-26

period ending in February 2015 and receives a floating rate of 6 month USD – LIBOR minus 0.342%, set in arrears. These swaps expire in February 2015. In November 2010, the Company also entered into additional swaps with a notional amount of $185.0 million under which it paid a fixed rate which increased from 1.783% for the settlement period ending in February 2011, to 1.875% for the six-month settlement period ending August 2011 and received a floating rate of 6 month USD – LIBOR plus 1.241%, set in arrears. These swaps expired in August 2011. As future interest rate expectations had declined since March 2010, the Company entered into these swaps to fix its future interest payments based on the forward LIBOR rates in effect in November 2010.

In October 2011, the Company entered into additional swaps with a notional amount of $300.0 million. These swaps have an effective date of June 2013, and under these swaps the Company pays a fixed interest rate which gradually increases from 0.81% for the three month settlement period ending September 2013, to 2.65% for the final settlement period ending in January 2016 and receives a floating rate of three month USD-LIBOR-BBA. These swaps expire in January 2016. The Company entered into these swaps to effectively fix the interest rate beginning in June 2013 on a portion of its Senior Secured Term Loan.

The Company has not designated any of its interest rate swaps or caps as hedges. The Company records these interest rate swaps and caps on its balance sheet at fair market value with the changes in fair value recorded as gain (loss) on interest rate swaps and caps, net, in its Consolidated Statements of Operations. During the years ended December 31, 2011 and 2010, the Company recorded a loss of $4.3 million and a gain of $34.2 million, respectively, for the change in the fair value of its interest rate swaps and caps and the semi-annual interest settlements. For information on the fair value of the Company’s interest rate swaps and caps see Note 10.

(10) Fair Value

In accordance with ASC Topic 820, the Company uses three levels of inputs to measure fair value:

Level 1. Quoted prices in active markets for identical assets or liabilities.

Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or valuations in which all significant inputs are observable or can be obtained from observable market data.

Level 3. Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities.

The Company values its interest rate swaps using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each interest rate swap. This analysis reflects the contractual terms of the interest rate swaps, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its interest rate swaps for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings.

The Company’s auction rate securities are valued using a discounted cash flow analysis or other type of valuation model. These analyses are highly judgmental and consider, among other items, the likelihood of redemption, credit quality, duration, insurance wraps and expected future cash flows. These securities were also compared, when possible, to other observable market data with similar characteristics to the securities held by the Company.

The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period.

F-27

As of December 31, 2011, assets and liabilities measured and recorded at fair value on a recurring basis, were as follows (in thousands):

	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Current Assets
Money market funds (1)	$	86,014	$	86,014
Corporate debt securities (2)		150,458				150,458
Foreign government obligations (2)		19,757				19,757
U.S. Treasuries / Agencies (2)		113,218				113,218
Non-Current Assets
Auction rate securities (3)		14,314						14,314
Corporate debt securities (3)		8,182				8,182
Foreign government obligations (3)		18,000				18,000
U.S. Treasuries / Agencies (3)		24,771				24,771
Interest rate swaps and caps (4)		16,433				16,433
Total assets	$	451,147	$	86,014	$	350,819	$	14,314

(1) Included in cash and cash equivalents on the Consolidated Balance Sheet.

(2) Included in short-term investments on the Consolidated Balance Sheet and classified as available-for-sale securities.

(3) Included in long-term marketable investment securities on the Consolidated Balance Sheet and classified as available-for-sale securities.

(4) Included in other assets on the Consolidated Balance Sheet. As of December 31, 2011, the fair value of the Company’s interest rate swaps and caps in an asset position was $29.8 million and the fair value in a liability position was $13.4 million. These amounts have been recorded on a net basis on the Company’s balance sheet.

As of December 31, 2010, assets and liabilities measured and recorded at fair value on a recurring basis, were as follows (in thousands):

	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Current Assets
Money market funds (1)	$	154,495	$	154,495		—		—
Corporate debt securities (2)		106,950		—		106,950		—
U.S. agency debt securities (2)		188,170		—		188,170		—
Non-Current Assets
Auction rate securities (3)		14,999		—		—		14,999
Corporate debt securities (3)		79,340		—		79,340		—
Foreign government obligations (3)		11,750		—		11,750		—
U.S. agency debt securities (3)		94,763		—		94,763		—
Interest rate swaps and caps (4)		33,159		—		33,159		—
Total assets	$	683,626	$	154,495	$	514,132	$	14,999

(1) Included in cash and cash equivalents on the Consolidated Balance Sheet.

(2) Included in short-term investments on the Consolidated Balance Sheet and classified as available-for-sale securities.

