WASHINGTON | 0-23137 | 91-1628146 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 9.01. | Financial Statements and Exhibits. |
Exhibit No. | Description |
99.1 | Earnings Release of RealNetworks, Inc. dated November 3, 2014 |
99.2 | Information Regarding Non-GAAP Financial Measures |
REALNETWORKS, INC. | ||
By: | / S / Tim M. Wan | |
Tim M. Wan | ||
Senior Vice President, Chief Financial Officer and Treasurer |
Exhibit Number | Description |
99.1 | Earnings Release of RealNetworks, Inc. dated November 3, 2014 |
99.2 | Information Regarding Non-GAAP Financial Measures |
• | Continued strong growth in RealPlayer Cloud user base, with over 8 million accounts; |
• | RealPlayer Cloud available on 12 platforms, including native Mac; |
• | Successfully launched Slingo Adventure on Facebook, iOS and Android platforms; and |
• | Cash and short-term investments of $178.0 million |
Quarters Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Net revenue | $ | 34,157 | $ | 48,958 | $ | 120,706 | $ | 155,601 | ||||||||
Cost of revenue | 18,928 | 18,990 | 58,500 | 59,015 | ||||||||||||
Extinguishment of liability | — | — | (10,580 | ) | — | |||||||||||
Gross profit | 15,229 | 29,968 | 72,786 | 96,586 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 12,784 | 15,707 | 40,110 | 45,951 | ||||||||||||
Sales and marketing | 13,283 | 19,427 | 51,022 | 59,830 | ||||||||||||
General and administrative | 7,723 | 9,869 | 25,617 | 28,506 | ||||||||||||
Restructuring and other charges | 2,048 | 1,877 | 3,805 | 4,075 | ||||||||||||
Lease exit and related charges | 154 | — | 703 | 3,066 | ||||||||||||
Loss on litigation settlements | — | 11,525 | — | 11,525 | ||||||||||||
Total operating expenses | 35,992 | 58,405 | 121,257 | 152,953 | ||||||||||||
Operating income (loss) | (20,763 | ) | (28,437 | ) | (48,471 | ) | (56,367 | ) | ||||||||
Other income (expenses): | ||||||||||||||||
Interest income, net | 80 | 166 | 396 | 992 | ||||||||||||
Gain (loss) on sale of available for sale securities, net | — | — | 2,371 | — | ||||||||||||
Equity in net loss of Rhapsody investment | (1,530 | ) | (2,629 | ) | (4,170 | ) | (6,209 | ) | ||||||||
Other income (expense), net | 325 | (118 | ) | 153 | (146 | ) | ||||||||||
Total other income (expense), net | (1,125 | ) | (2,581 | ) | (1,250 | ) | (5,363 | ) | ||||||||
Income (loss) before income taxes | (21,888 | ) | (31,018 | ) | (49,721 | ) | (61,730 | ) | ||||||||
Income tax expense (benefit) | 290 | 357 | 1,256 | (210 | ) | |||||||||||
Net income (loss) | $ | (22,178 | ) | $ | (31,375 | ) | $ | (50,977 | ) | $ | (61,520 | ) | ||||
Basic net income (loss) per share | $ | (0.62 | ) | $ | (0.88 | ) | $ | (1.42 | ) | $ | (1.73 | ) | ||||
Diluted net income (loss) per share | $ | (0.62 | ) | $ | (0.88 | ) | $ | (1.42 | ) | $ | (1.73 | ) | ||||
Shares used to compute basic net income (loss) per share | 36,003 | 35,670 | 35,912 | 35,490 | ||||||||||||
Shares used to compute diluted net income (loss) per share | 36,003 | 35,670 | 35,912 | 35,490 | ||||||||||||
September 30, 2014 | December 31, 2013 | ||||||
(in thousands) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 114,073 | $ | 151,235 | |||
Short-term investments | 63,948 | 74,920 | |||||
Trade accounts receivable, net | 17,679 | 24,613 | |||||
