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Macrovision Corporation Reports Record Net Revenues and Earnings for Second Quarter
SUNNYVALE, Calif.--(BUSINESS WIRE)--July 26, 1999--Macrovision Corporation announced today that second quarter 1999 net revenues were $8.1 million, compared with $5.7 million in the second quarter of 1998, an increase of 42%. Net income, excluding an in-process research and development write-off for the quarter, was $2.2 million or 65% higher than the $1.3 million recorded in last year's second quarter. Diluted earnings per share, excluding the in-process research and development write-off for the quarter, rose to $0.23 which was 35% higher than the diluted earnings per share of $0.17 in the second quarter a year ago. This increase occurred in spite of a 21% increase in shares used in computing diluted earnings per share, primarily due to the company's June 1998 secondary stock offering.

During the second quarter of 1999, Macrovision acquired the remaining outstanding shares in C-Dilla Ltd. for $12.3 million in cash and 109,200 shares of Macrovision stock. Including the $3.6 million Macrovision paid for its initial stake in C-Dilla Ltd. in 1998, the total acquisition was valued at $21.5 million. The acquisition of C-Dilla Ltd. resulted in a one time charge to operations of $4.3 million as a write-off of in-process research and development.

Net revenues for the first six months of 1999 increased to $15.2 million from $10.8 million for the first six months of 1998, an increase of 40%. Net income, excluding the in-process research and development write-off, for the first six months was $4.0 million, which was 74% higher than the $2.3 million recorded in the first six months of 1998. Diluted earnings per share, excluding the in-process research and development write-off, for the first six months of 1999 rose to $0.43, which was 43% higher than the earnings per share of $0.30 in the first six months of last year.

"We're very pleased with our second quarter results," said Bill Krepick, President and COO at Macrovision. "The home video industry continued on a high note for the Company with increased levels of revenue from all three product groups, videocassette, DVD and digital PPV. We are also very happy with the demand for SafeDisc(TM), our consumer multimedia software copy protection technology, which grew in excess of 118% over the first quarter. Our second quarter was important to us for a number of reasons including, the completion of the acquisition of C-Dilla Ltd. and the signing of Electronic Arts and Microsoft to SafeDisk contracts. The C-Dilla acquisition will provide the Company access to new technologies to help protect audio, software and data distributed via the Internet."

In other news, it was announced that Vic Viegas, the Company's CFO resigned effective August 1st to join a start-up company. Krepick complimented Viegas for his contributions to the Company during its pre and post IPO period, adding that "with Vic's leadership over the past three years he has built a strong Finance and Administrative group that is quite capable of carrying on as we fill his position. We wish him well."

About Macrovision

Macrovision Corporation develops and markets technologies to prevent the illicit duplication, reception or use of video and audio programs and computer software. The Company provides its products and services primarily to the home video, consumer multimedia software, pay-per-view, cable, satellite and video security markets. Macrovision has its headquarters in Sunnyvale, California with subsidiaries in London and Tokyo.

All statements contained herein, 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, constitute "forward-looking statements" and are made pursuant to the Safe-Harbor provisions of the Private Securities Litigation Reform Act of 1995.

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 or from any future results expressed or implied by such forward-looking statements. Such risks and uncertainties are outlined in the Company's Annual Report on Form 10-KSB for 1998 and its Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, both as filed with the Securities and Exchange Commission. 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.

Note to Editors: Additional background information on Macrovision Corporation is available through our Web Site at

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

Three Months         Six Months
Ended June 30,       Ended June 30,
         ----------------      ---------------
         1999        1998      1999      1998
       -------     -------   -------   -------
Net revenues      $  8,057    $  5,665  $ 15,220  $ 10,843

Costs and expenses:
 Cost of revenues      768         449     1,439       847
 Research and development        1,108         654     1,739     1,277
 Selling and marketing2,064       1,487     3,946     3,013
 General and administrative      1,196       1,128     2,577     2,287
 Amortization of intangibles
   from acquisition    109         --        109       --
 In-process research
  and development    4,286         --      4,286       --
        ------      ------   -------    ------
   Total costs and expenses      9,531       3,718    14,096     7,424

Operating (loss)/income         (1,474)      1,947     1,124     3,419
Interest and other income,
  net      405         172       823       303
       -------     -------   -------    ------
(Loss)/income before
  income taxes      (1,069)      2,119     1,947     3,722

(Benefit)/provision for
  income taxes        (469)        805       689     1,414
       -------     -------   -------   -------
(Loss)/net income  $  (600)   $  1,314  $  1,258  $  2,308
       =======     =======   =======   =======

Diluted (loss)/earnings per share:
  Net income before unusual
    charge         $  0.23    $   0.17  $   0.43  $   0.30
  In-process research
    and development  (0.29)        --      (0.30)      --
       -------     -------   -------   -------
   (Loss)/net income$ (0.06)   $   0.17  $   0.13  $   0.30
       =======     =======   =======   =======
Shares used in computing
  diluted earnings per share     9,452       7,838     9,390     7,787

   Macrovision Corporation And Subsidiaries
     Condensed Consolidated Balance Sheets
    (In thousands)

   June 30,December 31,
    1999    1998
 -------- --------
  Cash and cash equivalents         $   6,327$   3,513
  Short-term investments    9,635   22,877
  Accounts receivable, net  7,505    5,574
  Inventories     170      325
  Prepaid expenses and other assets     2,955    2,677
  -------  -------
         Total current assets26,592   34,966

  Property and equipment, net1,788    1,297
  Patents and other intangibles, net    1,638    1,526
  Long-term marketable investment
   securities  18,924   18,795
  Intangibles associated with
   acquisition, net        16,294       --
  Other assets  7,802    8,910
  -------  -------
         TOTAL ASSETS    $ 73,038 $ 65,494
  =======  =======
  Accounts payable      $   1,197$      803
  Accrued expenses3,290    2,691
  Deferred revenue1,627    1,207
  Income taxes payable         --      680
  Current portion of capital
   lease obligations348      112
  -------  -------
         Total current liabilities      6,462    5,493

  Capital lease obligations    19       76
  Deferred tax liabilities     --      383
  -------  -------
         TOTAL LIABILITIES  6,481    5,952

STOCKHOLDERS' EQUITY       66,557   59,542
  -------  -------
STOCKHOLDERS' EQUITY     $ 73,038 $ 65,494
  =======  =======

     Macrovision Corporation
     Victor Viegas, 408/743-8600
     Bill Krepick, 408/743-8600
     [email protected]

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