F-28

(3) Included in long-term marketable investment securities on the Consolidated Balance Sheet and classified available-for-sale securities.

(4) Included in other assets on the Consolidated Balance Sheet.

The following table provides a summary of changes in the Company’s Level 3 auction rate securities and ARS Put Option (in thousands):

	Year ended December 31,
	2011			2010			2009
Balance at beginning of period	$	14,999		$	73,004		$	76,717
Acquired ARS-Sonic Solution Acquisition		3,002			—			—
Gain on ARS classified as trading and recorded in other income		—			5,773			4,597
Unrealized gain included in accumulated other comprehensive income		622			20			936
Realized gain on settlement		51			—			—
ARS Put Option loss recorded in other income		—			(5,773	)		(4,596	)
Settlements		(4,360	)		(58,025	)		(4,650	)
Balance at end of period	$	14,314		$	14,999		$	73,004

The following inputs were used to determine the fair value of the Company’s outstanding debt at December 31, 2011 (in thousands):

	Carrying Value		Significant Other Observable Inputs (Level 2)
Term Loan A	$	447,740	$	446,625
Term Loan B		297,088	$	296,261
2040 Convertible Notes (1)		250,270	$	290,321
	$	995,098

(1) The par value of the 2040 Convertible Notes is $291.0 million as of December 31, 2011. See Note 7 for additional details.

(11) Restructuring and Asset Impairment Charges

Sonic Acquisition Restructuring Plan

In conjunction with the Sonic acquisition, management acted upon a plan to restructure certain Sonic operations to create cost efficiencies for the combined company. These restructuring actions occurred throughout 2011 and resulted in a restructuring charge of $8.1 million which included $4.4 million for employee severance, $1.0 million in stock compensation expense due to the contractual acceleration of restricted stock and stock options, $1.4 million to accrue for the present value of lease payments (net of subleases) for abandoned office space and $1.3 million in asset impairment charges. Of the total restructuring charge of $8.1 million, $7.3 million related to our continuing operations and $0.8 million related to discontinued operations. As of December 31, 2011, $0.5 million of costs related to the abandoned office space and $0.5 million of severance costs remain unpaid.

BD+

On July 1, 2011, the Company sold its BD+ technology assets for up to $25.0 million based on the achievement of certain milestones, with $2.0 million paid initially. During the year ended December 31, 2011,

F-29

the Company recorded a $13.5 million impairment charge related to the BD+ intangible assets. This impairment charge is recorded in restructuring and asset impairment charges on the Consolidated Statement of Operations. During the year ended December 31, 2011 and 2010, the Company recorded $1.8 million and $2.7 million, respectively, in BD+ revenue.

Muze Restructuring Plan

In connection with the acquisition of the assets of Muze (see Note 4), management implemented a plan to restructure Muze’s operations resulting in a charge of $0.9 million during the second quarter of 2009. This was done to eliminate redundancies with the Company’s entertainment metadata business. This charge included $0.7 million for employee severance and a $0.2 million liability for the fair value of future lease payments on abandoned office space. The Company paid all of the employee severance costs in 2009.

Q109 Restructuring Plan

In conjunction with the disposition of the Media Properties, the Company’s management approved several actions resulting in a restructuring and asset impairment charge of $8.4 million. This was done to create cost efficiencies for the Company now that it no longer supports the Media Properties. These charges included $1.3 million in severance, a $2.9 million liability for the fair value of future lease payments on abandoned office space and $4.2 million in non–cash asset impairment charges related to the abandoned office space. The Company paid all of the employee severance costs in 2009. As of December 31, 2011, the liability for future lease payments related to the abandoned office space was $1.0 million.

Additionally, during the first quarter of 2009, the Company reversed the remaining $0.4 million in liabilities related to a fiscal 2007 restructuring plan.

(12) Equity-based Compensation

Sonic Assumed Plan

On February 17, 2011, in conjunction with the acquisition of Sonic, the Company assumed the Sonic Solutions 2004 Equity Compensation Plan, amended and restated July 2010 (the “2004 Sonic Plan”). As of February 17, 2011, on a converted basis, the 2004 Sonic Plan had 2.2 million shares reserved and 1.6 million shares available for issuance.

Stock Options Plans

The Company grants stock options and restricted stock awards from the 2008 Equity Incentive Plan (the “2008 Plan”), the 2000 Equity Incentive Plan (the “2000 Plan”) and, effective February 17, 2011, the 2004 Sonic Plan.

