EXHIBIT 99.1
[ROXIO LOGO]
Investor Contacts: | | |
Elliot Carpenter | | Alex Wellins or Jennifer Jarman |
Chief Financial Officer | | the blueshirt group for Roxio, Inc. |
Roxio, Inc. | | (415) 217-7722 |
(408) 367-4813 | | |
elliot_carpenter@roxio.com | | |
ROXIO REPORTS FOURTH QUARTER AND FISCAL 2003 RESULTS
Fourth Quarter Revenues Rise to $34 Million Based on Successful Launch of Roxio’s Digital Media Suite
Recent Acquisition of Pressplay Paves the Way for Re-Launch of Napster
SANTA CLARA, Calif.—May 21, 2003—Roxio, Inc. (Nasdaq: ROXI), The Digital Media Company®, provider of the best selling digital media software in the world, today reported financial results for its fourth quarter and year ended March 31, 2003. Net revenue for the fourth quarter grew 28% sequentially to $33.8 million from $26.4 million in the preceding third quarter. Pro forma net income, which excludes non-cash charges related to the amortization of intangible assets and deferred stock-based compensation, was $3.8 million, or $0.19 per basic and diluted share, and therefore approximately the same as pro forma net income of $3.8 million, or $0.21 per basic and $0.19 per diluted share, for the fourth quarter of the prior fiscal year.
Roxio’s reported GAAP net income for the fourth quarter of fiscal 2003 was $2.3 million, or $0.12 per basic and diluted share, as compared with net income in the fourth quarter of the prior fiscal year of $340,000, or $0.02 per basic and diluted share.
Roxio 4Q03 Earnings Release, 5/21/03 | | Page 2 |
Net revenue for the fiscal year ended March 31, 2003 was $120.4 million, as compared to net revenue of $142.5 million for fiscal 2002. Pro forma net loss excluding non-cash charges was $3.1 million, or $0.16 per basic and diluted share, as compared to pro forma net income of $16.5 million, or $0.96 per basic and $0.94 per diluted share for the prior fiscal year.
Roxio’s GAAP net loss for fiscal 2003 was $9.9 million, or $0.51 per basic and diluted share, compared to GAAP net income of $2.3 million, or $0.14 per basic and $0.13 per diluted share, in fiscal 2002. A reconciliation of pro forma results described in this press release with the reported GAAP results is included in the attached table.
“Our fourth quarter financial results reflect a solid launch of Easy CD & DVD Creator 6, the Digital Media Suite,” said Chris Gorog, Roxio’s President and Chief Executive Officer. “Other notable achievements include the launch in late March of our PhotoSuite 5 Platinum digital photo editing software and our first major DVD OEM win for Creator 6 on TDK’s new Indi DVD Multiformat burner. With the sale of our GoBack software assets to Symantec, Roxio is now focused exclusively on its core digital media business. Additionally, our recent acquisition of Pressplay, as the foundation for the re-launch of Napster, should allow us to capitalize on the tremendous opportunity in online music and is an important step toward diversifying our revenues for the long-term growth of the company.”
Elliot Carpenter, Roxio’s Chief Financial Officer, commented, “We are pleased with the response to our recent product launch and execution on our fourth quarter financial objectives. At the same time, we are forecasting that the combined effects of a difficult retail environment, the sale of the GoBack product line to Symantec and our previously issued guidance that OEM revenues will continue to decline will result in a June quarter outlook for our software business of approximately $23.0 million in revenue and GAAP net income of $0.05 to $0.10 per fully diluted share. These estimates do not include the accounting impact of the Pressplay acquisition for the remainder of the June quarter, which has not yet been fully determined. Roxio’s cash and short-term investments were
Roxio 4Q03 Earnings Release, 5/21/03 | | Page 3 |
$58.0 million as of April 30, 2003. Taking into account the $12.5 million in cash consideration paid for the Pressplay acquisition and the approximately $20.0 million currently expected to be spent to re-launch Napster, we believe that we have sufficient cash to drive our software business and support our online music initiative.”
Earnings Call Information
The Roxio Fourth Quarter and Fiscal 2003 teleconference and webcast is scheduled to begin at 1:30 p.m., Pacific Time, on Wednesday, May 21, 2003. To participate on the live call, analysts and investors should dial 800-216-6962 at least ten minutes prior to the call and reference conference ID: 9730870. Roxio will also offer a live and archived webcast of the conference call, accessible from the “Investor Relations” section of the company’s Web site athttp://investor.roxio.com. A telephonic replay of the conference call will also be available for 48 hours by dialing 800-642-1687 and entering the passcode: 9730870.
