UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
May 8, 2012
Rosetta Stone Inc.
(Exact name of registrant as specified in its charter)
Delaware |
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001-34283 |
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043837082 |
(State or Other Jurisdiction of Incorporation) |
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(Commission File Number) |
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(IRS Employer Identification Number) |
1919 North Lynn St., 7th Fl., Arlington, Virginia 22209
(Address of principal executive offices, including zip code)
800-788-0822
(Registrants telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On May 8, 2012, Rosetta Stone Inc. announced its financial results for the fiscal first quarter ended March 31, 2012. A copy of the press release is furnished as Exhibit 99.1 to this report. In addition, a copy of the Investor Day Slides which will be discussed during the companys earnings call at 9:00 a.m. Eastern Time on Tuesday, May 8, 2012 is attached to this report as Exhibit 99.2 and incorporated herein by reference. A copy of the Supplemental Financial Data Sheet dated May 8, 2012 is attached to this report as Exhibit 99.3 and incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including the exhibits, shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosure.
See Item 2.02 Results of Operations and Financial Condition above.
Item 9.01. Financial Statements and Exhibits.
(d) |
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Exhibits. |
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99.1 |
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Press Release dated May 8, 2012. |
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99.2 |
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Presentation slides from the Rosetta Stone Inc. webcast of its fiscal first quarter ended March 31, 2012 earnings call held on May 8, 2012, furnished herewith. |
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99.3 |
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Supplemental Financial Data Sheet dated May 8, 2012, furnished herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 8, 2012 |
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By: |
/s/ Michael C. Wu |
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Name: Michael C. Wu |
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Title: General Counsel and Secretary |
EXHIBIT INDEX
Exhibit |
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Description |
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99.1 |
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Press Release dated May 8, 2012. |
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99.2 |
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Presentation slides from the Rosetta Stone Inc. webcast of its fiscal first quarter ended March 31, 2012 earnings call held on May 8, 2012, furnished herewith. |
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99.3 |
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Supplemental Financial Data Sheet, dated May 8, 2012, furnished herewith. |
Exhibit 99.1
Rosetta Stone Inc. Reports First Quarter 2012 Results
ARLINGTON, VA May 8, 2012 Rosetta Stone Inc. (NYSE:RST), a leading provider of technology-based language-learning solutions, today announced financial results for the first quarter 2012, as summarized below:
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Three Months Ended |
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US$ thousands |
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March 31, |
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% |
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except per-share data |
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2012 |
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2011 |
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change |
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Total revenue |
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$ |
69,449 |
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$ |
56,978 |
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22 |
% |
Sales bookings(1) |
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$ |
65,267 |
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$ |
55,580 |
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17 |
% |
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Net income/(loss) |
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$ |
(1,903 |
) |
$ |
(9,281 |
) |
79 |
% |
Net income/(loss) per share |
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$ |
(0.09 |
) |
$ |
(0.45 |
) |
80 |
% |
Adjusted EBITDA |
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$ |
1,348 |
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$ |
(10,043 |
) |
113 |
% |
Operating EBITDA(1) |
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$ |
(2,834 |
) |
$ |
(11,442 |
) |
75 |
% |
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Cash flow from operations |
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$ |
2,656 |
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$ |
932 |
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185 |
% |
Purchases of property and equipment |
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$ |
967 |
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$ |
2,651 |
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-64 |
% |
Free cash flow |
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$ |
1,689 |
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$ |
(1,719 |
) |
198 |
% |
(1) Definitions and reconciliations for all non-GAAP measures are provided in this press release.
Strength in our US Consumer business helped drive 22% revenue growth and better-than-expected Adjusted EBITDA and Net Income, said Stephen M. Swad, President and Chief Executive Officer, Rosetta Stone Inc. Improved web visits and conversion in the direct-to-consumer channel drove US Consumer results, while retail sell-through and same-store kiosk sales recorded double-digit gains in the quarter. In addition, we more efficiently managed our sales and marketing spending and lowered our general and administrative expenses from a year ago, which helped improve Adjusted EBITDA margins to positive 2% from negative 18% a year ago.
