EX-99.1 CHARTER 2 ex99-1.htm ex99-1.htm
EXHIBIT 99.1
 
 
Rovi Corporation
2830 De La Cruz Blvd.
Santa Clara, CA 95050
 
(408) 562-8400 Main
(408) 567-1800 Fax

 
 
 
ROVI CORPORATION REPORTS FOURTH QUARTER FINANCIAL PERFORMANCE
 
 
SANTA CLARA, Calif. (BUSINESS WIRE)—February 11, 2010—Rovi Corporation (NASDAQ: ROVI), announced today, fourth quarter 2009 revenues of $138.0 million, compared to $118.2 million for the fourth quarter of 2008. Fourth quarter 2009 GAAP net income was $2.6 million, compared to a net loss of $211.2 million for the fourth quarter of 2008. GAAP diluted net income per common share for the quarter was $0.02, compared to a loss per common share of $2.07 for the fourth quarter of 2008.

On a non-GAAP Adjusted Pro Forma basis, Adjusted Pro Forma Income was $52.0 million in the fourth quarter of 2009, compared to $32.8 million in the fourth quarter of 2008.  Adjusted Pro Forma Income Per Common Share for the fourth quarter of 2009 was $0.50, compared to $0.32 for the fourth quarter of 2008. Adjusted Pro Forma Income Per Common Share is calculated using Adjusted Pro Forma Income.  Adjusted Pro Forma Income is defined as pro forma income (loss) from continuing operations, adding back non-cash items such as equity-based compensation, amortization of intangibles, amortization or write-off of note issuance costs, non-cash interest expense recorded on convertible debt under ASC 470-20 (formerly known as FSP APB 14-1) and the reversals of discrete tax reserves; as well as items which impact comparability that are required to be recorded under GAAP, but that the Company believes are not indicative of its core operating results such as transaction, transition and integration costs, restructuring and asset impairment charges, insurance settlements, payments to note holders and for related expenses to allow for early redemption, payment of court awarded fees and gains on sale of strategic investments.  While depreciation expense is a non-cash item, it is included in Adjusted Pro Forma Income as a reasonable proxy for capital expenditures. Management has been using Adjusted Pro Forma measures since the acquisition of Gemstar-TV Guide International (“Gemstar”).  Management did so, in part, because it believes that including Gemstar’s operating results only for the period since its acquisition on May 2, 2008 diminishes the comparative value of results from the prior year.  Management believes it is useful to measure the results on an Adjusted Pro Forma basis, assuming the Gemstar acquisition was consummated on January 1, 2007.  The Adjusted Pro Forma results also exclude the Company’s Software, Games, eMeta and TV Guide Magazine businesses, which were sold in 2008; and the TVG Network, TV Guide Network and TV Guide Online businesses, which were sold during the first quarter of 2009.  Reconciliations between GAAP pro forma and Adjusted Pro Forma results from operations are provided in the tables below.

“We had an excellent year, beating the high end of all financial estimates we set for ourselves at the beginning of the year.  We grew revenues by 17% in Q4 2009 compared to the same period in 2008, with double digit growth in each of our primary vertical markets, and we grew Adjusted Pro Forma Income Per Common Share by 56% during the same period,” said Fred Amoroso, President and CEO of Rovi.  “In addition, we achieved a number of important business objectives during the fourth quarter, including continuing to pay down debt, signing a number of important customer wins, continuing to expand our data licensing business, and especially, continuing to make significant progress on our TotalGuide solution.”
 
 
“Our 2010 revenue and Adjusted Pro Forma Income Per Common Share estimates remain unchanged with a range of $505 million to $535 million and $1.80 to $2.00, respectively,” added James Budge, Chief Financial Officer.
 
 