Non-GAAP Financial Measures
Roxio discloses pro forma or non-GAAP measures of net income and earnings per share. Roxio believes that this pro forma information provides greater comparability regarding its ongoing operating performance. These measures should not be considered an alternative to measurements required by accounting principles generally accepted in the United States (“U.S. GAAP”), such as net income and earnings per share. These pro forma measures are unlikely to be comparable to pro forma information provided by other companies. In accordance with SEC regulations, reconciliation of the Roxio U.S. GAAP information to the pro forma information is provided in the table attached. We will also make available on the investor relations page of our web site athttp://investor.roxio.comthis press release, a replay of the Webcast, and a reconciliation of the difference between the GAAP and non-GAAP financial measures.
About Roxio
Roxio, Inc. (Nasdaq: ROXI) provides the best selling digital media software in the world. Roxio makes award-winning software products for CD/DVD burning, photo editing and video editing. Roxio’s family of products includes category leading productsEasy CD & DVD Creator™, the Digital Media Suite™,Easy CD Creator® (Windows) andToast® (Macintosh) for CD/DVD burning,PhotoSuite® for digital photography, andVideoWave® for digital video. Roxio also ownsNapster® and plans to re-launch it as a legal, paid service in the near future. Roxio’s current installed base is in excess of 100 million users. Roxio distributes its products globally through strategic partnerships with major hardware manufacturers, in stores with the leading worldwide retailers, through Internet partnerships and also sells its products direct at<www.roxio.com>. Headquartered in Santa Clara, California, Roxio also maintains offices in Minnesota, Canada, United Kingdom, Netherlands, and Japan. The company currently employs
Roxio 4Q03 Earnings Release, 5/21/03 | | Page 4 |
approximately 400 people worldwide. Roxio is a member of the S&P SmallCap 600 and the Russell 2000 Index.
Safe Harbor Statement
Except for historical information, the matters discussed in this press release, in particular matters related to Roxio’s future revenue, net income (loss), cash flow, the re-launch of Napster, OEM relationships, upgrades by existing users and product development, are forward-looking statements that are subject to certain risks and uncertainties such as decreased demand for our products, increased competition, failure to successfully integrate Pressplay failure to develop new products or improvements to existing products, general economic conditions and third party claims, that could cause actual results to differ materially from those projected. Additional information on these and other factors are contained in Roxio’s reports filed with the Securities and Exchange Commission (SEC), including the Company’s Annual Report on Form 10-K and Quarterly Report on Form 10-Q as filed with the SEC on July 1, 2002 and February 14, 2003, respectively, copies of which are available at the website maintained by the SEC at http://www.sec.gov. Roxio assumes no obligation to update the forward-looking statements included in this press release.
Copyright © 2003 Roxio, Inc. All rights reserved. Roxio, the Roxio tagline, Easy CD & DVD Creator, Easy CD Creator, PhotoSuite, VideoWave, Toast and Napster are registered trademarks of Roxio, Inc. in the United States and/or other countries. All other trademarks used are owned by their respective owners.
