Macrovision Corporation Reports Results for the First Quarter of 2005;

    Business Editors

    SANTA CLARA, Calif.--(BUSINESS WIRE)--May 2, 2005--Macrovision Corporation (Nasdaq:MVSN) announced today first quarter 2005 net revenues of $51.3 million, an increase of 35% compared to $38.0 million in the first quarter of 2004. Pro forma earnings (before amortization of intangibles from acquisitions, non-cash deferred compensation expense, impairment gains and losses on investments, and adjustments for changes to our tax rate, as applicable) were $11.5 million. Pro forma diluted earnings per share for the quarter were $0.22. The Company generated $15.1 million of cash from operations and its ending cash and cash equivalents, short-term investments and long term marketable securities were $265.2 million.
    GAAP net income for the first quarter of 2005 was $5.5 million which includes a charge of $5.8 million as a result of writing down an investment in Digimarc to market. Diluted GAAP earnings per share for the quarter were $0.11.
    "We are very pleased with our first quarter results," said Bill Krepick, President and CEO at Macrovision. "Our software business turned in a strong performance and for the first time our software technologies' revenues exceeded our entertainment technologies' revenues. We increased our customer base for both our new Hawkeye(TM) peer-to-peer anti-piracy service and our RipGuard DVD(TM) anti-ripping product. We are pleased that we were able to manage our costs even in the face of additional Sarbanes Oxley expenses and continued investment in new products and in the integration of our acquired products. We were also pleased that we filed our first 10-K under the rules governed by Sarbanes Oxley, and we received an unqualified opinion from our independent registered public accounting firm on our internal controls."
    Krepick continued, "Looking ahead, we are confirming our FY2005 guidance for revenues to be between $220 and $230 million, but increasing our guidance for pro forma EPS which we expect to be in the $1.05-$1.07 range, and GAAP earnings per share in the range of $0.83-$0.86. For Q2 2005, we are estimating that our revenues will be in the range of $47-$49 million and our pro forma EPS will be in the range of $0.15-$0.17. Our forecasts take into account the fact that we have a number of new products that we expect will slowly gain traction as the year progresses and will culminate in a strong Q4, which will reflect historical seasonality in both of our business units. These projections include the impact of the InstallShield(R) acquisition for the full year."
    Immediately following the Q1 2005 earnings release, Macrovision will hold an investor conference call on May 2, 2005, from 5:00 p.m. to 6:00 p.m. ET. Investors and analysts interested in participating in the conference are welcome to call 800-219-6110 (or international +1 303-262-2050) and reference the Macrovision call.
    The conference call can also be accessed via live Webcast at www.macrovision.com or www.fulldisclosure.com (or www.streetevents.com for subscribers) on May 2, 2005 at 5:00 p.m. ET. Approximately 1-2 hours after the live Webcast ends, the on-demand Webcast of Macrovision's earnings conference call can be accessed until June 1, 2005.
    Investors and analysts interested in listening to a recorded replay of the conference are welcome to call 800-405-2236 (or international +1 303-590-3000) and enter passcode 11028650#. Access to the replay is available through May 3, 2005.

    About Macrovision

    Macrovision develops and markets content value management and software value management technologies for the home video, PC games, music, cable/satellite, consumer software, and enterprise software industries. Macrovision holds a total of 187 issued or pending United States patents and 1129 issued or pending international patents, and continues to increase its patent portfolio with new and innovative technologies in related fields. Macrovision has its corporate headquarters in Santa Clara, California, with other offices in Schaumburg, Illinois, the United Kingdom, Amsterdam, Frankfurt, Tel Aviv, Tokyo, Hong Kong, Taipei and Seoul.

    Note to Editors: For more information on Macrovision Corporation and its products, please visit www.macrovision.com.

    (C) 2005 Macrovision Corporation. Macrovision, FLEXnet, Hawkeye, InstallShield and RipGuard DVD are registered trademarks or trademarks of Macrovision Corporation. All other brands and product names and trademarks are the registered property of their respective companies.

    All statements contained herein, including the quotations attributed to Mr. Krepick, as well as oral statements that may be made by the Company or by officers, directors or employees of the Company acting on the Company's behalf, 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 the Company's forecast of future revenues and earnings, the business strategies and product plans of the Company and the features and benefits of the products of the Company.
    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. Among the important factors that could cause results to differ materially are the following: the failure of markets for home video, audio CDs, consumer or enterprise software value management, or markets for the technological protection of copyrighted materials contained in such products, to continue, develop or expand, and the failure of the Company's products to achieve or sustain market acceptance or to meet, or continue to meet, the changing demands of content or software providers. Other factors include those outlined in the Company's Annual Report on Form 10-K for 2004 and such other documents as are filed with the Securities and Exchange Commission from time to time. These factors may not constitute all factors that could cause actual results to differ materially from those discussed in any forward-looking statement. The Company operates in a continually changing business environment and new factors emerge from time to time. The Company cannot predict such factors, nor can it assess the impact, if any, of such factors on the Company or its results. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results. The Company is not obligated to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.
    Macrovision uses pro forma condensed consolidated statements of income in the presentation of financial results and earnings guidance. Management believes that this presentation may be more meaningful in analyzing the results of operations and income generation, as non-cash, non-operating or non-recurring items (such as amortization of intangibles from acquisitions, amortization of deferred stock-based compensation, impairment gains and losses on investments, and adjustments for changes to the tax rate) are excluded from the pro forma earnings calculation. The Company believes this presentation is more indicative of its ongoing operational performance. The tables below present the differences between pro forma earnings and GAAP net income on an absolute and per share basis.