As of December 31, 2011, the Company had a total of 31.8 million shares reserved and 10.1 million shares available for issuance under the 2008 Plan, 2000 Plan and 2004 Sonic Plan.

These equity plans provide for the grant of stock options, restricted stock awards, restricted stock units and similar types of equity awards by the Company to employees, officers, directors and consultants of the Company. For options granted during the periods ended December 31, 2011, the vesting period was generally four years where one quarter of the grant vests at the end of the first year, and the remainder vests monthly. Options granted during the periods ended December 31, 2011, have a contractual term of seven years.

Restricted stock award and restricted stock unit grants generally vest annually over four years. Restricted stock awards are considered outstanding at the time of the grant, as the stockholders are entitled to voting rights. As of December 31, 2011, the number of restricted stock awards outstanding and unvested was 2.2 million. As of December 31, 2011, the number of restricted stock units outstanding and unvested was 0.1 million.

F-30

Employee Stock Purchase Plan

The Company’s 2008 Employee Stock Purchase Plan (“ESPP”) allows eligible employee participants to purchase shares of the Company’s common stock at a discount through payroll deductions. The ESPP consists of a twenty-four month offering period with four six-month purchase periods in each offering period. Employees purchase shares in each purchase period at 85% of the market value of the Company’s common stock at either the beginning of the offering period or the end of the purchase period, whichever price is lower.

As of December 31, 2011, the Company had reserved, and available for future issuance, 5.3 million shares of common stock under the ESPP.

Valuation and Assumptions

The Company uses the Black-Scholes option pricing model to determine the fair value of stock options and employee stock purchase plan shares. The fair value of equity-based payment awards on the date of grant is determined by an option-pricing model using a number of complex and subjective variables. These variables include expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends. The Company determines the fair value of its restricted stock awards as the difference between the market value of the awards on the date of grant less the exercise price of the awards granted.

Estimated volatility of the Company’s common stock for new grants is determined by using a combination of historical volatility and implied volatility in market traded options. When historical data is available and relevant, the expected term of options granted is determined by calculating the average term from historical stock option exercise experience. When there is insufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to changes in the terms of option grants, the Company uses the “simplified method” as permitted under Staff Accounting Bulletin No. 110. For options granted after July 15, 2008, the Company changed its standard vesting terms from three to four years and its contractual term from five to seven years. Since the Company did not have sufficient data for options with four year vesting terms and seven year contractual life, the simplified method was used to calculate the expected term. The risk-free interest rate used in the option valuation model is from U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option valuation model. In accordance with ASC Topic 718, Compensation – Stock Compensation, the Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option forfeitures and records equity-based compensation expense only for those awards that are expected to vest. The assumptions used to value equity-based payments (excluding options assumed through the Sonic acquisition) are as follows:

	Year ended December 31,
	2011			2010			2009
Option Plans:
Dividends		None			None			None
Expected term		4.6 years			4.5 years			4.5 years
Risk free interest rate		1.6	%		2.0	%		2.0	%
Volatility rate		44	%		39	%		44	%
ESPP Plan:
Dividends		None			None			None
Expected term		1.3 years			1.3 years			1.3 years
Risk free interest rate		0.3	%		0.4	%		0.7	%
Volatility rate		40	%		35	%		49	%

F-31

The weighted average fair values of equity-based awards are as follows:

	Year ended December 31,
	2011		2010		2009
Weighted average fair value:
Option grants	$	20.34	$	13.27	$	8.57
Restricted stock awards	$	51.23	$	43.57	$	26.95
Employee purchase share rights	$	14.97	$	9.92	$	6.82

In conjunction with the Sonic acquisition, the Company assumed 0.9 million shares of converted options and restricted stock units. The assumed options and restricted stock units continue to have, and be subject to, the same terms and conditions related to the applicable stock option or restricted stock unit immediately prior to the effective date of the acquisition. Since the Company did not have sufficient data for the assumed options, the simplified method was used to calculate expected term. The assumptions used to value the assumed and converted Sonic options are as follows:

Dividends	None
Expected term	5.8 years
Risk free interest rate	2.6	%
Volatility rate	39	%

The weighted average fair value of assumed and converted Sonic options was $39.50 per share.

As of December 31, 2011, there was $120.8 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested equity-based payments granted to employees in our continuing operations. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures and is expected to be recognized over a weighted average period of 2.5 years.