Swad continued, Although growth from our US Consumer business was robust, we are still working to reset and grow our business in our International consumer markets. Our Institutional segment showed mixed results with gains in the Corporate and Educational
channels offset by softness in the Government channel. Overall results for the quarter were a good start to the year, but we have more work to do. The new strategy that we are pursuing to drive revenues, improve margins and return to profitability will not materialize immediately, but I believe that we are headed in the right direction and first quarter results provide a solid foundation.
First Quarter 2012 Operational and Financial Highlights
· Revenue increased 22%: Revenue grew 22% to $69.4 million reflecting the strong performance of the US Consumer segment.
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Three Months Ended |
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March 31, |
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% |
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2012 |
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2011 |
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change |
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Total consumer units sold (000) |
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190.8 |
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114.2 |
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67 |
% | ||
Average revenue per unit |
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$ |
290 |
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$ |
374 |
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-22 |
% |
First quarter 2012 units and pricing were influenced by a larger sell-in to our retail partners compared with unusually low levels in the prior year period. In addition, lower price points that were instituted in 2011 as well as more effective marketing during the quarter, particularly in the direct-to-consumer channel, drove a 67% year-over-year increase in consumer units sold to 190.8 thousand.
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Three Months Ended |
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March 31, |
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March 31, |
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% |
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US$ thousands |
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2012 |
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2011 |
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change |
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Revenue from: |
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US Consumer |
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$ |
42,671 |
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$ |
28,061 |
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52 |
% |
International Consumer |
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12,617 |
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14,601 |
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-14 |
% | ||
Total Consumer |
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55,288 |
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42,662 |
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30 |
% | ||
Institutional |
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14,161 |
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14,316 |
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-1 |
% | ||
Total |
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69,449 |
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56,978 |
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22 |
% | ||
· US Consumer revenues increased 52%: Revenues in our US Consumer segment increased sharply to $42.7 million from $28.1 million in the first quarter of 2011. Results were driven by higher sell-in to our retail partners and better conversion in the direct-to-consumer channel, as well as favorable promotional and pricing activity.
First quarter 2011 results were impacted by both lower sales from retailers as these retail partners stocked larger than usual inventories in the fourth quarter of 2010 with the introduction of TOTALe Version 4, as well as from higher returns of our Version 3 offering. The absence of this dynamic in the first quarter of 2012 resulted in a larger than usual increase in our retail channel. Sell-through, or retail sales to consumers, was still robust in the quarter, up double-digits from the prior year period. Kiosk sales declined year-over-year as the company has rationalized that channel, but same-store-sales grew 18%, reflecting the improvement in selling efficiency in that channel.
· International Consumer revenues decreased 14%: International consumer revenues of $12.6 million were 13.6% lower than the first quarter of 2011. Performance in Europe was positive, but was offset by continuing challenges in Japan and Korea. The issues in our Asian markets are country-specific including shifting distribution in Korea and pricing and messaging in Japan. International Consumer revenues represented 18% of total revenues in the quarter, down from a high of 26% in the prior year period.
· Worldwide Institutional revenues declined 1%: Institutional revenues decreased to $14.2 million, compared to $14.3 million in the first quarter of 2011. Corporate channel revenues grew double-digit as efforts implemented last year began to generate results while International continues to be a contributor. Education channel revenues were only modestly higher due to softer new business, partially reflecting tighter school budgets. The decrease in the Government/Non-profit channel offset the gains in the other channels as the prior year period includes the U.S. Army and U.S. Marine Corps contracts, which were not renewed in the second half of 2011.
· Adjusted EBITDA: Adjusted EBITDA for the first quarter was $1.3 million, an increase of $11.4 million from ($10.0) million in the first quarter of 2011. Operating EBITDA was ($2.8) million for the quarter, compared to ($11.4) million in the first quarter of 2011. Going forward, the company will no longer report Operating EBITDA as a metric and will use Adjusted EBITDA. Adjusted EBITDA margin was 1.9%, an increase of 19.6% points from (17.6%) in the prior year period. The improvement in Adjusted EBITDA was driven by higher US Consumer revenues, a slight improvement in gross profit and a 1.3% reduction in operating expenses. Sales and marketing costs increased 1.5% to support higher sales, but decreased to 55% of revenues compared with 66% in the first quarter of 2011. Research and development (R&D) expenses decreased modestly, while general and administrative (G&A) expenses declined 7.8% or $1.1 million to $13.7 million. As a percentage of revenues R&D decreased 240 basis points to 9% and G&A decreased 630 basis points to 20% from 26% in the prior year period.
