Gemstar-TV Guide Announces Full Year and Fourth Quarter 2007 Results

Business Wire, Feb 14, 2008

LOS ANGELES -- Gemstar-TV Guide International, Inc. (NASDAQ:GMST) announced that for the year ended December 31, 2007, the Company reported consolidated revenues of $627.7 million, an increase of 10%, versus $571.3 million in 2006. Growth was largely driven by a 28% increase in the Company's Guidance Technology and Solutions segment.

Operating income for 2007 of $65.9 million benefited from the reversal of $10.7 million in accrued patent rights liabilities relating to a former CEO and included costs of $7.4 million related to the Company's exploration of strategic alternatives. Operating income for 2006 of $66.9 million benefited from the reversal of $40.1 million of accrued expenses relating to former officers of the Company and included $3.3 million in accrued patent rights expense relating to a former CEO. In addition to increased Guidance Technology and Solutions revenues, the year also saw reduced operating costs in the Company's Publishing segment, partially offset by higher corporate marketing expense.

Net income for 2007 increased to $176.9 million, or $0.41 per share, compared with net income of $72.5 million, or $0.17 per share in 2006. Net income for 2007 was positively impacted by $107.4 million in income tax benefits, as a result of reversing our deferred tax asset valuation allowance, a benefit of approximately $0.25 per share.

Rich Battista, Gemstar-TV Guide CEO, commented, "I am pleased with the strong financial performance of the Company in 2007. Year over year we saw a 10% increase in consolidated revenue and, on an operating basis, the Company had a significant improvement it its financial performance. Our Guidance Technology and Solutions segment contributed considerably to this solid performance as we greatly expanded our patent licensing program both internationally and to emerging platforms, while also growing our IPG products and services businesses on a global basis. We also achieved a better-than-forecasted performance at TV Guide magazine."

Mr. Battista continued, "In 2007, the Company focused on the development and deployment of My TV Guide, our suite of cross-platform, next generation guidance tools and services. Our media businesses enjoyed solid distribution and each strengthened their content offerings with innovative enhancements, including the Online Video Guide at TVGuide.com."

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FOURTH QUARTER 2007 FINANCIAL PERFORMANCE

For the quarter ended December 31, 2007, the Company reported consolidated revenues of $155.8 million, an increase of 7%, versus $145.0 million in 2006. Growth was primarily driven by a 29% increase in revenues in the Guidance Technology and Solutions segment versus the prior year's quarter.

The Company reported a net loss for the fourth quarter of 2007 of $(1.5) million, or $0.00 per share, compared with net income of $31.8 million, or $0.07 per share for the prior year's quarter. The fourth quarter of 2007 included $12.4 million from cross platform marketing expenses primarily for the national brand awareness campaign, depreciation and amortization charges of $10.7 million, and $4.2 million in costs related to the exploration of strategic alternatives. In 2006, the fourth quarter included $1.3 million in cross platform marketing expenses, depreciation and amortization charges of $8.2 million and the benefit of reversing $29.5 million in accrued liabilities related to a former officer.

FULL YEAR AND FOURTH QUARTER 2007 SEGMENT FINANCIAL PERFORMANCE

The schedule below reflects Gemstar-TV Guide's performance for the years ended December 31, 2007 and 2006 and the fourth quarters of 2007 and 2006 by segment. The following segment information is presented and reconciled to consolidated income (loss) from continuing operations before income taxes. Certain prior period amounts, including the results of discontinued operations, have been reclassified to conform to the current presentation. More detailed information is contained in the Company's Form 10-K for the year ended December 31, 2007, which was filed with the Securities Exchange Commission today.

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Guidance Technology and Solutions

* Revenues for the full year ended December 31, 2007 were $286.1 million, or 45% of the Company's total revenue. Revenues for 2007 increased 28% from revenues of $222.9 million in 2006. This was primarily due to a 41% increase in IPG patent revenues and a 32% increase in IPG Products and Services revenues. Partially offsetting this was an 18% decrease in VCR Plus revenues, due to a reduction in units shipped incorporating VCR Plus technology.

* For the full 2007 year, adjusted EBITDA increased to $186.1 million, a 37% increase versus 2006. This was largely due to increased revenues, partially offset by higher operating expenses primarily from the acquisition of Aptiv Digital.

* Revenues for the fourth quarter ended December 31, 2007 were $71.2 million, an increase of 29% versus the prior year's quarter. The increase was primarily due to a 29% increase in IPG Patent License revenues and a 44% increase in IPG Products and Services revenues, offset by a 19% decrease in VCR Plus revenues versus the prior year's quarter.