GAAP to Adjusted Pro Forma Reconciliation
 
Rovi Corporation provides non-GAAP or Adjusted Pro Forma information. References to Adjusted Pro Forma information are non-GAAP pro forma measures.  The Company provides Adjusted Pro Forma financial information to assist investors in assessing its current and future operations in the way that its management evaluates those operations.  Adjusted Pro Forma Revenue, Adjusted Pro Forma Income and Adjusted Pro Forma Income Per Common Share are supplemental measures of the Company’s performance that are not required by, and are not presented in accordance with GAAP. The Adjusted Pro Forma information does not substitute for any performance measure derived in accordance with GAAP, including, but not limited to, GAAP basis pro forma information.  Rovi Corporation believes that providing Adjusted Pro Forma financial information is useful to investors. Adjusted Pro Forma financial information assumes all acquisitions and divestitures prior to March 31, 2009 (including the Gemstar acquisition and the Software, Games, eMeta, TV Guide Magazine, TVG Network, TV Guide Network and TV Guide Online divestures), as well as any discontinued operations and product lines were effective on January 1, 2007.  Additionally, the TVG Network, TV Guide Network and TV Guide Online businesses are assumed to have been sold for aggregate proceeds of $275 million which is assumed to have reduced the debt issued in conjunction with the acquisition of Gemstar.  Further, Adjusted Pro Forma Income and Adjusted Pro Forma Income Per Common Share exclude the effect of non-cash items and items which impact comparability that are required to be recorded under GAAP, but that the Company believes are not indicative of its core operating results, or that the Company expects to be incurred over a limited period of time.  While depreciation expense is a non-cash item, it is included in Adjusted Pro Forma Income as management considers it a proxy for capital expenditures.

The Company’s management evaluates and makes operating decisions about its business operations primarily based upon Adjusted Pro Forma Revenue, Adjusted Pro Forma Income and Adjusted Pro Forma Income Per Common Share. Management uses Adjusted Pro Forma Income and Adjusted Pro Forma Income Per Common Share as measures as they exclude amortization of intangibles, amortization or write-off of note issuance costs, non-cash interest expense recorded on convertible debt under ASC 470-20 (formerly known as FSP APB 14-1), the reversals of discrete tax reserves, equity-based compensation, transaction costs, transition and integration costs, restructuring and asset impairment charges, insurance settlements, payments to note holders and related expenses to allow for early redemption, payment of court awarded fees and gains on sale of strategic investments; items management does not consider to be “core costs” when making business decisions. Therefore, management presents these Adjusted Pro Forma financial measures along with GAAP measures.  The income statement line items impacted in the adjustment from GAAP to the Adjusted Pro Forma presentation in this earnings release are cost of revenues; research and development; selling, general and administrative; amortization; restructuring and asset impairment charges; interest expense; loss on debt redemption, gain on sale of strategic investments and income tax (benefit) expense.

For each such Adjusted Pro Forma financial measure, the adjustment provides management with information about the Company’s underlying operating performance that enables a more meaningful comparison of its financial results in different reporting periods. For example, since Rovi Corporation does not acquire businesses on a predictable cycle, management excludes amortization of intangibles from acquisitions, transaction costs and transition and integration costs in order to make more consistent and meaningful evaluations of the Company’s operating expenses. Management also excludes the effect of restructuring and asset impairment charges, insurance settlements, losses on debt redemption, payment of court awarded fees and gains on sale of strategic investments for the same reason.  Management excludes discontinued product lines as it believes this exclusion is as meaningful for comparability purposes as excluding the results from a business that meets the criteria to be classified as discontinued operations on a GAAP basis.  Management excludes the impact of equity-based compensation to help it compare current period operating expenses against the operating expenses for prior periods and to eliminate the effects of this non-cash item, which, because it is based upon estimates on the grant dates, may bear little resemblance to the actual values realized upon the future exercise, expiration, termination or forfeiture of the equity-based compensation, and which, as it relates to stock options and stock purchase plan shares, is required for GAAP purposes to be estimated under valuation models, including the Black-Scholes model used by Rovi Corporation.  Management includes the benefit of the convertible debt call option, which allows the Company to purchase up to 7.96 million shares of its own stock at approximately $28.28, that is
 
 

 
excluded from GAAP EPS calculation as it is anti-dilutive, because the pragmatic reality is management would exercise this option rather then allow this dilution to occur.

Management uses these Adjusted Pro Forma measures to help it make budgeting decisions, including decisions that affect operating expenses and operating margin.  Further, Adjusted Pro Forma financial information helps management track actual performance relative to financial targets.  Making Adjusted Pro Forma financial information available to investors, in addition to GAAP financial information, may also help investors compare the Company’s performance with the performance of other companies in our industry, which may use similar financial measures to supplement their GAAP financial information.