· Net Income: Rosetta Stone recorded a net loss of $1.9 million in the first quarter 2012, compared to a net loss of $9.3 million in the first quarter of 2011. Net loss per share was $0.09 compared with a net loss of $0.45 per share in the prior year period.
· Balance Sheet and cash flow: Cash, cash equivalents and short-term investments were $118.5 million at March 31, 2012, an increase of $2.2 million compared with $116.3 million at December 31, 2011 and a decrease of $2.3 million from the prior year period. The company has no debt. Net cash provided by operating activities in the quarter was $2.7 million. Capital expenditures were $1.0 million. Free cash flow for the quarter was $1.7 million, an almost 200% increase from ($1.7) million in the first quarter of 2011.
Financial Outlook
The company is providing the following guidance for 2012:
· Net revenue growth of 1% to 5% to approximately $270 million to $285 million
· North American Consumer revenues are expected to increase compared with 2011
· International Consumer revenues are expected to decrease compared with 2011
· Institutional revenues are expected to be approximately flat compared with 2011
· Adjusted EBITDA* of $5 Million to $8 Million with Adjusted EBITDA margin of approximately 2% to 3%
· Net Income of ($6) million to ($4) million
· Earnings per share of ($0.33) to ($0.20)
· Diluted weighted average shares outstanding of approximately 21 million
· Capital expenditures of $10 million to $13 million
*Adjusted EBITDA excludes any potential expenses related to the previously disclosed lawsuit seeking to prevent Google Inc. from infringing upon Rosetta Stones trademarks, and any restructuring costs.
Non-GAAP Financial Measures
This press release contains the non-GAAP financial measure Operating EBITDA, which is GAAP net income or loss plus interest expense, income tax expense, depreciation, amortization (primarily related to acquired intangibles) and stock-based compensation expenses plus the change in deferred revenue from the prior quarter. This press
release also contains the non-GAAP financial measure Adjusted EBITDA, which is GAAP net income or loss plus interest expense, income tax expense, depreciation, amortization and stock-based compensation expenses. An additional non-GAAP financial measure in this press release is total sales bookings, or bookings, which represents executed sales contracts received by the company that are either recorded immediately as revenue or as deferred revenue. This press release also includes the non-GAAP financial measure free cash flow, which is cash flow from operations less cash used in purchases of property and equipment. Management believes that these non-GAAP measures of financial results provide useful information to investors regarding certain financial and business trends relating to the companys financial condition and results of operations. Management uses these non-GAAP measures to compare the companys performance to that of prior periods for trend analyses, for purposes of determining executive incentive compensation, and for budgeting and planning purposes. These measures are used in monthly financial reports prepared for management and in quarterly financial reports presented to the companys board of directors. Management believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the companys financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.
Management typically excludes the amounts described above when evaluating the companys operating performance and believes that the resulting non-GAAP measures are useful to investors and financial analysts in assessing the companys operating performance due to the following factors:
· Amortization of Acquired Intangibles. Amortization costs and the related tax effects are fixed at the time of an acquisition, and then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management after the acquisition.
· Stock-based Compensation. Although stock-based compensation is an important aspect of compensation of the companys employees and executives, stock-based compensation expense is generally fixed at the time of grant, then amortized over a period of several years after the grant of the stock-based instrument, and generally cannot be changed or influenced by management after the grant. In addition, the impact of shares granted under these plans is considered in the companys EPS calculation to the extent the shares are dilutive.
· Total Sales Bookings. Although revenue is an important aspect of measuring company performance, the company believes total sales bookings can be a valuable indicator of the companys performance. In September 2010, the company began to transition to a greater amount of subscription sales, which results in an increasing portion of sales being recorded as deferred revenue.
· Deferred Revenue. At the time a customer enters into a binding subscription agreement, the company classifies the amounts received, as well as the amounts on
billed and uncollected amounts due from customers, in advance of revenue recognition as deferred revenue.