Deferred costs, current portion | 1,023 | 1,601 | |||||
Deferred tax assets, current | 296 | 306 | |||||
Prepaid expenses and other current assets | 8,382 | 9,124 | |||||
Total current assets | 205,401 | 261,799 | |||||
Equipment, software, and leasehold improvements, at cost: | |||||||
Equipment and software | 83,230 | 86,721 | |||||
Leasehold improvements | 3,616 | 3,482 | |||||
Total equipment, software, and leasehold improvements | 86,846 | 90,203 | |||||
Less accumulated depreciation and amortization | 68,392 | 67,031 | |||||
Net equipment, software, and leasehold improvements | 18,454 | 23,172 | |||||
Restricted cash equivalents and investments | 3,000 | 3,000 | |||||
Equity method investment | 10,000 | 12,473 | |||||
Available for sale securities | 2,848 | 7,181 | |||||
Other assets | 2,925 | 2,332 | |||||
Deferred costs, non-current portion | 913 | 946 | |||||
Deferred tax assets, net, non-current portion | 1,424 | 1,409 | |||||
Other intangible assets, net | 10,954 | 12,993 | |||||
Goodwill | 17,615 | 17,476 | |||||
Total assets | $ | 273,534 | $ | 342,781 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 18,155 | $ | 19,987 | |||
Accrued and other current liabilities | 25,885 | 41,893 | |||||
Deferred tax liabilities, net, current portion | 768 | 899 | |||||
Deferred revenue, current portion | 6,908 | 7,498 | |||||
Total current liabilities | 51,716 | 70,277 | |||||
Deferred revenue, non-current portion | 143 | 166 | |||||
Deferred rent | 1,293 | 1,318 | |||||
Deferred tax liabilities, net, non-current portion | 1,805 | 1,556 | |||||
Other long-term liabilities | 563 | 483 | |||||
Total liabilities | 55,520 | 73,800 | |||||
Shareholders' equity | 218,014 | 268,981 | |||||
Total liabilities and shareholders' equity | $ | 273,534 | $ | 342,781 |
Nine Months Ended September 30, | |||||||
2014 | 2013 | ||||||
(in thousands) | |||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | (50,977 | ) | $ | (61,520 | ) | |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||||
Depreciation and amortization | 8,876 | 15,045 | |||||
Stock-based compensation | 4,158 | 5,671 | |||||
Equity in net loss of Rhapsody | 4,170 | 6,209 | |||||
Deferred income taxes, net | (64 | ) | (1,238 | ) | |||
Gain on sale of available for sale securities | (2,371 | ) | — | ||||
Realized translation gain | (48 | ) | (35 | ) | |||
Extinguishment of liability | (10,580 | ) | — | ||||
Other | — | 51 | |||||
Net change in certain operating assets and liabilities | 1,194 | 7,514 | |||||
Net cash provided by (used in) operating activities | (45,642 | ) | (28,303 | ) | |||
Cash flows from investing activities: | |||||||
Purchases of equipment, software, and leasehold improvements | (2,054 | ) | (5,798 | ) | |||
Proceeds from sale of available for sale securities | 2,754 | — | |||||
Purchases of short-term investments | (63,574 | ) | (85,670 | ) | |||
Proceeds from sales and maturities of short-term investments | 74,546 | 110,359 | |||||
Decrease in restricted cash equivalents and investments | — | 5,000 | |||||
Acquisitions of businesses, net of cash acquired | (733 | ) | (22,480 | ) | |||
Other | (467 | ) | — | ||||
Net cash provided by (used in) investing activities | 10,472 | 1,411 | |||||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock (stock options and stock purchase plan) | 641 | 408 | |||||