Management recognizes that the use of Adjusted Pro Forma measures has limitations, including the fact that management must exercise judgment in determining which types of charges should be excluded from the Adjusted Pro Forma financial information.  Because other companies, including companies similar to Rovi Corporation, may calculate their non-GAAP financial measures differently than the Company calculates its Adjusted Pro Forma measures, these Adjusted Pro Forma measures may have limited usefulness in comparing companies.  Management believes, however, that providing this Adjusted Pro Forma financial information, in addition to the GAAP financial information, facilitates consistent comparison of the Company’s financial performance over time. The Company has provided Adjusted Pro Forma financial information to the investment community, not as an alternative, but as an important supplement to GAAP financial information; to enable investors to evaluate the Company’s core operating performance in the same way that management does. Reconciliations between pro forma and Adjusted Pro Forma results of operations are provided in the tables below.

Dial-in Information
Rovi Corporation will hold an investor conference call at 4:30 p.m. Eastern time on February 11, 2010.  Investors and analysts interested in participating in the conference are welcome to call 877-941-8609 (or international +1 480-629-9818) and reference the Rovi call.

The conference call can also be accessed via live webcast at www.rovicorp.com on February 11, 2010 at 4:30 p.m. Eastern time. The on-demand audio webcast of the earnings conference call will be made available as soon as practicable after the live webcast ends.

A replay of the conference call will be available through February 15, 2010 and can be accessed by calling 800-406-7325 (or international +1 303-590-3030) and entering passcode 4202156#. A replay of the audio webcast will be available on Rovi Corporation’s website approximately 1-2 hours after the live webcast ends and will remain on Rovi Corporation’s website until our next quarterly earnings call.

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

Rovi Corporation holds over 4,400 issued or pending patents and patent applications worldwide. It is headquartered in Santa Clara, California, with numerous offices across the United States and around the world including Japan, Hong Kong, Luxembourg, and the United Kingdom. More information about Rovi Corporation can be found at www.rovicorp.com.
 

All statements contained herein, including the quotations attributed to Mr. Amoroso and Mr. Budge, that are not statements of historical fact, including statements that use the words “will,” “believes,” “anticipates,” “estimates,” “expects,” “intends” or “looking to the future” or similar words that describe the Company’s or its management’s
 

 
future plans, objectives, or goals, are “forward-looking statements” and are made pursuant to the Safe-Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, the Company’s estimates of future revenues and earnings, business strategies, and future opportunities for product, market or customer expansion.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to be materially different from the historical results and/or from any future results or outcomes expressed or implied by such forward-looking statements. Such factors include, among others, the Company’s ability to successfully execute on its strategic plan and customer demand for and industry acceptance of the Company’s technologies and integrated solutions. Such factors are further addressed in the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2009 and such other documents as are filed with the Securities and Exchange Commission from time to time (available at www.sec.gov). The Company assumes no obligation, except as required by law, to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

# # #
Investor Contact:
James Budge
Rovi Corporation
+1 (408) 562-8400

Lauren Landfield
Rovi Corporation
+1 (408) 562-8400
 
 

 
ROVI CORPORATION
                       
GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
                   
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                       
(UNAUDITED)
                       
                         
   
Three Months Ended
   
Twelve Months Ended
 
   
December 31,
   
December 31,
 
   
2009
   
2008
   
2009
   
2008
 
                         
Revenues
  $ 138,002     $ 118,170     $ 483,911     $ 330,045  
                                 
Costs and expenses:
                               
Cost of revenues
    20,511       13,233       65,916       44,568  
Research and development
    24,912       24,941       94,632       67,714  
Selling, general and administrative
    34,700       34,584       133,207       114,614  
Depreciation
    4,804       5,010       18,408       13,832  
Amortization
    20,637       20,417       81,934       59,139  
Restructuring and asset impairment charges
    -       -       53,619       -  
Total costs and expenses
    105,564       98,185       447,716       299,867  
                                 
Operating income from continuing operations
    32,438       19,985       36,195       30,178  
Interest expense
    (10,595 )     (19,136 )     (52,028 )     (54,834 )
Interest income and other, net
    696       1,236       4,394       11,732  
Loss on debt redemption
    -       -       (8,687 )     -  
Gain on sale of strategic investments
    -       -       -       5,238  
Income (loss) from continuing operations before income taxes
    22,539       2,085       (20,126 )     (7,686 )
Income tax expense (benefit)
    22,007       (5,809 )     (1,421 )     (23,409 )
Income (loss) from continuing operations, net of tax
    532       7,894       (18,705 )     15,723  
Discontinued operations, net of tax
    2,095       (219,115 )     (34,246 )     (129,783 )
Net income (loss)
  $ 2,627     $ (211,221 )   $ (52,951 )   $ (114,060 )
                                 