Activity under the Company’s stock option plans is as follows:

	Shares			Weighted- average exercise price		Weighted- average remaining contractual term (years)		Aggregate Intrinsic  Value (in thousands)
Outstanding at December 31, 2008		8,133,235		$	17.05
Granted		2,180,098		$	22.52
Canceled		(1,203,269	)	$	18.65
Exercised		(1,563,001	)	$	17.59
Outstanding at December 31, 2009		7,547,063		$	18.27
Granted		1,963,304		$	37.94
Canceled		(536,265	)	$	22.46
Exercised		(4,042,549	)	$	18.27
Outstanding at December 31, 2010		4,931,553		$	25.64
Assumed options from Sonic acquisition		899,873		$	36.11
Granted		1,786,296		$	52.81
Canceled		(834,187	)	$	43.01
Exercised		(1,996,022	)	$	20.95
Outstanding at December 31, 2011		4,787,513		$	36.67		5.4	$	11,137
Vested and expected to vest at December 31, 2011		3,774,043		$	36.35		5.3	$	9,413
Exercisable at December 31, 2011		1,362,686		$	28.93		4.3	$	6,275

F-32

The total intrinsic value of options exercised, during the years ended December 31, 2011, 2010, and 2009 was $66.5 million, $99.4 million, and $16.9 million, respectively. The intrinsic value is calculated as the difference between the market value on the date of exercise and the exercise price of the shares.

Activity related to the Company’s restricted awards is as follows:

	Shares			Weighted- average Grant-Date Fair Value		Aggregate Fair Value (1) (in thousands)
Outstanding at December 31, 2008		809,210		$	21.77
Granted		717,055		$	26.95
Vested		(281,046	)	$	22.04	$	6,842
Forfeited		(15,619	)	$	24.10
Outstanding at December 31, 2009		1,229,600		$	24.70
Granted		700,630		$	43.57
Vested		(460,371	)	$	24.87	$	18,592
Forfeited		(61,015	)	$	26.01
Outstanding at December 31, 2010		1,408,844		$	33.97
Granted		1,436,774		$	51.23
Vested		(503,328	)	$	30.52	$	25,394
Forfeited		(168,197	)	$	44.76
Outstanding at December 31, 2011		2,174,093		$	45.34

(1) Represents the fair value of the restricted award on the day the award vested.

The Company recorded $62.3 million, $34.3 million and $22.3 million in stock compensation expense from continuing operations for the years ended December 31, 2011, 2010 and 2009, respectively.

(13) Stock Repurchase Program

In December 2010, the Company’s Board of Directors authorized the repurchase of up to $400.0 million of the Company’s common stock. In November 2011, the Company’s Board of Directors authorized the repurchase of up to $400.0 million of the Company’s common stock. This November 2011 $400.0 million authorization includes any amounts which were outstanding under previously authorized stock repurchase programs. During the year ended December 31, 2011, the Company repurchased 6.8 million shares of its common stock for $337.6 million of which $312.6 million was repurchased under the December 2010 authorization and $25.0 million was repurchased under the November 2011 authorization. As of December 31, 2011 the Company had $375.0 million remaining under its existing stock repurchase authorization.

In February 2010, the Company’s Board of Directors authorized the repurchase of up to $100.0 million of common stock in connection with the offering of the 2040 Convertible Notes as well as up to an additional $200.0 million of its common stock in the open market from time to time at prevailing market prices or otherwise, as conditions warrant. This $200.0 million authorization included any amounts which were outstanding under previously authorized stock repurchase programs. In connection with the 2040 Convertible Note offering, the Company repurchased 3.0 million shares of its common stock for $109.9 million. These repurchases were recorded as treasury stock and resulted in a reduction of stockholders’ equity.

F-33

(14) Income Taxes

The components of income from continuing operations before income taxes are as follows (in thousands):

	Year Ended December 31,
	2011		2010		2009
Domestic income	$	12,569	$	73,845	$	(47,780	)
Foreign income		5,988		13,600		27,971
Income (loss) from continuing operations before income taxes	$	18,557	$	87,445	$	(19,809	)

Income tax expense (benefit) for the years ended December 31, 2011, 2010 and 2009 consisted of the following (in thousands):

	Year Ended December 31,
	2011			2010			2009
Current:
Federal	$	(1,415	)	$	(134,132	)	$	3,983
State		3,028			(15,881	)		4,609
Foreign		17,882			13,006			11,058
Total current expense (benefit)	$	19,495		$	(137,007	)	$	19,650
Deferred:
Federal		(9,378	)		14,184			(17,471	)
State		(1,299	)		(16,390	)		(3,600	)
Total deferred tax (benefit) expense		(10,677	)		(2,206	)		(21,071	)
Total tax expense (benefit) from continuing operations	$	8,818		$	(139,213	)	$	(1,421	)
Total tax (benefit) expense from discontinued operations	$	—		$	(207	)	$	31,716