Tax payments from shares withheld upon vesting of restricted stock | (403 | ) | (911 | ) | |||
Payment of contingent consideration | (696 | ) | (828 | ) | |||
Net cash provided by (used in) financing activities | (458 | ) | (1,331 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (1,534 | ) | (96 | ) | |||
Net increase (decrease) in cash and cash equivalents | (37,162 | ) | (28,319 | ) | |||
Cash and cash equivalents, beginning of period | 151,235 | 163,198 | |||||
Cash and cash equivalents, end of period | $ | 114,073 | $ | 134,879 |
2014 | 2013 | ||||||||||||||||||||||||||
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||
Net Revenue by Line of Business | |||||||||||||||||||||||||||
RealPlayer Group (A) | $ | 6,565 | $ | 8,556 | $ | 15,215 | $ | 16,799 | $ | 17,641 | $ | 18,383 | $ | 22,383 | |||||||||||||
Mobile Entertainment (B) | 19,190 | 23,182 | 19,913 | 22,146 | 19,948 | 18,592 | 20,495 | ||||||||||||||||||||
Games (C) | 8,402 | 9,087 | 10,596 | 11,650 | 11,369 | 12,875 | 13,915 | ||||||||||||||||||||
Total net revenue | $ | 34,157 | $ | 40,825 | $ | 45,724 | $ | 50,595 | $ | 48,958 | $ | 49,850 | $ | 56,793 | |||||||||||||
Net Revenue by Product | |||||||||||||||||||||||||||
RealPlayer Group | |||||||||||||||||||||||||||
- License (D) | $ | 3,255 | $ | 3,273 | $ | 5,018 | $ | 7,128 | $ | 7,281 | $ | 6,766 | $ | 8,332 | |||||||||||||
- Subscriptions (E) | 2,680 | 2,569 | 2,777 | 3,118 | 3,615 | 4,193 | 4,924 | ||||||||||||||||||||
- Media Properties (F) | 630 | 2,714 | 7,420 | 6,553 | 6,745 | 7,424 | 9,127 | ||||||||||||||||||||
Mobile Entertainment | |||||||||||||||||||||||||||
- SaaS (G) | 17,919 | 20,175 | 18,463 | 20,406 | 18,156 | 17,002 | 18,674 | ||||||||||||||||||||
- Technology License & Other (H) | 1,271 | 3,007 | 1,450 | 1,740 | 1,792 | 1,590 | 1,821 | ||||||||||||||||||||
Games | |||||||||||||||||||||||||||
- License (I) | 2,988 | 3,399 | 3,849 | 3,511 | 3,421 | 4,089 | 5,249 | ||||||||||||||||||||
- Subscriptions (J) | 4,320 | 4,440 | 5,241 | 5,688 | 5,733 | 5,980 | 6,312 | ||||||||||||||||||||
- Media Properties (K) | 1,094 | 1,248 | 1,506 | 2,451 | 2,215 | 2,806 | 2,354 | ||||||||||||||||||||
Total net revenue | $ | 34,157 | $ | 40,825 | $ | 45,724 | $ | 50,595 | $ | 48,958 | $ | 49,850 | $ | 56,793 | |||||||||||||
Net Revenue by Geography | |||||||||||||||||||||||||||
United States | $ | 12,280 | $ | 15,092 | $ | 20,428 | $ | 19,724 | $ | 21,039 | $ | 21,463 | $ | 28,024 | |||||||||||||
Rest of world | 21,877 | 25,733 | 25,296 | 30,871 | 27,919 | 28,387 | 28,769 | ||||||||||||||||||||
Total net revenue | $ | 34,157 | $ | 40,825 | $ | 45,724 | $ | 50,595 | $ | 48,958 | $ | 49,850 | $ | 56,793 | |||||||||||||
Net Revenue by Line of Business | |||||||||||||||||||||||||||
(A) The RealPlayer Group primarily includes revenue from RealPlayer and related products, such as the distribution of third-party software products, advertising on RealPlayer websites, and sales of RealPlayer Plus software licenses to consumers, sales of intellectual property licenses, and consumer subscriptions such as SuperPass and our recently launched RealPlayer Cloud service. | |||||||||||||||||||||||||||