Basic earnings per common share:
                               
Basic earnings per share from continuing operations
  $ 0.01     $ 0.08     $ (0.18 )   $ 0.18  
Basic earnings per share from discontinued operations
  $ 0.02     $ (2.15 )   $ (0.34 )   $ (1.50 )
Basic net earnings per share
  $ 0.03     $ (2.07 )   $ (0.52 )   $ (1.32 )
                                 
Shares used in computing basic earnings per share
    101,895       100,990       100,860       85,334  
                                 
Diluted earnings per common share:
                               
Diluted earnings per share from continuing operations
  $ 0.00     $ 0.08     $ (0.18 )   $ 0.18  
Diluted earnings per share from discontinued operations
  $ 0.02     $ (2.15 )   $ (0.34 )   $ (1.50 )
Diluted net earnings per share
  $ 0.02     $ (2.07 )   $ (0.52 )   $ (1.32 )
                                 
Shares used in computing diluted earnings per share
    104,549       101,001       100,860       85,357  
                                 
See notes to the GAAP Consolidated Financial Statements in our Form 10-K.
                         
 
 

 
ROVI CORPORATION
           
GAAP CONSOLIDATED BALANCE SHEETS
           
(IN THOUSANDS)
           
(UNAUDITED)
           
ASSETS
           
   
December 31,
   
December 31,
 
   
2009
   
2008
 
Current assets:
           
Cash and cash equivalents
  $ 165,410     $ 199,188  
Short-term investments
    107,362       77,914  
Restricted cash
    36,838       -  
Trade accounts receivable, net
    71,875       84,020  
Taxes receivable
    6,363       -  
Deferred tax assets, net
    7,844       29,537  
Prepaid expenses and other current assets
    10,661       12,053  
Assets held for sale
    -       329,522  
Total current assets
    406,353       732,234  
Long-term marketable securities
    26,674       84,955  
Property and equipment, net
    43,124       45,352  
Finite-lived intangible assets, net
    779,371       895,071  
Long-term deferred tax assets, net
    13,691       -  
Other assets
    27,861       50,387  
Goodwill
    854,065       828,185  
    $ 2,151,139     $ 2,636,184  
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current liabilities:
               
Accounts payable and accrued expenses
  $ 81,369     $ 85,686  
Taxes payable
    -       8,996  
Deferred revenue
    16,536       14,376  
Current portion of debt and capital lease obligations
    18,486       5,842  
Liabilities held for sale
    -       56,021  
Total current liabilities
    116,391       170,921  
Taxes payable, less current portion
    80,675       73,009  
Deferred tax liability, net
    -       9,914  
Long-term debt and capital lease obligations, less current portion
    411,551       855,160  
Deferred revenue, less current portion
    4,919       4,909  
Other non current liabilities
    17,334       7,076  
      630,870       1,120,989  
Stockholders’ equity:
               
Common stock
    106       103  
Treasury stock
    (25,068 )     (25,068 )
Additional paid-in capital
    1,657,888       1,602,667  
Accumulated other comprehensive loss
    (2,078 )     (4,879 )
Accumulated deficit
    (110,579 )     (57,628 )
Total stockholders’ equity
    1,520,269       1,515,195  
    $ 2,151,139     $ 2,636,184  
                 
See notes to the GAAP Consolidated Financial Statements in our Form 10-K.
               
 

 
 
ROVI CORPORATION
                                   
ADJUSTED PRO FORMA RECONCILIATION
                                   
(IN THOUSANDS)
                                   
(UNAUDITED)
                                   
   
Three Months Ended
   
Three Months Ended
 
   
December 31, 2009
   
December 31, 2008
 
                                     
   
GAAP
         
Adjusted
   
GAAP
         
Adjusted
 
Revenues:
 
Pro Forma (8)
   
Adjustments
   
Pro Forma
   
Pro Forma
   
Adjustments
   
Pro Forma
 
  Service providers(1)
  $ 62,451     $ -     $ 62,451     $ 50,890     $ -     $ 50,890  
  Consumer electronics manufacturers (1)
    61,247       -       61,247       53,495       -       53,495  
  Other
    14,304       -       14,304       13,785       -       13,785  
      138,002       -       138,002       118,170       -       118,170  
Costs and expenses:
                                               