Income tax expense for the years ended December 31, 2011, 2010, and 2009 differed from the amounts computed by applying the U.S. federal income tax rate of 35% to pretax income as a result of the following (in thousands):

	Year ended December 31,
	2011			2010			2009
Federal tax statutory rate	$	6,495		$	30,606		$	(7,044	)
State taxes, net of federal benefit		(423	)		(9,371	)		(3,483	)
Tax credits		(3,269	)		—			(213	)
Foreign tax rate differential		1,648			1,622			(3,539	)
Change in uncertain tax positions		1,163			(17,295	)		4,813
Compensation expense		1,755			3,620			4,842
PFA Settlement		—			(458,353	)		—
Change in valuation allowance		1,768			320,264			—
Others		(319	)		(10,306	)		3,203
Total tax expense (benefit)	$	8,818		$	(139,213	)	$	(1,421	)

F-34

The tax effects of the temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below (in thousands):

	December 31,
	2011			2010
Deferred tax assets:
Accruals, reserves and others	$	20,556		$	13,323
Impairment losses on investments		8,043			8,163
Equity-based compensation		15,278			5,286
Deferred revenue		3,456			4,164
Credits		82,837			45,575
Others		28,058			9,050
Net operating loss carryforwards		480,297			475,603
Gross deferred tax assets		638,525			561,164
Valuation allowance		(345,396	)		(322,548	)
Total deferred tax assets		293,129			238,616
Deferred tax liabilities:
Intangible assets		(268,650	)		(202,141	)
Debt amortization		(14,378	)		(29,611	)
Others		(14,216	)		(17,710	)
Total deferred tax liabilities		(297,244	)		(249,462	)
Net deferred tax liabilities	$	(4,115	)	$	(10,846	)

During the three months ended March 31, 2010, the Company entered into a closing agreement with the Internal Revenue Service through its Pre-Filing Agreement (PFA) program confirming that the Company recognized an ordinary tax loss of approximately $2.4 billion from the 2008 sale of its TV Guide Magazine business. To account for the PFA closing agreement, the Company (i) recorded a discrete tax benefit for the release of $576.9 million of reserves for uncertain tax positions previously netted against its deferred tax assets, (ii) reduced the deferred tax asset originally established in connection with the tax loss by $115 million to reflect the PFA closing agreement and (iii) established a valuation allowance of $347 million against its deferred tax assets as a result of determining that it is more likely than not that its deferred tax assets would not be realized.

At December 31, 2011, the Company reviewed the determination made at March 31, 2010 that it is more likely than not that its deferred tax assets will not be realized. While the Company believes that its fundamental business model is robust, there has not been a change from the March 31, 2010, determination that it is more likely than not that its deferred tax assets will not be realized and as such has maintained a valuation allowance against deferred tax assets at December 31, 2011.

During the second quarter of 2010, the Company received $128.5 million from the Internal Revenue Service resulting from loss carryback claims for taxes paid by Rovi group members during the years 2003 – 2008.

As of December 31, 2011, the Company had federal tax loss carryforwards of approximately $1,547.0 million, of which $175.1 million related to stock option deductions and are not included in deferred tax assets. The federal loss carryforwards will expire from 2020 through 2030. The Company has state net operating loss carryforwards of approximately $87.1 million as of December 31, 2011. The state loss carryforwards will expire from 2021 through 2031.

The Company has federal research and development and foreign tax credits available to reduce future income tax expense of approximately $23.0 million and $59.8 million, respectively. The federal research credits will expire from 2024 through 2030 and the foreign tax credits will expire from 2014 through 2021.

F-35

Utilization of state and federal net operating loss and credit carryforwards may be subject to limitations due to ownership changes.

The Company recognizes a liability for uncertain tax positions. The gross tax-affected unrecognized tax benefits which, if recognized, would affect the Company’s tax rate were $129.2 million and $48.5 million as of December 31, 2011 and 2010. The Company recorded interest related to unrecognized tax benefits of approximately $1.2 million, $1.0 million and $3.4 million for the years ended December 31, 2011, 2010 and 2009, respectively, and released interest and penalties of $4.0 million and $18.5 million for settlements and statute closures for the years ended December 31, 2011 and 2010, respectively. Total accrued interest and penalties was $3.2 million and $6.0 million at December 31, 2011 and 2010. Interest and penalties are classified in income tax expense. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is (in thousands):

	December 31,
	2011			2010
Balance as of January 1	$	50,593		$	634,020
Additions from acquired companies		6,659			—
Additions for tax positions related to the current year		73,777			188
Additions for tax provisions of prior years		1,666			2,644
Reductions for audit settlements		—			(576,883	)
Reductions for statute of limitations closures		(1,285	)		(9,376	)
Balance as of December 31	$	131,410		$	50,593

The reduction for audit settlements in 2010 is a result of entering into the closing agreement with the Internal Revenue Service described above. We do not expect a material change in the next twelve months to the ending balance.

