Macrovision Corporation Reports Results for the Third Quarter of 2005

Macrovision Corporation (Nasdaq:MVSN) announced todaythird quarter 2005 net revenues of $46.6 million, a decrease of 5%compared to $48.9 million in the third quarter of 2004. Pro formaearnings (before amortization of intangibles from acquisitions,in-process research and development charges, impairment oninvestments, and adjustments for changes to the tax rate, asapplicable) were $7.0 million, compared to $11.2 million in the thirdquarter of 2004. Pro forma diluted earnings per share for the quarterwere $0.14, compared to $0.22 in the same quarter of 2004. The Companygenerated $4.0 million of cash from operations and its ending cash andcash equivalents, short-term investments and long term marketablesecurities were $246.3 million.

GAAP net income for the third quarter of 2005 was $6.1 million,compared to $1.3 million for the third quarter of 2004. Diluted GAAPearnings per share for the quarter were $0.12, compared with $0.03 forthe comparable quarter in 2004.

"The growth rate in DVD sales continues to decline, which impactedrevenues from our copy protection business. The result being that ourrevenues, while within the range of guidance previously provided, wereinsufficient to support our earnings per share guidance," said FredAmoroso, President and CEO of Macrovision. "We are pleased, however,to have completed our acquisition of Trymedia during the quarter andto have added considerable experience and depth to our managementteam. Over the past three months we have been working aggressively onour new strategic direction for the future by identifying theorganization, management talent and actions needed to leverage ourexisting leadership position in the marketplace toward achieving ahigher value and broader relationship with our customers. To that end,we initiated an action today to consolidate our divisional operationsthat will result in a reduction in worldwide headcount byapproximately 10%. We believe that these collective actions will allowus to expand our market leadership while allowing us to realizesynergies in our business processes resulting in improved operatingmargins."

"As a result of our current outlook in the copy protectionbusiness, we are lowering our 2005 guidance for revenues to a range of$202 to $204 million. We expect Q4 revenues of between $60 and $62million. We are also lowering our pro forma EPS to be between $0.79and $0.81 for the full year of 2005 and between $0.28 and $0.30 forthe fourth quarter," added James Budge, Chief Financial Officer. "Weexpect to incur between $2 million and $3 million in restructuringcharges in Q4 as a result of our headcount reduction. We expect thisheadcount reduction combined with other operating expense reductionswill result in a reduction of $10 million to $12 million in annualoperating expense, primarily realized in 2006."

Macrovision will hold an investor conference call on November 2,2005, at 5:00 p.m. ET. Investors and analysts interested inparticipating in the conference are welcome to call 800-366-7417 (orinternational +1 303-275-2170) and reference the Macrovision call.

The conference call can also be accessed via live Webcast atwww.macrovision.com or www.fulldisclosure.com (or www.streetevents.comfor subscribers) on November 2, 2005 at 5:00 p.m. ET. The on-demandaudio Webcast of Macrovision's earnings conference call can beaccessed approximately 1-2 hours after the live Webcast ends.

Investors and analysts interested in listening to a recordedreplay of the conference are welcome to call 800-405-2236 (orinternational +1 303-590-3000) and enter passcode 11041889#. Access tothe replay is available through November 3, 2005.

About Macrovision

Macrovision develops and markets content value management andsoftware value management technologies for the home video, PC games,music, cable/satellite, consumer software, and enterprise softwareindustries. Macrovision holds a total of 220 issued or pending UnitedStates patents and 1,200 issued or pending international patents, andcontinues to increase its patent portfolio with new and innovativetechnologies in related fields. Macrovision has its corporateheadquarters in Santa Clara, California, with other offices across theUnited States and around the world.

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

(C) 2005 Macrovision Corporation. Macrovision is a registeredtrademark of Macrovision Corporation. All other brands and productnames and trademarks are the registered property of their respectivecompanies.

All statements contained herein, including the quotationsattributed to Mr. Amoroso and Mr. Budge, as well as oral statementsthat may be made by the Company or by officers, directors or employeesof the Company acting on the Company's behalf, that are not statementsof 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'sor its management's future plans, objectives, or goals, are"forward-looking statements" and are made pursuant to the Safe-Harborprovisions of the Private Securities Litigation Reform Act of 1995.These forward-looking statements include the Company's forecast offuture revenues and earnings, the business strategies and productplans of the Company and the expected results of the headcount andexpense reduction action of the Company.

Such forward-looking statements involve known and unknown risks,uncertainties and other factors that could cause the actual results ofthe Company to be materially different from the historical resultsand/or from any future results or outcomes expressed or implied bysuch forward-looking statements. Among the important factors thatcould cause results to differ materially are the following: thefailure of markets for home video, audio CDs, consumer or enterprisesoftware value management, or markets for the technological protectionof copyrighted materials contained in such products, to continue,develop or expand, and the failure of the Company's products toachieve or sustain market acceptance or to meet, or continue to meet,the changing demands of content or software providers. Other factorsinclude those outlined in the Company's Annual Report on Form 10-K forthe year ended December 31, 2004, the latest Quarterly Report on Form10-Q for the period ended June 30, 2005 and such other documents asare filed with the Securities and Exchange Commission from time totime (available at www.sec.gov). These factors may not constitute allfactors that could cause actual results to differ materially fromthose discussed in any forward-looking statement. The Company operatesin a continually changing business environment and new factors emergefrom time to time. The Company cannot predict such factors, nor can itassess the impact, if any, of such factors on the Company or itsresults. Accordingly, forward-looking statements should not be reliedupon as a prediction of actual results. The Company assumes noobligation to revise or update any forward-looking statements in orderto reflect events or circumstances that may arise after the date ofthis release.

