Wednesday July 29, 4:06 pm Eastern Time
Company Press Release
Gemstar International Group Limited Reports First
Quarter Financial Results
PASADENA, Calif.--(BUSINESS WIRE)--July 29, 1998--Gemstar International Group
Limited (NASDAQ: GMSTF - news) reported its results of operations for the first quarter of
fiscal year 1999 ended June 30, 1998.
Revenues for the first quarter were $33.9 million. Operating income was $17.9 million. Net
income was $14.1 million. Diluted earnings per share were $0.26 based on 55.3 million shares.
For the first quarter of fiscal year 1998 ended June 30, 1997, the Company reported revenues of
$25.6 million, operating loss of $1.6 million, net loss of $3.2 million, and diluted loss per share of
$0.07 based on 46.8 million shares. If the one-time merger costs of $11.7 million associated with
the acquisition of StarSight are excluded, the results for the first quarter ended June 30, 1997
would show an operating income of $10.1 million, net income of $8.5 million, and diluted earnings
per share of $0.17 based on 48.7 million shares. Compared to these results, revenues increased
by 32%, operating income increased by 77%, net income increased by 66% and diluted earnings
per share increased by 53% despite a 13% increase in the outstanding share count.
The increase in revenues is due to the continued growth in worldwide licensing income from the
Company's proprietary technologies and intellectual property in electronic program guide and
VCR Plus+(R) fields.
''We are pleased with the financial results of the first quarter for fiscal year 1999 and the
continued strong growth of our licensing business in both the electronic program guide and VCR
Plus+ areas,'' said Henry Yuen, chief executive officer. ''We have also made significant progress
in each sector of our business, including an important first step in the validation of our advertising
business model by our agreement with NBC.''
In June, Sony (NYSE:SNE - news) extended its VCR Plus+ license agreement with the
Company for seven additional years. In July, the Company announced an agreement with
Microsoft Corporation (NASDAQ:MSFT - news) which provides for closer cooperation in areas
of technical, marketing and advertising sales. In the same month, the Company concluded a
multi-element strategic agreement with NBC which provides for data carriage for Gemstar's
electronic program guide, support for a new brand of service to be made available on Gemstar's
GUIDE Plus+(tm) Gold product, an investment by NBC in a Gemstar-controlled subsidiary
aimed at exploring advertising opportunities, and NBC becoming a charter advertiser on
Gemstar's electronic program guide.
Yesterday, the Company filed a patent infringement suit seeking monetary damages and injunctive
relief against Prevue Networks, Inc., a wholly-owned subsidiary of United Video Satellite Group
(NASDAQ:UVSGA - news), for making, using or selling its Prevue Interactive product. The
action is consistent with the Company's policy to protect its intellectual property rights.
Gemstar develops, markets and licenses proprietary technologies and systems aimed at making
technology user-friendly for consumers. Gemstar's technology and intellectual property are
licensed to major companies in the consumer electronics, satellite, cable and personal computer
industries, including Aiwa, Akai, Cox, Daewoo, Funai, GTE, Hitachi, Hughes Network Systems,
JVC, LG Electronics (Goldstar), Matsushita (Panasonic, Quasar), MediaOne, Microsoft,
Mitsubishi, Orion, Philips (Magnavox, Philips), Samsung, Sanyo, Scientific-Atlanta, Sharp,
Shintom, Sony, Southern New England Telephone, Thomson (GE, Proscan, RCA), Time
Warner, Toshiba, Uniden and Zenith. Gemstar has 62 issued U.S. patents in the general area of
audio-visual technologies with over 1,000 claims and 73 foreign patents with over 1,000 claims.
The Company continues to pursue a worldwide patent prosecution program and has 135 pending
U.S. patent applications and 161 pending foreign patent applications.
Gemstar is a leading provider of electronic program guide services, which allow a user to view a
television program guide on screen, obtain details about a show, sort shows by themes or
categories, and select shows for tuning or recording, all through the remote control. In the United
States, data for Gemstar's electronic program guide services are carried on the ABC, FOX,
CBS, NBC, UPN and PBS networks by hundreds of over-the-air broadcast stations and on a
number of cable systems. Gemstar's interactive program guide has been built into a number of
models of new televisions, VCRs and TV/VCR combination units, and has been launched in
Canada, Taiwan and Japan, in addition to the United States. Gemstar's electronic program guide
is also licensed to cable, telco and MMDS service providers, and has been integrated into direct
broadcast satellite receivers, digital and advanced analog cable set-top boxes, PCTV and other
Internet devices.
Gemstar's VCR Plus+ instant programming system is a world standard for VCR programming.
VCR Plus+ allows a user to record a television show simply by entering a number -- the
PlusCode(R) number -- printed in television program guides. The PlusCode numbers are
published by over 1,800 newspapers and television program guides worldwide, with a combined
circulation of over 330 million. The VCR Plus+ system has been licensed to virtually every major
television and VCR manufacturer and is available in 39 countries including the United States,
Canada, United Kingdom, Continental Europe, Japan, Southeast Asia, Australia, New Zealand,
South America and South Africa.
This press release contains forward-looking statements which involve risks and uncertainties,
some of which are discussed from time to time in the Company's reports on file with the Securities
and Exchange Commission. The Company's actual results in the future may differ significantly from
the results discussed in the forward-looking statements.
EDITORS: VCR Plus+ and PlusCode are registered trademarks of Gemstar Development
Corporation. GUIDE Plus+ and GUIDE Plus+ Gold are trademarks of Gemstar Development
Corporation. StarSight is a registered trademark of StarSight Telecast, Inc. Other product names
used herein are for identification purposes only and may be trademarks of their respective
companies.
GEMSTAR INTERNATIONAL GROUP LIMITED
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)
Three months ended
June 30
1998 1997
Revenues $33,899 $25,625
Operating costs and expenses:
Selling and marketing 7,697 7,443
Research and development 3,381 3,497
General and administrative 4,945 4,590
Merger costs - 11,713
Operating income (loss) 17,876 (1,618)
Other income, net 2,018 1,546
Income (loss) before income taxes 19,894 (72)
Income taxes 5,768 3,149
Net income (loss) $14,126 ($3,221)
Basic earnings (loss) per share $0.29 ($0.07)
Diluted earnings (loss) per share $0.26 ($0.07)
Weighted average shares outstanding 48,460 46,843
Weighted average shares outstanding,
assuming dilution 55,255 46,843
SUMMARY BALANCE SHEET DATA
(In thousands)
June 30, March 31,
1998 1998
(unaudited)
Cash and marketable securities $175,606 $157,860
Total assets 203,062 186,078
Total liabilities 81,503 82,596
Net shareholders' equity 121,559 103,482
Contact:
Gemstar International Group Limited
Elsie Leung or Sallie Manson
626/792-5700
or
Kekst & Company
Adam Weiner or Jason Lynch
212/521-4800
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