The Company has not provided U.S. Federal or state taxes on approximately $124.9 million of undistributed earnings of non-U.S. subsidiaries as such earnings are considered to be permanently reinvested outside the U.S.

The Company conducts business globally and as a result files U.S. federal, state and foreign income tax returns in various jurisdictions. With few exceptions, the Company is no longer subject to income tax examinations for years prior to 2008.

(15) Geographic Information

Information on Revenue from Continuing Operations by Geographic Areas:

	Year ended December 31,
	2011		2010		2009
United States	$	349,375	$	262,236	$	239,389
International		341,435		279,254		241,061
Total Revenue	$	690,810	$	541,490	$	480,450

F-36

Information on Long Lived Assets by Geographic Areas:

	December 31,
	2011		2010
United States
Property and Equipment, net	$	39,967	$	36,271
Goodwill, net		1,336,186		836,928
Intangibles, net		811,888		691,404
Total United States		2,188,041		1,564,603
International
Property and Equipment, net		3,236		2,934
Goodwill, net		27,959		20,288
Intangibles, net		3,161		10,981
Total International		34,356		34,203
Total Long Lived Assets	$	2,222,397	$	1,598,806

(16) Commitments and Contingencies

Lease Commitments

The Company leases its facilities and certain equipment pursuant to noncancelable operating lease agreements expiring through 2019. The Company’s corporate headquarters are located in Santa Clara, California and such leases expire in 2017. The Company also leases office space in Ann Arbor, Bedford, Burbank, New York, Radnor, San Diego, San Francisco, Tulsa, the United Kingdom, Luxembourg, China, Japan and other locations, with various expiration dates through 2019. The Company records rent expense on a straight-line basis based on contractual lease payments. Allowances from lessors for tenant improvements have been included in the straight-line rent expense for applicable locations. Tenant improvements are capitalized and depreciated over the remaining life of the applicable lease.

Future minimum lease payments pursuant to these leases as of December 31, 2011 were as follows (in thousands):

	Operating Leases
2012	$	23,499
2013		20,711
2014		15,168
2015		12,775
2016		7,333
Thereafter		8,644
Total minimum lease payments	$	88,130
Less sublease revenues		(22,072	)
Net future minimum lease payments	$	66,058

Rent expense from continuing operations was $16.9 million, $13.5 million, and $17.2 million, for the years ended December 31, 2011, 2010, and 2009, respectively.

F-37

Indemnifications

In the normal course of business, the Company provides indemnification of varying scopes and amounts to certain of its licensees against claims made by third parties arising out of the use and/or incorporation of the Company’s products, intellectual property, services and/or technologies into the licensee’s products and services, provided the licensee is not in violation of the terms and conditions of the agreement and/or additional performance or other requirements for such indemnification. In some cases, the Company may receive tenders of defense and indemnity arising out of products that are no longer provided by the Company due to having divested certain assets, but which were previously licensed by the Company. The Company’s indemnification obligations are typically limited to the cumulative amount paid to the Company by the licensee under the license agreement, however some license agreements, including those with the Company’s largest multiple system operators and digital broadcast satellite providers, have larger limits or do not specify a limit on amounts that may be payable under the indemnity arrangements. The Company cannot estimate the possible range of losses that may affect the Company’s results of operations or cash flows in a given period or the maximum potential impact of these indemnification provisions on its future results of operations.

DirecTV, Inc. v. Finisar Corporation. In April 2005, Gemstar received a notice of a potential claim for indemnification from DirecTV Group, Inc. (“DirecTV”) as a result of a lawsuit filed by Finisar Corporation (“Finisar”) against DirecTV in the United States District Court for the Eastern District of Texas. Finisar alleged that several aspects of the DirecTV satellite transmission system, including aspects of its advanced electronic program guide (“EPG”) and the storage, scheduling, and transmission of data for the EPG, infringed a Finisar patent. On July 7, 2006, the Court awarded Finisar approximately $117 million. In addition, the Court ordered DirecTV to pay approximately $1.60 per activated set-top box in licensing fees going forward in lieu of an injunction until the expiration of Finisar’s patent in 2012. The parties both filed appeals to the Federal Circuit, which subsequently ruled that the trial court’s construction of certain terms of the patent was too broad, vacated the jury’s verdict of infringement, held that one of the seven patent claims at issue is invalid, and left standing the remaining six claims for reconsideration by the trial court. The appeals court also reversed the jury’s finding that DirecTV’s infringement was willful. The trial court subsequently ruled in DirecTV’s favor on its summary judgment motion that the remaining claims of the subject patent were invalid, and in January 2010, the court of appeals confirmed that ruling. The Company has not established a reserve with respect to this matter in its Consolidated Financial Statements.