Management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the companys financial statements. In addition, they are subject to inherent limitations, because they reflect the exercise of judgments by management about which expenses and items of income are excluded from these non-GAAP financial measures and may not be calculated in the same manner as other companies similarly titled non-GAAP measures.
In order to compensate for these limitations, management presents its non-GAAP financial measures in connection with its GAAP results. The company urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing earnings information, including this press release, and not to rely on any single financial measure to evaluate the companys business.
Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP measures used in this press release are included at the end of this release.
Investor Webcast
This news release and the accompanying tables should be read in conjunction with the additional content that is available on the companys website, which includes supplemental financial information
Rosetta Stones management will discuss first quarter financial results as part of its 2012 Investor Day that is being webcast.
The live webcast, available at http://investors.RosettaStone.com, is scheduled for today, May 8, from 9:00 a.m. to 12:00 p.m. Eastern Time (ET).
A recorded replay of the Investor Day webcast will be available on the Investor Relations page of the companys web site http://investors.RosettaStone.com. The replay will be archived for a period of one year.
About Rosetta Stone
Rosetta Stone Inc. provides interactive solutions and cutting-edge technology that is changing the way the world learns languages. Rosetta Stones proprietary learning
techniques are acclaimed for the power to unlock the natural language-learning ability in everyone. The company offers 30 languages, from the most commonly spoken, like English, Mandarin Chinese and Spanish, to the less widely used, like Swahili and Tagalog. Rosetta Stone solutions are used by schools, businesses, global organizations, and millions of individuals in more than 150 countries throughout the world. The company was founded in 1992 on the core beliefs that learning a language should be natural and instinctive and that interactive technology can replicate and activate the immersion method powerfully for learners of any age. The company is based in Arlington, VA. For more information, visit RosettaStone.com.
Rosetta Stone, TOTALe, ReFLEX and other names used herein are registered trademarks or trademarks of Rosetta Stone Ltd. in the United States and other countries.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release are forward-looking statements, including our guidance for future financial performance and operating targets, and our long-term growth prospects. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as project, believe, plan, expect, anticipate, estimate, intend, should, would, could, potentially, seek, may, likely, will, financial outlook, strategy, or continue. These forward-looking statements reflect the companys current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, including demand for language learning software; the advantages of our products, technology, brand and business model as compared to others; our ability to maintain effective internal controls or to remediate material weaknesses; our cash needs and expectations regarding cash flow from operations; our product development plans; the impact of our Version 4 TOTALe and ReFLEX products on our industry; the appeal and efficacy of Version 4 TOTALe and ReFLEX; our expectations regarding capturing lifetime value and a broader range of market segments through such offerings; our plans regarding expansion of our marketing initiatives and sales force; our international expansion and growth plans; our plans regarding our kiosks and retail relationships; our plans regarding our Institutional business; the impact of any revisions to our pricing strategy; our ability to manage and grow our business and execute our business strategy; our financial performance; our actions to stabilize our business in the U.S. consumer market including realigning our cost structure and revitalizing our go-to-market strategy; our plans to transition our distribution to more online in the consumer space; adverse trends in general economic conditions and the other factors described more fully in the companys filings with the U.S. Securities and Exchange Commission (SEC), including the companys annual report on Form 10-K for the fiscal year ended December 31, 2011, which is on file with
the SEC. The company assumes no obligation to update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.