  Cost of revenues (2)
    20,511       (3,651 )     16,860       13,233       (575 )     12,658  
  Research and development (3)
    24,912       (1,465 )     23,447       24,941       (1,252 )     23,689  
  Selling, general and adminstrative (4)
    34,700       (4,718 )     29,982       34,585       (5,423 )     29,162  
  Depreciation (5)
    4,804       -       4,804       5,010       -       5,010  
  Amortization
    20,637       (20,637 )     -       20,417       (20,417 )     -  
  Total operating expenses
    105,564       (30,471 )     75,093       98,186       (27,667 )     70,519  
Operating income from continuing operations
    32,438       30,471       62,909       19,984       27,667       47,651  
Interest expense (6)
    (10,595 )     5,396       (5,199 )     (12,986 )     3,583       (9,403 )
Interest income and other, net
    696       -       696       1,235       -       1,235  
Income from continuing operations before taxes
    22,539       35,867       58,406       8,233       31,250       39,483  
Income tax expense (benefit) (7)
    22,007       (15,582 )     6,425       (3,780 )     10,431       6,651  
Income from continuing operations
  $ 532     $ 51,449     $ 51,981     $ 12,013     $ 20,819     $ 32,832  
Diluted income per common share from continuing operations
  $ 0.00             $ 0.50     $ 0.12             $ 0.32  
Shares used in computing diluted net income per common share (9)
    104,549       (541 )     104,008       101,001               101,001  
                                                 
(1)    Service provider revenue includes any revenue related to an IPG deployed by a service provider in a subscriber household regardless of whether
the ultimate payment for that IPG comes from the service provider or from a manufacturer of a set-top box. IPG revenues for IPGs included in
a set-top box deployed by a service provider where payment was made by the set-top box manufacturer were previously classified in Consumer
electronics manufacturers. Prior period amounts have been reclassified to conform to the current period presentation.
(2)    Adjustments to cost of revenues consist of the following:
                                       
              2009       2008                          
         Equity based compensation
          $ (279 )   $ (190 )                        
         Transition and integration costs
            -       (385 )                        
         Court awarded fees
            (3,372 )     -                          
             Total adjustment
          $ (3,651 )   $ (575 )                        
 
(3)    Adjustments include $1.5 million and $1.0 million for equity based compensation and $0.0 million and $0.3 million for transition and
integration costs in Q409 and Q408, respectively.
(4)    Adjustments to selling, general and administrative consist of the following:
              2009       2008                          
         Equity based compensation
          $ (4,718 )   $ (3,101 )                        
         Transition and integration costs
            -       (2,322 )                        
               Total adjustment
          $ (4,718 )   $ (5,423 )                        
                                                 
(5)    While depreciation is a non-cash item, it is included in Adjusted Pro Forma Income From Continuing Operations as management considers
it a proxy for capital expenditures.
(6)    Adjustments eliminate non-cash interest expense such as amortization of note issuance costs and the convertible note discount recorded under
ASC 470-20 (formerly FSP APB 14-1.)
(7)    For 2009, utilization of net operating losses result in an adjusted pro forma tax rate of 11%. For 2008, tax effect adjustments at 33%.
(8)    GAAP Pro Forma information for Q409 is the same as our GAAP results. No adjustments have been made to the GAAP results since they are
comparative with prior quarters' pro forma results.
(9)    Recognize benefit of convertible debt call option, which allows the Company to purchase up to 7.96 million shares of its own stock at
approximately $28.28, that is excluded from GAAP EPS calculation as it is anti-dilutive.
 

 
ROVI CORPORATION
                                   
ADJUSTED PRO FORMA RECONCILIATION
                                   
(IN THOUSANDS)
                                   
(UNAUDITED)
                                   
   
Twelve Months Ended
   
Twelve Months Ended
 
   
December 31, 2009
   
December 31, 2008
 
   
GAAP
         
Adjusted
   
GAAP
         
Adjusted
 
Revenues:
 
Pro Forma (10)
 
Adjustments
   
Pro Forma
   
Pro Forma
   
Adjustments
   
Pro Forma
 
  Service providers(1)
  $ 230,727     $ -     $ 230,727     $ 197,027     $ -     $ 197,027  
  Consumer electronics manufacturers (1)
    199,905       -       199,905       183,328       -       183,328  
  Other
    53,279       -       53,279       51,692       -       51,692  
      483,911       -       483,911       432,047       -       432,047  
Costs and expenses:
                                               