Macrovision Corporation and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (In thousands, except per share data)

Three Months Ended March 31, -------------------- 2005 2004 -------- --------- Net Revenues $51,257 $37,982 Costs and expenses: Costs of revenues, including amortization of intangibles of $2,416 and $779 for the three months ended March 31, 2005 and 2004, respectively 7,794 3,084 Research and development 8,697 5,587 Selling and marketing 12,922 8,556 General and administrative 8,426 5,513 Deferred compensation expense relating to Globetrotter -- 185 Impairment losses (gains) on investments, net 5,726 (1,040) -------- --------- Total costs and expenses 43,565 21,885 -------- --------- Income before interest and income taxes 7,692 16,097 Interest and other income, net 937 728 -------- --------- Income before income taxes 8,629 16,825 Income taxes 3,162 6,057 -------- --------- Net income $ 5,467 $10,768 ======== ========= Diluted earnings per share $ 0.11 $ 0.21 ======== ========= Shares used in computing diluted earnings per share 51,341 50,210 ======== =========

Macrovision Corporation and Subsidiaries Pro forma Reconciliation of Condensed Consolidated Statements of Income (Unaudited) (1) (In thousands, except per share data)

Three Months Ended March 31, -------------------- 2005 2004 -------- --------- Net income $ 5,467 $10,768 Add: Adjustment to pro forma tax rate 358 -- Amortization of intangibles from acquisitions (net of taxes) 1,790 647 Deferred compensation expense relating to Globetrotter -- 185 Impairment losses (gains) on investments, net (net of taxes) 3,865 (670) -------- --------- Pro forma net income $11,480 $10,930 ======== ========= Diluted earnings per share reconciliation: Net income $ 0.11 $ 0.21 Add: Adjustment to pro forma tax rate 0.01 -- Amortization of intangibles from acquisitions (net of taxes) 0.03 0.01 Deferred compensation expense relating to Globetrotter -- 0.01 Impairment losses on investments, net of gains (net of taxes) 0.07 (0.01) -------- --------- Pro forma diluted earnings per share $ 0.22 $ 0.22 ======== ========= Shares used in computing diluted earnings per share 51,341 50,210 ======== =========

Notes:

(1) Pro forma results for the three ended March 31, 2005 and 2004 are presented for information purposes only. These results present the operating results of Macrovision Corporation, excluding costs associated with amortization of intangibles from acquisitions, amortization of capitalized patents from our acquisition of TTR's assets in the second quarter of 2003, deferred compensation expense, and impairment gains and losses on investments. These costs were $6,013 for the three month period ended March 31, 2005, net of taxes when applicable, using the Company's pro forma tax rate. The amortization expense for capitalized TTR patents included in cost of revenues was $236 for the three months ended March 31, 2005. The format presented above is not in accordance with Generally Accepted Accounting Principles.

Macrovision Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) (In thousands)

March 31, December 31, 2005 2004 ---------- ------------ ASSETS Cash and cash equivalents $113,740 $104,957 Restricted cash -- 859 Short-term investments 122,449 101,299 Accounts receivable, net 39,047 41,468 Prepaid expenses and other assets 13,976 12,643 ---------- ------------

Total Current Assets 289,212 261,226

Property and equipment, net 9,381 9,295 Long-term marketable investment securities 29,024 47,414 Goodwill 74,188 74,529 Other intangibles from acquisitions, net 28,724 31,185 Deferred tax assets 17,033 17,151 Patents and other assets 11,537 11,673 ---------- ------------ TOTAL ASSETS $459,099 $452,473 ========== ============

LIABILITIES Accounts payable $ 5,127 $ 5,907 Accrued expenses and income taxes payable 27,558 32,639 Deferred revenue 18,032 14,604 ---------- ------------

Total Current Liabilities 50,717 53,150

Other liabilities 1,553 979 ---------- ------------

TOTAL LIABILITIES 52,270 54,129

STOCKHOLDERS' EQUITY 406,829 398,344 ---------- ------------ TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $459,099 $452,473 ========== ============

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CONTACT: Macrovision Corporation George Monk, 408-562-8400 ir-info@macrovision.com

KEYWORD: CALIFORNIA INDUSTRY KEYWORD: HARDWARE COMPUTERS/ELECTRONICS SOFTWARE EARNINGS CONFERENCE CALLS SOURCE: Macrovision Corporation

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