Rosetta Stone Inc. |
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Investor Contact: |
Media Contact: |
Steve Somers, CFA |
Kristen Ingraham |
703-387-5876 |
(212)-593-5801 |
ssomers@rosettastone.com |
kristen@finnpartners.com |
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Source: Rosetta Stone Inc. |
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ROSETTA STONE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
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Three Months Ended |
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March 31, |
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2012 |
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2011 |
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Revenue: |
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Product |
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$ |
47,530 |
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$ |
42,303 |
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Subscription and service |
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21,919 |
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14,675 |
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Total revenue |
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69,449 |
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56,978 |
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Cost of revenue: |
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Cost of product revenue |
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9,108 |
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8,795 |
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Cost of subscription and service revenue |
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4,366 |
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2,667 |
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Total cost of revenue |
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13,474 |
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11,462 |
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Gross profit |
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55,975 |
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45,516 |
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Operating expenses |
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Sales and marketing |
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38,404 |
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37,820 |
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Research and development |
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6,273 |
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6,484 |
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General and administrative |
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13,657 |
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14,808 |
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Total operating expenses |
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58,334 |
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59,112 |
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Loss from operations |
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(2,359 |
) |
(13,596 |
) | ||
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Other income and (expense): |
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Interest income |
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78 |
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80 |
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Interest expense |
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(3 |
) | ||
Other income (expense) |
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(364 |
) |
2 |
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Total other income (expense) |
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(286 |
) |
79 |
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Loss before income taxes |
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(2,645 |
) |
(13,517 |
) | ||
Income tax benefit |
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(742 |
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(4,236 |
) | ||
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Net loss |
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$ |
(1,903 |
) |
$ |
(9,281 |
) |
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Net loss per share: |
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Basic |
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$ |
(0.09 |
) |
$ |
(0.45 |
) |
Diluted |
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$ |
(0.09 |
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$ |
(0.45 |
) |
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Common shares and equivalents outstanding: |
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Basic weighted average shares |
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20,942 |
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20,675 |
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Diluted weighted average shares |
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20,942 |
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20,675 |
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ROSETTA STONE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
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March 31, |
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December 31, |
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2012 |
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2011 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
112,073 |
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$ |
106,516 |
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Restricted cash |
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51 |
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74 |
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Short term investments |
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6,404 |
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9,711 |
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Accounts receivable (net of allowance for doubtful accounts of $1,035 and $1,951, respectively) |
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34,315 |
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51,997 |
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Inventory |
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7,440 |
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6,723 |
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Prepaid expenses and other current assets |
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6,579 |
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7,081 |
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Income tax receivable |
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8,738 |
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7,678 |
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Deferred income taxes |
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11,076 |
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10,985 |