  Cost of revenues (2)
    65,916       (4,652 )     61,264       57,757       (1,709 )     56,048  
  Research and development (3)
    94,632       (4,697 )     89,935       87,813       (3,621 )     84,192  
  Selling, general and adminstrative (4)
    133,207       (18,745 )     114,462       113,814       13,390       127,204  
  Depreciation (5)
    18,408       -       18,408       18,969       -       18,969  
  Amortization
    81,934       (81,934 )     -       82,258       (82,258 )     -  
  Restructuring and asset impairment charges (6)
    53,619       (53,619 )     -       -       -       -  
  Total operating expenses
    447,716       (163,647 )     284,069       360,611       (74,198 )     286,413  
Operating income from continuing operations
    36,195       163,647       199,842       71,436       74,198       145,634  
Interest expense (7)
    (45,433 )     17,037       (28,396 )     (51,616 )     14,126       (37,490 )
Interest income and other, net
    4,394       -       4,394       7,288       -       7,288  
Loss on debt redemption (8)
    (8,687 )     8,687       -       -       -       -  
Gain on sale of strategic investments
    -       -       -       5,238       (5,238 )     -  
(Loss) income from continuing operations before taxes
    (13,531 )     189,371       175,840       32,346       83,086       115,432  
Income tax expense (benefit) (9)
    797       18,545       19,342       (14,248 )     39,378       25,130  
(Loss) income from continuing operations
  $ (14,328 )   $ 170,826     $ 156,498     $ 46,594     $ 43,708     $ 90,302  
Diluted (loss) income per common share from continuing operations
  $ (0.14 )           $ 1.52     $ 0.45             $ 0.88  
Shares used in computing diluted net (loss) income per common share (11)
    100,860       1,254       102,114       101,646               101,646  
                                                 
(1)    Service provider revenue includes any revenue related to an IPG deployed by a service provider in a subscriber household regardless of whether
the ultimate payment for that IPG comes from the service provider or from a manufacturer of a set-top box. IPG revenues for IPGs included in
a set-top box deployed by a service provider where payment was made by the set-top box manufacturer were previously classified in Consumer
electronics manufacturers. Prior period amounts have been reclassified to conform to the current period presentation.
(2)    Adjustments to cost of revenues consist of the following:
              2009       2008                          
         Equity based compensation
          $ (783 )   $ (500 )                        
         Transition and integration costs
            (497 )     (1,209 )                        
         Court awarded fees
            (3,372 )     -                          
                Total adjustment
          $ (4,652 )   $ (1,709 )                        
(3)    Adjustments include $4.5 million and $2.2 million for equity based compensation and $0.2 million and $1.4 million for transition
and integration costs in the years ended December 31, 2009 and 2008, respectively.
(4)    Adjustments to selling, general and administrative consist of the following:
 
              2009       2008                          
         Equity based compensation
          $ (17,123 )   $ (11,834 )                        
         Transaction costs
            (617 )     (681 )                        
         Transition and integration costs
            (1,005 )     (6,595 )                        
         Insurance settlement
            -       32,500                          
             Total adjustment
          $ (18,745 )   $ 13,390                          
(5)    While depreciation is a non-cash item, it is included in Adjusted Pro Forma Income From Continuing Operations as management considers
it a proxy for capital expenditures.
(6)    Adjustments eliminate $44.7 million of non-cash asset impairment charges and $8.9 million of restructuring charges.
(7)    Adjustments eliminate non-cash interest expense such as amortization of note issuance costs and the convertible note discount recorded under
ASC 470-20 (formerly FSP APB 14-1.)
(8)    Adjustments eliminate $5.6 million of non-cash charges and $3.1 million of non-recurring charges in connection with the redemption of 11% Senior Notes.
(9)    For 2009, utilization of net operating losses result in an adjusted pro forma tax rate of 11%. For 2008, tax effect adjustments at 34%
and eliminate discrete tax benefit of $11.5 million in the year ended December 31, 2008.
(10)    GAAP Pro Forma information is necessary in 2009 to provide comparative operating results. GAAP Pro Forma assumes $275 million of
net proceeds from the sale of the Media Properties reduced the debt issued in conjunction with acquiring Gemstar. As such, GAAP Pro Forma
includes a $6.6 million reduction in interest expense and a $2.2 million reduction in tax benefit.
(11)    Adjust to include dilutive potential common shares as adjustments to pro forma loss from continuing operations resulted in Adjusted Pro Forma Net Income.