(B) The Mobile Entertainment division primarily includes revenue from SaaS services, system integration, and professional services to mobile carriers, and sales of technology licenses of our software products such as Helix. | |||||||||||||||||||||||||||
(C) The Games division primarily includes revenue from sales of games licenses, online games subscription services, advertising on games sites and social network sites, microtransactions from online and social games, and sales of mobile games. | |||||||||||||||||||||||||||
Net Revenue by Product | |||||||||||||||||||||||||||
(D) Licensing revenue within the RealPlayer Group includes sales of RealPlayer Plus software licenses to consumers and sales of intellectual property licenses. | |||||||||||||||||||||||||||
(E) Subscriptions revenue within the RealPlayer Group includes revenue from subscriptions such as SuperPass and our recently launched RealPlayer Cloud service. | |||||||||||||||||||||||||||
(F) Media Properties revenue within the RealPlayer Group includes distribution of third-party software products and advertising on RealPlayer websites. | |||||||||||||||||||||||||||
(G) SaaS revenue within Mobile Entertainment includes revenue from music on demand, ringback tones, intercarrier messaging services provided to network services providers who are largely mobile phone networks, and our recently launched LISTEN product. | |||||||||||||||||||||||||||
(H) Licensing and other revenue within Mobile Entertainment includes revenue from Helix-related products and professional services provided to mobile carriers. | |||||||||||||||||||||||||||
(I) Licensing revenue within Games includes retail games-related revenue, microtransactions from online and social games and sales of mobile games. | |||||||||||||||||||||||||||
(J) Subscriptions revenue within Games includes revenue from online games subscriptions. | |||||||||||||||||||||||||||
(K) Media Properties revenue within Games includes distribution of third-party software products and advertising on games sites and social network sites. |
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Q3 | Q2 | Q3 | YTD | YTD | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
RealPlayer Group | ||||||||||||||||||||
Net revenue | $ | 6,565 | $ | 8,556 | $ | 17,641 | $ | 30,336 | $ | 58,407 | ||||||||||
Cost of revenue | 3,566 | 3,620 | 3,264 | 10,704 | 12,984 | |||||||||||||||
Gross profit | 2,999 | 4,936 | 14,377 | 19,632 | 45,423 | |||||||||||||||
Gross margin | 46 | % | 58 | % | 81 | % | 65 | % | 78 | % | ||||||||||
Operating expenses | 12,392 | 12,489 | 14,449 | 42,668 | 44,656 | |||||||||||||||
Operating income (loss) | $ | (9,393 | ) | $ | (7,553 | ) | $ | (72 | ) | $ | (23,036 | ) | $ | 767 | ||||||
Adjusted EBITDA | $ | (8,770 | ) | $ | (6,893 | ) | $ | 624 | $ | (21,154 | ) | $ | 2,425 | |||||||
Mobile Entertainment | ||||||||||||||||||||
Net revenue | $ | 19,190 | $ | 23,182 | $ | 19,948 | $ | 62,285 | $ | 59,035 | ||||||||||
Cost of revenue | 12,626 | 14,298 | 11,972 | 38,874 | 33,974 | |||||||||||||||
Gross profit | 6,564 | 8,884 | 7,976 | 23,411 | 25,061 | |||||||||||||||
Gross margin | 34 | % | 38 | % | 40 | % | 38 | % | 42 | % | ||||||||||
Operating expenses | 7,086 | 9,424 | 9,453 | 26,126 | 26,976 | |||||||||||||||
Operating income (loss) | $ | (522 | ) | $ | (540 | ) | $ | (1,477 | ) | $ | (2,715 | ) | $ | (1,915 | ) | |||||
