Gemstar International Group LimitedReports Second Quarter Financial Results
November 9, 1999 04:10 PM Eastern Time
PASADENA, Calif.--(BUSINESS WIRE)--Nov. 9, 1999--Gemstar International Group Limited GMST reported its results of operations for the second quarter ended September 30, 1999.
Revenues for the second quarter were $47.2 million. Operating income was $27.1 million. Net income was $22.2 million. Diluted earnings per share were $0.19 based on 120 million shares. Compared with the year-ago period, revenues increased 27%, operating income increased 37% and net income increased 37%, excluding non-recurring expenses in the same quarter last year. Diluted earnings per share increased 27% despite an increase in share count of 8%.
The increase in revenues is due to the continued growth in worldwide licensing income derived from the Company's proprietary technologies and intellectual property associated with VCR Plus+(R) and the electronic program guide.
In October 1999, the Company entered into a merger agreement with TV Guide Inc. TVGIA under which TV Guide will become a wholly owned subsidiary of the Company. The transaction will be accounted for as a purchase. Closing of the transaction is anticipated in the first half of next year and is subject to approval by shareholders of each company and the satisfaction of customary regulatory requirements.
Last month, a panel of the American Arbitration Association issued a partial award against General Instrument Corporation in favor of Gemstar's wholly owned subsidiary, StarSight Telecast Inc., as a result of General Instrument's breach of its contract with StarSight and its misappropriation of StarSight Telecast's proprietary technology and intellectual property in the electronic program guide (EPG) area. The exact amount of the multi-million dollar award is being calculated by StarSight and will be submitted to the American Arbitration Association for the panel's approval. The award is not reflected in this quarter's reported revenues.
During the past quarter, the Company entered into an agreement with Axel Springer Verlags AG (Hamburg) to collaborate over broadcasts of free-to-consumer electronic program guide services in Germany. The Company also announced that it received a key patent covering the concept of displaying advertisements in electronic program guides. Recently, the Company made a strategic investment in Telecruz Technology Inc., a developer of multi-purpose chips for interactive televisions.
"We are pleased with our financial performance for the second quarter of fiscal year 2000," said Henry Yuen, chairman and chief executive officer. "We are also excited by the progress we made in our business. Of particular significance is our merger agreement with TV Guide. I believe that the combined company will be able to compete well in the highly-competitive, rapidly-moving area of television portal and digital convergence."
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, America Online (AOL), Americast, Cox, Daewoo, Funai, GTE, Hitachi, Hughes Network Systems, JVC, LG Electronics (Goldstar), Matsushita (Panasonic, Quasar), Microsoft Corporation, Mitsubishi, Orion, Philips (Magnavox, Philips), Quadravision, Samsung, Sanyo, Sharp, Shintom, Sony, Southern New England Telephone, Thomson Multimedia (GE, Proscan, RCA, Thomson), Time Warner, Toshiba, Uniden, US West and Zenith. Gemstar has over 80 issued U.S. patents in the general area of audio-visual technologies with over 1,790 claims and over 85 issued foreign patents. The Company continues to pursue a worldwide patent prosecution program and has more than 115 pending U.S. patent applications and over 300 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. Gemstar's electronic program guide has been built into a number of models of new televisions, VCRs and TV/VCR combination units. 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 and computer operating systems such as Windows 98.
Gemstar's VCR Plus+(R) 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 now available in 40 countries and 6 continents, including the United States, Canada, United Kingdom, Continental Europe, Japan, Southeast Asia, Australia, New Zealand, South America and South Africa.
Except for historical information contained here, the matters discussed in this news release contain forward-looking statements which involve risks and uncertainties, including the timely availability and acceptance of new products, the impact of competitive products and pricing, the management of growth, and the other risks detailed from time to time in the Company's SEC reports, including the report on Form 10-K and Form 10-Q.
EDITORS: GUIDE Plus+, VCR Plus+ and PlusCode are trademarks of Gemstar. 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 Six months ended
September 30 September 30
1999 1998 1999 1998
Revenues $47,207 $37,032 $90,303 $70,931
Operating costs and expenses:
Selling and marketing 10,545 8,018 20,044 15,715
Research and development 3,629 3,511 7,247 6,892
General and administrative 5,938 5,743 11,788 10,688
Nonrecurring expense 0 1,851 0 1,851
Operating income 27,095 17,909 51,224 35,785
Other income, net 3,354 2,258 6,122 4,276
Income before income taxes 30,449 20,167 57,346 40,061
Income taxes 8,221 5,848 15,481 11,616
Net income $22,228 $14,319 $41,865 $28,445
Basic earnings per share $0.22 $0.15 $0.42 $0.29
Diluted earnings per share $0.19 $0.13 $0.35 $0.26
Weighted average shares
outstanding 100,279 97,500 99,915 97,210
Weighted average shares
outstanding, assuming dilution 119,952 110,963 119,425 110,736
SUMMARY BALANCE SHEET DATA
(unaudited)
(In thousands)
September 30, March 31,
1999 1999
Cash and cash equivalents $186,639 $184,334
Marketable securities 95,233 33,713
Total assets 331,365 253,164
Total liabilities 75,531 69,193
Net shareholders' equity 255,834 183,971
kwp/la
CONTACT: Gemstar International Group Limited Elsie Leung, Chief Financial Officer Linda Lloyd da Silva, Investor Relations 626/792-5700
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