Macrovision uses pro forma condensed consolidated statements ofincome in the presentation of financial results and earnings guidance.Management believes that this presentation may be more meaningful inanalyzing the results of operations and income generation, asnon-cash, non-operating or non-recurring items (such as amortizationof intangibles from acquisitions, in-process research and development,amortization of deferred stock-based compensation, impairment gainsand losses on investments, and adjustments for changes to the taxrate) are excluded from the pro forma earnings calculation. TheCompany believes this presentation is more indicative of its ongoingoperational performance. The tables below present the differencesbetween pro forma earnings and GAAP net income on an absolute and pershare basis.


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



Three Months Nine Months
Ended September 30, Ended September 30,
-------------------- -------------------
2005 2004 2005 2004
---------- -------- --------- ---------
Net Revenues $46,590 $48,859 $142,261 $122,511
Costs and expenses:
Costs of revenues, including
amortization of intangibles
of $2,967 and $2,403 for
the three months ended
September 30, 2005 and
2004, respectively, and
$7,849 and $3,959 for the
nine months ended September
30, 2005 and 2004,
respectively 9,113 8,478 24,372 14,802
Research and development 8,583 8,409 25,205 19,704
Selling and marketing 13,749 11,227 39,698 28,553
General and administrative 8,804 6,635 24,691 17,268
Deferred compensation
expense relating to
Globetrotter -- -- -- 185
In-process research and
development 500 5,400 500 5,400
Impairment losses (gains) on
investments (78) 5,298 5,648 4,258
---------- -------- --------- ---------
Total costs and expenses 40,671 45,447 120,114 90,170
---------- -------- --------- ---------
Income before interest and
income taxes 5,919 3,412 22,147 32,341
Interest and other income, net 1,317 755 3,228 2,468
---------- -------- --------- ---------
Income before income taxes 7,236 4,167 25,375 34,809
Income taxes 1,148 2,843 7,750 13,874
---------- -------- --------- ---------
Net income $6,088 $1,324 $17,625 $20,935
========== ======== ========= =========
Diluted earnings per share $0.12 $0.03 $0.34 $0.42
========== ======== ========= =========
Shares used in computing
diluted earnings per share 51,340 50,671 51,305 50,430
========== ======== ========= =========




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


Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
2005 2004 2005 2004
---------- -------- --------- ---------
Net income $6,088 $1,324 $17,625 $20,935
Add:
Amortization of intangibles
from acquisitions
(net of taxes) 2,058 1,677 5,510 2,965
In process research and
development (net of taxes) 323 3,456 323 3,456
Deferred compensation
expense relating to
Globetrotter -- -- -- 185
Adjustment to pro-forma tax
rate (1,419) 1,343 (1,248) 1,343
Impairment losses (gains) on
investments (net of taxes) (50) 3,393 3,645 2,725
---------- -------- --------- ---------
Pro forma net income $7,000 $11,193 $25,855 $31,609
========== ======== ========= =========
Diluted earnings per share
reconciliation:
Net income $0.12 $0.03 $0.34 $0.42
Add:
Amortization of
intangibles from
acquisitions (net of
taxes) 0.04 0.03 0.11 0.06
In process research and
development (net of
taxes) 0.01 0.07 0.01 0.07
Deferred compensation
expense relating to
Globetrotter -- -- -- --
Adjustment to pro-forma
tax rate (0.03) 0.03 (0.03) 0.03
Impairment losses (gains)
on investments (net of
taxes) -- 0.06 0.07 0.05
---------- -------- --------- ---------
Pro forma diluted earnings
per share research and
development $0.14 $0.22 $0.50 $0.63
========== ======== ========= =========
Shares used in computing
diluted earnings per share 51,340 50,671 51,305 50,430
========== ======== ========= =========


Notes:
(1) Pro forma results for the three and nine months ended
September 30, 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, in-process
research and development, amortization of capitalized patents
from our acquisition of TTR's assets in the second quarter of
2003, deferred compensation expense, adjustments to the pro
forma tax rate, and impairment losses (gains) on investments.
These costs were $912 for the three month period ended
September 30, 2005, and $8,230 for the nine month period
ending September 30, 2005, net of taxes when applicable,
using the Company's pro forma effective rate. The
amortization expense for capitalized TTR patents included in
cost of revenues was $221 and $688 for the three and nine
months ended September 30, 2005, respectively. The format
presented above is not in accordance with Generally Accepted
Accounting Principles.




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


September 30, December 31,
2005 2004
------------- ------------
ASSETS
Cash and cash equivalents $127,737 $104,957
Restricted cash -- 859
Short-term investments 97,544 101,299
Accounts receivable, net 34,311 41,468
Prepaid expenses and other assets 14,500 12,643
------------- ------------

Total Current Assets 274,092 261,226

Property and equipment, net 13,109 9,295
Long-term marketable investment
securities 21,065 47,414
Goodwill 108,745 74,529
Other intangibles from acquisitions, net 35,930 31,185
Deferred tax assets 12,071 17,151
Patents and other assets 11,031 11,673
------------- ------------
TOTAL ASSETS $476,043 $452,473
============= ============

LIABILITIES
Accounts payable $5,198 $5,907
Accrued expenses and income taxes payable 26,811 32,639
Deferred revenue 18,602 14,604
------------- ------------

Total Current Liabilities 50,611 53,150

Other liabilities 1,156 979
------------- ------------

TOTAL LIABILITIES 51,767 54,129

STOCKHOLDERS' EQUITY 424,276 398,344
------------- ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $476,043 $452,473
============= ============