Adjusted EBITDA | $ | 447 | $ | 808 | $ | 503 | $ | 916 | $ | 4,579 | ||||||||||
Games | ||||||||||||||||||||
Net revenue | $ | 8,402 | $ | 9,087 | $ | 11,369 | $ | 28,085 | $ | 38,159 | ||||||||||
Cost of revenue | 2,573 | 2,717 | 3,216 | 8,419 | 10,397 | |||||||||||||||
Gross profit | 5,829 | 6,370 | 8,153 | 19,666 | 27,762 | |||||||||||||||
Gross margin | 69 | % | 70 | % | 72 | % | 70 | % | 73 | % | ||||||||||
Operating expenses | 8,658 | 8,769 | 11,513 | 27,193 | 35,120 | |||||||||||||||
Operating income (loss) | $ | (2,829 | ) | $ | (2,399 | ) | $ | (3,360 | ) | $ | (7,527 | ) | $ | (7,358 | ) | |||||
Adjusted EBITDA | $ | (2,246 | ) | $ | (1,798 | ) | $ | (2,704 | ) | $ | (5,718 | ) | $ | (5,173 | ) | |||||
Corporate | ||||||||||||||||||||
Net revenue | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Cost of revenue | 163 | 151 | 538 | 503 | 1,660 | |||||||||||||||
Extinguishment of liability | — | — | — | (10,580 | ) | — | ||||||||||||||
Gross profit | (163 | ) | (151 | ) | (538 | ) | 10,077 | (1,660 | ) | |||||||||||
Gross margin | N/A | N/A | N/A | N/A | N/A | |||||||||||||||
Operating expenses | 7,856 | 8,189 | 22,990 | 25,270 | 46,201 | |||||||||||||||
Operating income (loss) | $ | (8,019 | ) | $ | (8,340 | ) | $ | (23,528 | ) | $ | (15,193 | ) | $ | (47,861 | ) | |||||
Adjusted EBITDA | $ | (3,788 | ) | $ | (5,198 | ) | $ | (6,792 | ) | $ | (15,400 | ) | $ | (18,962 | ) | |||||
Total | ||||||||||||||||||||
Net revenue | $ | 34,157 | $ | 40,825 | $ | 48,958 | $ | 120,706 | $ | 155,601 | ||||||||||
Cost of revenue | 18,928 | 20,786 | 18,990 | 58,500 | 59,015 | |||||||||||||||
Extinguishment of liability | — | — | — | (10,580 | ) | — | ||||||||||||||
Gross profit | 15,229 | 20,039 | 29,968 | 72,786 | 96,586 | |||||||||||||||
Gross margin | 45 | % | 49 | % | 61 | % | 60 | % | 62 | % | ||||||||||
Operating expenses | 35,992 | 38,871 | 58,405 | 121,257 | 152,953 | |||||||||||||||
Operating income (loss) | $ | (20,763 | ) | $ | (18,832 | ) | $ | (28,437 | ) | $ | (48,471 | ) | $ | (56,367 | ) | |||||
Adjusted EBITDA | $ | (14,357 | ) | $ | (13,081 | ) | $ | (8,369 | ) | $ | (41,356 | ) | $ | (17,131 | ) |
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Q3 | Q2 | Q3 | YTD | YTD | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
RealPlayer Group | |||||||||||||||||||||
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment: | |||||||||||||||||||||
Operating income (loss) | $ | (9,393 | ) | $ | (7,553 | ) | $ | (72 | ) | $ | (23,036 | ) | $ | 767 | |||||||
Acquisitions related intangible asset amortization | 103 | 125 | 60 | 288 | 189 | ||||||||||||||||
Depreciation and amortization | 520 | 535 | 636 | 1,594 | 1,469 | ||||||||||||||||
Adjusted EBITDA | $ | (8,770 | ) | $ | (6,893 | ) | $ | 624 | $ | (21,154 | ) | $ | 2,425 | ||||||||
Mobile Entertainment | |||||||||||||||||||||
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment: | |||||||||||||||||||||
Operating income (loss) | $ | (522 | ) | $ | (540 | ) | $ | (1,477 | ) | $ | (2,715 | ) | $ | (1,915 | ) | ||||||
Acquisitions related intangible asset amortization | 287 | 628 | 1,055 | 1,522 | 2,506 | ||||||||||||||||
Depreciation and amortization | 682 | 720 | 925 | 2,109 | 3,988 | ||||||||||||||||
Adjusted EBITDA | $ | 447 | $ | 808 | $ | 503 | $ | 916 | $ | 4,579 | |||||||||||
Games | |||||||||||||||||||||