Comcast Cable Communications Corp., LLC v. Finisar Corporation, in the United States District Court for the Northern District of California. In support of a potential claim for indemnification, Comcast Cable Communications Corp., LLC (“Comcast”) put the Company on notice that it had received communications from Finisar asserting infringement of U.S. Patent 5,404,505 (the “‘505 patent”). On July 7, 2006, Comcast filed a declaratory judgment action in the Northern District of California asking the Court to rule, among other things, that it does not infringe the ‘505 patent and/or that the patent is invalid. On May 15, 2008, Finisar entered into a covenant and stipulation with Comcast, filed with the California Court, that it would not assert any claim of the ‘505 patent against Comcast or certain related entities, other than claim 25. On July 11, 2008, the Court ruled on Comcast’s summary judgment motion, finding that claim 25 is invalid, and therefore finding that Comcast’s non-infringement motion is moot. Comcast has not taken any further action insofar as its potential indemnity claim against the Company is concerned.

Legal Proceedings

Thomson, Inc. v. Gemstar-TV Guide International, Inc., in the Superior Court of the State of Indiana for the County of Hamilton. On May 23, 2008, Thomson, Inc. (“Thomson”) initiated this action, seeking, among other things, indemnification from the Company in connection with its settlement of the patent claims against it in SuperGuide Corporation v. DirecTV Enterprises, Inc., et al., in the United States District Court for the Western District of North Carolina. The parties reached a confidential settlement in the matter and the Company paid all amounts due in March 2010.

F-38

DIRECTV, Inc. v. Gemstar-TV Guide Interactive, Inc., American Arbitration Association—Los Angeles. On March 20, 2009, DirecTV filed this arbitration demand seeking indemnity for payments made in settlement of two patent infringement lawsuits, including the SuperGuide Corporation v. DirecTV Enterprises, Inc., et al. matter. The Company received the arbitrators’ final ruling on the matter and paid the amount that the arbitrators awarded to DirecTV in the arbitration in March 2010.

Sonic Acquisition Litigation

Vassil Vassilev v. Sonic Solutions, et al., Matthew Barnes v. Habinger [sic] et al., Diana Willis v. Sonic Solutions, et al., Mark Chropufka v. Sonic Solutions, et al. and Joann Thompson v. Sonic Solutions, et al., filed in California Superior Court for the County of Marin. On January 3, 2011, a putative class action lawsuit entitled Vassil Vassilev v. Sonic Solutions, et al. was filed in California Superior Court for the County of Marin by an individual purporting to be a shareholder of Sonic Solutions against Sonic Solutions, the members of its board of directors, the Company and Sparta Acquisition Sub, arising out of the proposed transaction between the Company and Sonic. On January 10, 14 and 18, 2011, three substantially similar putative class action lawsuits were filed in the same court against the same defendants, entitled Matthew Barnes v. Habinger [sic] et al., Mark Chropufka v. Sonic Solutions, et al. and Diana Willis v. Sonic Solutions, et al., respectively (the “Lawsuits”). The Lawsuits allege that the members of Sonic’s board of directors breached their fiduciary duties of care and loyalty by, inter alia, failing to maximize shareholder value and by approving the merger transaction via an unfair process. The Lawsuits allege that the Company and Sparta Acquisition Sub aided and abetted the breach of fiduciary duties. In January 2011, the above actions were consolidated and an amended consolidated complaint was filed adding allegations of omissions in the Schedule 14D-9 Recommendation Statement filed by Sonic on January 14, 2011 and seeking to enjoin the acquisition of Sonic by the Company, to rescind the transaction in the event it is consummated, to impose a constructive trust, and monetary damages, fees and costs in an unspecified amount.

On January 25, 2011, another substantially similar putative class action lawsuit was filed in the same court against the same defendants, entitled Joann Thompson v. Sonic Solutions, et al. On January 28, 2011, the parties to the consolidated action reached an agreement in principle to settle. The proposed settlement, which is subject to court approval following notice to the class and a hearing, disposes of all causes of action asserted in the consolidated action and in Thompson v. Sonic Solutions, et. al. on behalf of all class members who do not elect to opt out of the settlement. Class members who elect to opt out, if any, may continue to pursue causes of action against the defendants. On November 29, 2011, the plaintiff in the Thompson action filed a voluntary request for dismissal, which the court granted on the same date. The court granted final approval of the settlement in February 2012.