(Tables attached)
ROXIO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
| | | March 31, 2003
| | | March 31, 2002
| |
ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 36,820 | | | $ | 47,280 | |
Short-term investments | | | 16,677 | | | | 4,700 | |
Accounts receivable, net of allowance for doubtful accounts of $850 at March 31, 2003 and and $775 at March 31, 2002 | | | 12,637 | | | | 24,260 | |
Inventories | | | 460 | | | | 363 | |
Prepaid expenses and other current assets | | | 3,366 | | | | 3,409 | |
Income taxes receivable | | | — | | | | 2,378 | |
Deferred income taxes | | | 4,709 | | | | 3,880 | |
| | |
|
|
| |
|
|
|
Total current assets | | | 74,669 | | | | 86,270 | |
|
Long-term investment | | | 3,059 | | | | — | |
Property and equipment, net | | | 9,058 | | | | 7,122 | |
Goodwill, net | | | 55,247 | | | | 51,447 | |
Other intangibles assets, net | | | 10,314 | | | | 11,248 | |
Other assets | | | 589 | | | | 545 | |
| | |
|
|
| |
|
|
|
Total assets | | $ | 152,936 | | | $ | 156,632 | |
| | |
|
|
| |
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 11,952 | | | $ | 9,563 | |
Income taxes payable | | | 1,353 | | | | — | |
Accrued liabilities | | | 16,153 | | | | 21,972 | |
Current portion of long-term debt | | | 606 | | | | 526 | |
| | |
|
|
| |
|
|
|
Total current liabilities | | | 30,064 | | | | 32,061 | |
|
Long term liabilities: | | | | | | | | |
Long term debt | | | 5,490 | | | | 921 | |
Deferred income taxes | | | 1,190 | | | | 1,922 | |
| | |
|
|
| |
|
|
|
Total liabilities | | | 36,744 | | | | 34,904 | |
| | |
|
|
| |
|
|
|
Stockholders’ equity: | | | | | | | | |
Preferred stock, $0.001 par value; Authorized: 10,000 shares; Issued and outstanding: none at March 31, 2003 and 2002 | | | — | | | | — | |
Common stock, $0.001 par value; Authorized: 100,000 shares; Issued and outstanding: 19,574 shares at March 31, 2003 and 19,474 shares at March 31, 2002 | | | 20 | | | | 20 | |
Additional paid-in capital | | | 127,804 | | | | 129,804 | |
Deferred stock-based compensation | | | (2,886 | ) | | | (7,487 | ) |
Accumulated deficit | | | (10,675 | ) | | | (731 | ) |
Accumulated other comprehensive income | | | 1,929 | | | | 122 | |
| | |
|
|
| |
|
|
|
Total stockholders’ equity | | | 116,192 | | | | 121,728 | |
| | |
|
|
| |
|
|
|
Total liabilities and stockholders’ equity | | $ | 152,936 | | | $ | 156,632 | |
| | |
|
|
| |
|
|
|
ROXIO INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| | | Three Months Ended March 31,
| | Year Ended March 31,
| |
| | | 2003
| | | 2002
| | 2003
| | | 2002
| |
Net revenues | | $ | 33,756 | | | $ | 38,894 | | $ | 120,408 | | | $ | 142,521 | |
Cost of revenues (excluding stock-based compensation charges of $10, $14, $49 and $103, respectively) | | | 8,523 | | | | 8,084 | | | 31,410 | | | | 29,154 | |
| | |
|
|
| |
|
| |
|
|
| |
|
|
|
Gross profit | | | 25,233 | | | | 30,810 | | | 88,998 | | | | 113,367 | |
| | |
|
|
| |
|
| |
|
|
| |
|
|
|
|
Operating expenses: | | | | | | | | | | | | | | | |
Research and development (excludes stock-based compensation charges of $142, $208 $715 and $1,515, respectively) | | | 5,886 | | | | 5,679 | | | 21,623 | | | | 21,637 | |
Sales and marketing (excludes stock-based compensation charges of $127, $1,194, $113 and $4,158, respectively) | | | 9,282 | | | | 14,098 | | | 41,553 | | | | 49,247 | |
General and administrative (excludes stock-based compensation charges of $210, $1,419, $1,059 and $3,443 respectively.) | | | 5,777 | | | | 6,178 | | | 26,990 | | | | 19,327 | |
Amortization of intangible assets | | | 1,637 | | | | 1,849 | | | 6,401 | | | | 6,146 | |
Stock-based compensation charges | | | 489 | | | | 1,726 | | | 1,936 | | | | 8,110 | |
In-process research and development | | | — | | | | 1,110 | | | — | | | | 1,110 | |