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Total current assets |
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186,676 |
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200,765 |
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Property and equipment, net |
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19,713 |
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20,869 |
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Goodwill |
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34,856 |
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34,841 |
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Intangible assets, net |
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10,855 |
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10,865 |
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Deferred income taxes |
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9,162 |
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8,038 |
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Other assets |
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2,954 |
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1,803 |
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Total assets |
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$ |
264,216 |
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$ |
277,181 |
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Liabilities and stockholders equity |
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Current liabilities: |
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Accounts payable |
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$ |
6,716 |
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$ |
7,291 |
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Accrued compensation |
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9,644 |
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11,703 |
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Other current liabilities |
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27,259 |
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34,911 |
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Deferred revenue |
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45,154 |
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49,375 |
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Total current liabilities |
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88,773 |
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103,280 |
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Deferred revenue |
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2,559 |
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2,520 |
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Other long-term liabilities |
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1,769 |
|
176 |
| ||
Total liabilities |
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93,101 |
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105,976 |
| ||
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Commitments and contingencies |
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Stockholders equity: |
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Preferred stock, $0.001 par value; 10,000 and 10,000 authorized; zero and zero shares issued and outstanding March 31, 2012 and December 31, 2011 |
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Non-designated common stock, $0.00005 par value, 190,000 and 190,000 shares authorized, 21,747 and 21,258 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively |
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2 |
|
2 |
| ||
Additional paid-in capital |
|
153,334 |
|
151,823 |
| ||
Accumulated income |
|
17,179 |
|
19,082 |
| ||
Accumulated other comprehensive income |
|
600 |
|
298 |
| ||
Total stockholders equity |
|
171,115 |
|
171,205 |
| ||
Total liabilities and stockholders equity |
|
$ |
264,216 |
|
$ |
277,181 |
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ROSETTA STONE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
|
Three Months Ended |
| ||||
|
|
March 31, |
| ||||
|
|
2012 |
|
2011 |
| ||
Cash Flows From Operating Activities: |
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|
|
|
| ||
|
|
|
|
|
| ||
Net loss |
|
(1,903 |
) |
(9,281 |
) | ||
Adjustments to reconcile net loss to cash provided by operating activities, net of business acquisitions |
|
|
|
|
| ||
Stock-based compensation expense |
|
1,635 |
|
1,437 |
| ||
Bad debt expense |
|
165 |
|
216 |
| ||
Depreciation and amortization |
|
2,436 |
|
2,114 |
| ||
Deferred income tax benefit |
|
(1,314 |
) |
(2,977 |
) | ||
Loss on sales of equipment |
|
32 |
|
15 |
| ||
Net change in: |
|
|
|
|
| ||
Restricted cash |
|
23 |
|
28 |
| ||
Accounts receivable |
|
17,575 |
|
18,319 |
| ||
Inventory |
|
(709 |
) |
(412 |
) | ||
Prepaid expenses and other current assets |
|
503 |
|
66 |
| ||
Income tax receivable |
|
(1,236 |
) |
(2,004 |
) | ||
Other assets |
|
(1,209 |
) |
(63 |
) | ||
Accounts payable |
|
(587 |
) |
(1,013 |
) | ||
Accrued compensation |
|
(2,076 |
) |
(2,867 |
) | ||
Other current liabilities |
|
(8,020 |
) |
(1,119 |
) | ||
Excess tax benefit from stock options exercised |
|
|
|
(18 |
) | ||
Other long-term liabilities |
|
1,587 |
|
(6 |
) | ||
Deferred revenue |
|
(4,246 |
) |
(1,503 |
) | ||
Net cash provided by operating activities |
|
2,656 |
|
932 |
| ||
|
|
|
|
|
| ||
Cash Flows From Investing Activities: |
|
|
|
|
| ||
Purchases of property and equipment |
|
(967 |
) |
(2,651 |
) | ||
Proceeds from (purchases of) available-for-sale securities |
|
3,307 |
|
(1,807 |
) | ||
Acquisition, net of cash acquired |
|
|
|
(75 |
) | ||
Net cash provided by (used in) investing activities |
|
2,340 |
|
(4,533 |
) | ||
|
|
|
|
|
| ||
Cash Flows From Financing Activities: |
|
|
|
|
| ||
Proceeds from the exercise of stock options |
|
|
|
40 |
| ||
Tax benefit of stock options exercised |
|
|
|
18 |
| ||
Payments under capital lease obligations |
|
(2 |
) |
(3 |
) | ||
Net cash provided by (used in) financing activities |
|
(2 |
) |
55 |
| ||
|
|
|
|
|
| ||
Increase (decrease) in cash and cash equivalents |
|
4,994 |
|
(3,546 |
) | ||
|
|
|
|
|
| ||
Effect of exchange rate changes in cash and cash equivalents |
|
563 |
|
329 |
| ||
|
|
|
|
|
| ||
Net increase (decrease) in cash and cash equivalents |
|
5,557 |
|
(3,217 |
) | ||
|
|
|
|
|
| ||
Cash and cash equivalentsbeginning of period |
|
106,516 |
|
115,756 |
| ||
|
|
|
|
|
| ||
Cash and cash equivalentsend of period |
|
$ |
112,073 |
|
$ |
112,539 |
|
ROSETTA STONE INC.
Reconciliation of Net Loss to Operating EBITDA
(in thousands)
(unaudited)
|
|
Three Months Ended |
| ||||
|
|
March 31, |
| ||||
|
|
2012 |
|
2011 |
| ||
|
|
|
|
|
| ||
Net loss |
|
$ |
(1,903 |
) |
$ |
(9,281 |
) |
Interest (income)/expense, net |
|
(78 |
) |
(77 |
) | ||
Income tax benefit |
|
(742 |
) |
(4,236 |
) | ||
Depreciation and amortization |
|
2,436 |
|
2,114 |
| ||
Stock-based compensation |
|
1,635 |
|
1,437 |
| ||
|
|
|
|
|
| ||
Adjusted EBITDA |
|
$ |
1,348 |
|
$ |
(10,043 |
) |
|
|
|
|
|
| ||
Change in deferred revenue |
|
(4,182 |
) |
(1,399 |
) | ||
|
|
|
|
|
| ||
Operating EBITDA |
|
$ |
(2,834 |
) |
$ |
(11,442 |
) |
ROSETTA STONE INC.