In addition to the items listed above, the Company is party to various legal actions, claims and proceedings as well as other actions, claims and proceedings incidental to its business. The Company has established loss provisions only for matters in which losses are probable and can be reasonably estimated. Some of the matters pending against the Company involve potential compensatory, punitive or treble damage claims, or sanctions, that if granted, could require the Company to pay damages or make other expenditures in amounts that could have a material adverse effect on its financial position or results of operations. At this time, management has not reached a determination that the matters listed above or any other litigation, individually or in the aggregate, are expected to result in liabilities that will have a material adverse effect on the Company’s financial position or results of operations or cash flows.

F-39

(17) Quarterly Consolidated Financial Data (Unaudited)

	Quarter
	Q1			Q2			Q3			Q4			Year
	(in thousands, except per share data)
2011 (1)
Revenues	$	152,741		$	178,976		$	181,889		$	177,204		$	690,810
Income (loss) from continuing operations, net of taxes (2)	$	18,206		$	(6,939	)	$	5,469		$	(6,997	)	$	9,739
Discontinued operations, net of tax	$	(1,171	)	$	(3,789	)	$	(3,716	)	$	(42,349	)	$	(51,025	)
Net (loss) income (2)	$	17,035		$	(10,728	)	$	1,753		$	(49,346	)	$	(41,286	)
Basic income (loss) per share from continuing operations	$	0.17		$	(0.06	)	$	0.05		$	(0.07	)	$	0.09
Basic loss per share from discontinued operations		(0.01	)		(0.04	)		(0.03	)		(0.39	)		(0.47	)
Basic net earnings per share	$	0.16		$	(0.10	)	$	0.02		$	(0.46	)	$	(0.38	)
Diluted income (loss) per share from continuing operations	$	0.16		$	(0.06	)	$	0.05		$	(0.07	)	$	0.09
Diluted loss per share from discontinued operations		(0.01	)		(0.04	)		(0.03	)		(0.39	)		(0.45	)
Diluted net earnings per share	$	0.15		$	(0.10	)	$	0.02		$	(0.46	)	$	(0.36	)
2010
Revenues	$	129,370		$	133,908		$	138,028		$	140,184		$	541,490
Income (loss) from continuing operations, net of taxes (3)	$	79,734		$	41,270		$	37,624		$	68,030		$	226,658
Discontinued operations, net of tax	$	(11,639	)	$	(84	)	$	(1,206	)	$	(845	)	$	(13,774	)
Net (loss) income (3)	$	68,095		$	41,186		$	36,418		$	67,185		$	212,884
Basic income (loss) per share from continuing operations	$	0.77		$	0.41		$	0.36		$	0.65		$	2.20
Basic loss per share from discontinued operations		(0.11	)		0.00			(0.01	)		(0.01	)		(0.14	)
Basic net earnings per share	$	0.66		$	0.41		$	0.35		$	0.64		$	2.06
Diluted income (loss) per share from continuing operations	$	0.75		$	0.39		$	0.34		$	0.60		$	2.07
Diluted loss per share from discontinued operations		(0.11	)		0.00			(0.01	)		(0.01	)		(0.13	)
Diluted net earnings per share	$	0.64		$	0.39		$	0.33		$	0.59		$	1.94

(1) Amounts for 2011 have been reclassified to reflect the Roxio Consumer Software business as discontinued operations.

(2) During the first quarter of 2011, the Company recorded a $14.4 million income tax benefit from continuing operations including a discrete benefit from the reduction in the Company’s deferred tax asset valuation allowance resulting from the Company’s acquisitions of Sonic and SideReel (See Note 14). During the second quarter of 2011, the Company recorded a $13.5 million impairment charge related to its former BD+ technology intangible assets (See Note 11).

(3) During the first quarter of 2010, the Company recorded a $108.5 million income tax benefit from continuing operations primarily due to entering into a closing agreement with the Internal Revenue Service through its PFA program confirming that the Company recognized an ordinary tax loss from the 2008 sale of its TV Guide Magazine business (See Note 14). During the fourth quarter of 2010, the Company released $17.3 million of tax contingency reserves (See Note 14).

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(18) Subsequent Events

On February 1, 2012, the Company sold the assets of its Roxio Consumer Software business for approximately $15 million.

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