| | |
|
|
| |
|
| |
|
|
| |
|
|
|
Total operating expenses | | | 23,071 | | | | 30,640 | | | 98,503 | | | | 105,577 | |
| | |
|
|
| |
|
| |
|
|
| |
|
|
|
Income (loss) from operations | | | 2,162 | | | | 170 | | | (9,505 | ) | | | 7,790 | |
Other income (loss), net | | | (94 | ) | | | 292 | | | 471 | | | | 1,285 | |
| | |
|
|
| |
|
| |
|
|
| |
|
|
|
Income (loss) before provision for income taxes | | | 2,068 | | | | 462 | | | (9,034 | ) | | | 9,075 | |
Provision (benefit) for income taxes | | | (256 | ) | | | 122 | | | 910 | | | | 6,726 | |
| | |
|
|
| |
|
| |
|
|
| |
|
|
|
Net income (loss) | | $ | 2,324 | | | $ | 340 | | $ | (9,944 | ) | | $ | 2,349 | |
Other comprehensive gain (loss) : | | | | | | | | | | | | | | | |
Foreign currency translation adjustment | | | — | | | | — | | | 1,785 | | | | (280 | ) |
Unrealized gain on short-term investment | | | | | | | — | | | 24 | | | | — | |
| | |
|
|
| |
|
| |
|
|
| |
|
|
|
Comprehensive income (loss) | | $ | 2,324 | | | $ | 340 | | $ | (8,135 | ) | | $ | 2,069 | |
| | |
|
|
| |
|
| |
|
|
| |
|
|
|
Earnings per share: | | | | | | | | | | | | | | | |
Basic | | $ | 0.12 | | | $ | 0.02 | | $ | (0.51 | ) | | $ | 0.14 | |
| | |
|
|
| |
|
| |
|
|
| |
|
|
|
Diluted | | $ | 0.12 | | | $ | 0.02 | | $ | (0.51 | ) | | $ | 0.13 | |
| | |
|
|
| |
|
| |
|
|
| |
|
|
|
Weighted average shares used in computing basic and diluted net income per share | | | | | | | | | | | | | | | |
Basic | | | 19,498 | | | | 18,568 | | | 19,477 | | | | 17,216 | |
| | |
|
|
| |
|
| |
|
|
| |
|
|
|
Diluted | | | 19,783 | | | | 19,767 | | | 19,477 | | | | 17,518 | |
| | |
|
|
| |
|
| |
|
|
| |
|
|
|
ROXIO INC.
RECONCILIATION OF REPORTED EARNINGS (LOSS) TO PRO FORMA EARNINGS (LOSS)
(In thousands)
| | | Three Months Ended March 31, 2003
| | | Three Months Ended March 31, 2002
| |
| | | Net Income
| | | Basic EPS
| | | Diluted EPS
| | | Net Income
| | | Basic EPS
| | | Diluted EPS
| |
Reported earnings | | $ | 2,324 | | | $ | 0.12 | | | $ | 0.12 | | | $ | 340 | | | $ | 0.02 | | | $ | 0.02 | |
|
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | |
Amortization of intangible assets | | | 1,637 | | | | 0.08 | | | | 0.08 | | | | 1,849 | | | | 0.10 | | | | 0.09 | |
Stock-based compensation charges | | | 489 | | | | 0.02 | | | | 0.02 | | | | 1,726 | | | | 0.09 | | | | 0.09 | |
Write-off of in-process research and development | | | — | | | | — | | | | — | | | | 1,110 | | | | 0.06 | | | | 0.06 | |
Tax effect of pro forma entries | | | (682 | ) | | | (0.03 | ) | | | (0.03 | ) | | | (1,180 | ) | | | (0.06 | ) | | | (0.06 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Pro forma earnings | | $ | 3,768 | | | $ | 0.19 | | | $ | 0.19 | | | $ | 3,845 | | | $ | 0.21 | | | $ | 0.19 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
|
| | | Year Ended March 31, 2003
| | | Year Ended March 31, 2002
| |
| | | Net Income
| | | Basic EPS
| | | Diluted EPS
| | | Net Income
| | | Basic EPS
| | | Diluted EPS
| |
Reported earnings (loss) | | $ | (9,944 | ) | | $ | (0.51 | ) | | $ | (0.51 | ) | | $ | 2,349 | | | $ | 0.14 | | | $ | 0.13 | |
|
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | |
Amortization of intangible assets | | | 6,401 | | | | 0.33 | | | | 0.33 | | | | 6,146 | | | | 0.36 | | | | 0.35 | |
Stock-based compensation charges | | | 1,936 | | | | 0.10 | | | | 0.10 | | | | 8,110 | | | | 0.47 | | | | 0.46 | |
Write-off of in-process research and development | | | — | | | | — | | | | — | | | | 1,110 | | | | 0.06 | | | | 0.06 | |
Tax effect of pro forma entries | | | (1,517 | ) | | | (0.08 | ) | | | (0.08 | ) | | | (1,180 | ) | | | (0.07 | ) | | | (0.07 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Pro forma earnings (loss) | | $ | (3,124 | ) | | $ | (0.16 | ) | | $ | (0.16 | ) | | $ | 16,535 | | | $ | 0.96 | | | $ | 0.94 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
ROXIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| | | Years Ended March 31,
| |
| | | 2003
| | | 2002
| |
Cash flows from operating activities: | | | | | | | | |
Net income | | $ | (9,944 | ) | | | 2,349 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 9,742 | | | | 7,439 | |
Stock-based compensation charges | | | 1,936 | | | | 8,110 | |
Provision for doubtful accounts | | | 649 | | | | 790 | |
Write-off of acquired in-process technology | | | — | | | | 1,110 | |
Deferred income taxes | | | (1,549 | ) | | | (1,076 | ) |
Change in operating assets and liabilities: | | | | | | | | |
Accounts receivable | | | 12,356 | | | | 8,544 | |
Inventories | | | (172 | ) | | | 875 | |
Prepaid expenses and other assets | | | (199 | ) | | | (2,160 | ) |
Accounts payable | | | 2,162 | | | | (10,189 | ) |
Income taxes payable (receivable) | | | 4,065 | | | | 363 | |
Accrued liabilities | | | (9,926 | ) | | | 7,921 | |
| | |
|
|
| |
|
|
|
Net cash provided by operating activities | | | 9,120 | | | | 24,076 | |
| | |
|
|
| |
|
|
|
|
Cash flows from investing activities: | | | | | | | | |
Purchases of property and equipment | | | (4,235 | ) | | | (3,839 | ) |
Proceeds from sale of property and equipment | | | — | | | | — | |
Purchases of other intangible assets | | | (5,667 | ) | | | (251 | ) |
Purchases of short-term investments | | | (27,578 | ) | | | (4,700 | ) |
Proceeds from sale of short-term investments | | | 11,075 | | | | — | |
Maturities of short-term investments | | | 4,526 | | | | — | |
Investment in nonconsolidated companies | | | (3,059 | ) | | | — | |
Acquisition of MGI Software Corp, net of acquired cash of $770 | | | — | | | | (1,988 | ) |
| | |
|
|
| |
|
|
|
Net cash used in investing activities | | | (24,938 | ) | | | (10,778 | ) |
| | |
|
|
| |
|
|
|
|
Cash flows from financing activities: | | | | | | | | |
Net cash transfers from Adaptec | | | — | | | | 27,446 | |
Principal payment of capital lease obligation | | | (557 | ) | | | (199 | ) |
Proceeds from line of credit | | | 5,000 | | | | — | |
Issuance of common stock to strategic partner | | | — | | | | 1,999 | |
Issuance of common stock under employee stock plan | | | 1,367 | | | | 4,740 | |
Repurchase of common stock | | | (1,064 | ) | | | — | |
| | |
|
|
| |
|
|
|
Net cash provided by financing activities | | | 4,746 | | | | 33,986 | |
| | |
|
|
| |
|
|
|
|
Effect of exchange rates on cash | | | 612 | | | | (4 | ) |
|
Change in cash and cash equivalents | | | (10,460 | ) | | | 47,280 | |
Cash and cash equivalents at beginning of period | | | 47,280 | | | | — | |
| | |
|
|
| |
|
|
|
Cash and cash equivalents at end of period | | $ | 36,820 | | | $ | 47,280 | |
| | |
|
|
| |
|
|
|
|
Supplemental cash flow information: | | | | | | | | |
Cash paid for interest | | $ | 220 | | | $ | 47 | |
| | |
|
|
| |
|
|
|
Cash paid for income taxes | | $ | 1,832 | | | $ | 5,258 | |
| | |
|
|
| |
|
|
|
|
Non-cash disclosure of financing and investing activities: | | | | | | | | |
Transfer of other assets from Adaptec upon legal separation | | $ | — | | | $ | 4,608 | |
| | |
|
|
| |
|
|
|
Adjustment to the purchase price allocation of MGI Software Corp | | $ | 3,802 | | | $ | — | |
| | |
|
|
| |
|
|
|
Issuance of stock for acquisition of MGI Software Corp. | | $ | — | | | $ | 31,421 | |
| | |
|
|
| |
|
|
|
Deferred stock compensation | | $ | — | | | $ | 12,880 | |
| | |
|
|
| |
|
|
|
Issuance and remeasurement of warrants for services | | $ | (705 | ) | | $ | — | |
| | |
|
|
| |
|
|
|
Issuance of warrant for services | | $ | 329 | | | $ | 1,840 | |
| | |
|
|
| |
|
|
|
Assets acquired under capital leases | | $ | 203 | | | $ | 1,624 | |
| | |
|
|
| |
|
|
|
8