Reconciliation of Net Loss to non-GAAP Net Loss
(in thousands, except per share amounts)
(unaudited)
|
|
Three Months Ended |
| ||||
|
|
March 31, |
| ||||
|
|
2012 |
|
2011 |
| ||
|
|
|
|
|
| ||
Net loss |
|
$ |
(1,903 |
) |
$ |
(9,281 |
) |
Stock-based compensation net of tax (1) |
|
1,022 |
|
898 |
| ||
Amortization of intangibles net of tax (1) |
|
6 |
|
14 |
| ||
Non-GAAP net loss |
|
$ |
(875 |
) |
$ |
(8,369 |
) |
|
|
|
|
|
| ||
Non-GAAP net loss per share: |
|
|
|
|
| ||
Basic |
|
$ |
(0.04 |
) |
$ |
(0.40 |
) |
Diluted |
|
$ |
(0.04 |
) |
$ |
(0.40 |
) |
|
|
|
|
|
| ||
Common shares and equivalents outstanding: |
|
|
|
|
| ||
Basic weighted average shares |
|
20,942 |
|
20,675 |
| ||
Diluted weighted average shares |
|
20,942 |
|
20,675 |
|
(1) Non-GAAP tax rate of 37.5%
Exhibit 99.2
|
Overview & Roadmap to 2015 Investor Day May 8, 2012 |
|
Agenda Welcome & Introduction Steve Somers, VP of IR Rosetta Stone Overview & Roadmap Steve Swad, CEO Product Roadmap Mike Fulkerson, CTO Global Consumer Overview Pragnesh Shah, President Global Consumer Global Institutional Overview Judy Verses, President Global Institutional Customer Success Jay Topper, SVP Customer Success Marketing & Brand Strategy Pamela Mulder, CMO Financial Review Steve Somers, VP IR |
|
Certain information contained in this presentation and certain comments today constitutes forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the company's current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, including demand for our language learning solutions; the advantages of our products, services, technology, brand and business model as compared to others; our cash needs and expectations regarding cash flow from operations; our product development plans; the appeal and efficacy of our products and services; our expectations regarding capturing lifetime value and a broader range of market segments through such offerings; our plans regarding expansion of our marketing initiatives and sales force; our international growth and expansion plans; our plans regarding our kiosks and retail relationships; our product development plans; our plans regarding our Institutional business; the impact of any revisions to our pricing strategy; our ability to manage and grow our business and execute our business strategy; our financial performance; our actions to stabilize our business in the U.S. consumer market including realigning our cost structure and revitalizing our go-to-market strategy; our plans to transition our distribution to more online in the consumer space; adverse trends in general economic conditions and the other factors including the Risk Factors more fully described in the company's filings with the U.S. Securities and Exchange Commission (SEC), including the companys annual report on Form 10-K for the year period ended December 31, 2012, which is on file with the SEC. We encourage you to review those factors before making any investment decision. You should not place undue reliance on forward-looking statements because they involve factors that are, in some cases, beyond our control and that could materially affect actual results, levels of activity, performance, or achievements. Todays presentation and discussion also contains references to non-GAAP financial measures. The full definition and reconciliation of those measures is available in our Form 8-K filed with the SEC on May 8, 2012. Management uses these non-GAAP measures to compare the company's performance to that of prior periods for trend analyses, for purposes of determining executive incentive compensation, and for budgeting and planning purposes. Management believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends. Our definitions of non-GAAP measures may not be comparable to the definitions used by other companies, and we encourage you to review and understand all our financial reporting before making any investment decision. Safe Harbor Reminder |
|
Overview & Roadmap Steve Swad President & Chief Executive Officer |
|
CEO 75-day Plan Listen Customers Internal team Thought leaders Board External advisors Analysts Define & Align Analysis Strategy 2012-2015 Align team Communicate Internally Board Employees Externally to Street Investor Day |
|