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment: | |||||||||||||||||||||
Operating income (loss) | $ | (2,829 | ) | $ | (2,399 | ) | $ | (3,360 | ) | $ | (7,527 | ) | $ | (7,358 | ) | ||||||
Acquisitions related intangible asset amortization | 314 | 314 | 314 | 942 | 565 | ||||||||||||||||
Depreciation and amortization | 269 | 287 | 342 | 867 | 1,620 | ||||||||||||||||
Adjusted EBITDA | $ | (2,246 | ) | $ | (1,798 | ) | $ | (2,704 | ) | $ | (5,718 | ) | $ | (5,173 | ) | ||||||
Corporate | |||||||||||||||||||||
Reconciliation of segment GAAP operating income (loss) to adjusted EBITDA by segment: | |||||||||||||||||||||
Operating income (loss) | $ | (8,019 | ) | $ | (8,340 | ) | $ | (23,528 | ) | $ | (15,193 | ) | $ | (47,861 | ) | ||||||
Other income (expense), net | 325 | (95 | ) | (118 | ) | 153 | (146 | ) | |||||||||||||
Depreciation and amortization | 556 | 553 | 1,839 | 1,554 | 4,708 | ||||||||||||||||
Lease exit and related charges | 154 | 470 | — | 703 | 3,066 | ||||||||||||||||
Loss (gain) on litigation settlements | — | — | 11,525 | — | 11,525 | ||||||||||||||||
Restructuring and other charges | 2,048 | 541 | 1,877 | 3,805 | 4,075 | ||||||||||||||||
Stock-based compensation | 1,148 | 1,673 | 1,613 | 4,158 | 5,671 | ||||||||||||||||
Extinguishment of liability | — | — | — | (10,580 | ) | — | |||||||||||||||
Adjusted EBITDA | $ | (3,788 | ) | $ | (5,198 | ) | $ | (6,792 | ) | $ | (15,400 | ) | $ | (18,962 | ) | ||||||
Total | |||||||||||||||||||||
Reconciliation of GAAP operating income (loss) to adjusted EBITDA: | |||||||||||||||||||||
Operating income (loss) | $ | (20,763 | ) | $ | (18,832 | ) | $ | (28,437 | ) | $ | (48,471 | ) | $ | (56,367 | ) | ||||||
Other income (expense), net | 325 | (95 | ) | (118 | ) | 153 | (146 | ) | |||||||||||||
Acquisitions related intangible asset amortization | 704 | 1,067 | 1,429 | 2,752 | 3,260 | ||||||||||||||||
Depreciation and amortization | 2,027 | 2,095 | 3,742 | 6,124 | 11,785 | ||||||||||||||||
Lease exit and related charges | 154 | 470 | — | 703 | 3,066 | ||||||||||||||||
Loss (gain) on litigation settlements | — | — | 11,525 | — | 11,525 | ||||||||||||||||
Restructuring and other charges | 2,048 | 541 | 1,877 | 3,805 | 4,075 | ||||||||||||||||
Stock-based compensation | 1,148 | 1,673 | 1,613 | 4,158 | 5,671 | ||||||||||||||||
Extinguishment of liability | — | — | — | (10,580 | ) | — | |||||||||||||||
Adjusted EBITDA | $ | (14,357 | ) | $ | (13,081 | ) | $ | (8,369 | ) | $ | (41,356 | ) | $ | (17,131 | ) |
• | supplementing the financial results and forecasts reported to the Company’s board of directors; |
• | evaluating the operating performance of RealNetworks, which includes direct and incrementally controllable revenue and costs of operations but excludes items considered by management to be non-cash or non-operating such as interest income and expense, stock-based compensation, tax expense, depreciation and amortization, impairment of deferred costs and long-lived assets, and other items that are not within management’s control; |
• | managing and comparing performance internally across the Company’s businesses and externally against the Company’s peers; |
• | establishing internal operating budgets; and |
• | evaluating and valuing potential acquisition candidates. |