Company Profile Founded 1992 Language learning solutions Technology-based 30+ languages Based in Arlington, VA ~1,700 employees1 Global locations Two main segments: Global Consumer Global Institutions 1) Full-time and part-time as of April 12 Source: Rosetta Stone Worldwide Revenues $MM 20% 3% 4% |
|
Business Overview 1) Includes Consumer and Institutional markets, except for Korea and Japan (market sizes Consumer only) Source: Rosetta Stone; Nielsen study 2007 $80B+ Global Market1 U.S. $6.7B UK & Germany $5.6B Brazil $9.3B Japan $10.3B Korea $9.1B Revenue Mix in 2011 ($MM) Concentrated in top markets: International Consumer Global Institutions U.S. Consumer |
|
Leadership team Steve Swad Chief Executive Officer Mike Fulkerson Chief Technology Officer Pradeep Mannakkara Chief Information Officer Pamela Mulder Chief Marketing Officer Michael Wu General Counsel and Corporate Secretary Greg Keim Chief Innovation Officer Michaela Oliver SVP, Human Resources Pragnesh Shah President, Global Consumer Sales Jay Topper SVP, Customer Success Judy Verses President, Global Institutions Tom Pierno Chief Financial Officer Nino Ninov VP, Consumer Research |
|
Mission Our vision is that anyone, anywhere, anytime can learn to speak another language using Rosetta Stone alone. Every day, our innovations help people improve their lives and make the world a better place. |
|
Vision for 2015 LIVE mobile Community Korea and Japan Growing Global recognition as K-12 partner Engaged Learners Strategic Partnerships Adaptive |
|
Strategic Focus Through 2015 Three priorities: Balance margins and growth investments New products Targeted marketing Disciplined geographic expansion B2B marketing Staged brand extensions Leverage cloud Adaptive Multi-device Integrated Live Community New alliances Expand B2B sales force Social |
|
Leverage Brand Transferable Brand Equity High Awareness 1 ) Shown in chart are percentages of survey respondents indicating interested in other RS products Source: Rosetta Stone and McKinsey surveys Aided brand awareness in select markets and year-over-year change: To new language products And other learning categories1 Kids Intermediate English |
|
Innovate Platform Adaptive Multi-device Rich Data Integrated Live Community Enhanced customer benefits and relevance Better business economics |
|
Expand Distribution Pursuing New Alliances: Illustrative Examples Asia Community Online Mobile Source: images public domain |
|
Leverage Advantages Other Players Rosetta Stone Advantages Segment Specialists Greater scale in R&D Choice and efficient targeting Free Stronger quality and brand awareness New bundles and tiers (better RS entry) Strong Incumbents Improved efficacy More convenience More choice Online Platforms Better efficacy Diversified channels |
|
Next Phase of Growth Total Revenues ($MM) 2011-2015 CAGR ~10% Source: Rosetta Stone 270-285 400+ |
|
Operating Margin Growth Note: Adjusted EBITDA is GAAP net income or loss plus interest expense, income tax expense, depreciation, amortization and stock-based compensation expenses. Source: Rosetta Stone Gross Profit G&A Adjusted EBITDA R&D S&M 82% 23% (3%) 9% 60% 82-85% 15-18% 10-13% 9-11% 45-50% 2011 2015 Selected Drivers 0-3 (5-8) 13-16 0-2 (10-15) pt. Lower hard product costs Better coaching monetization More efficient media Further channel optimization Alliances R&D leverage Cost efficiencies Intl infrastructure scale General scale economies Margins |
|
2012 Financial Outlook 2012 Guidance Note: Adjusted EBITDA is GAAP net income or loss plus interest expense, income tax expense, depreciation, amortization and stock-based compensation expenses. Source: Rosetta Stone Key Points Modest US Consumer growth Driven by DTC & retail channels Reset International Consumer Stabilize and focus on profitable revenue Flattish Institutional revenues Growth in Corporate and International offset by Government Improving S&M and G&A efficiencies Cost reduction and efficiency programs $270 - $285 $5 - $8 Revenues (MM) Adjusted EBITDA ($MM) +3% |
|
Recap |
|
Product Roadmap Mike Fulkerson Chief Technology Officer |
|
Dynamic Immersion® |
|
Core Competencies Pedagogy Widgets Speech Community Live Mobile multi platform Al adaptive learning Version 1 Version 3 Version 4 TOTALe ReFLEX Features and capabilities that are provided online with an active subscription. |
|
Connected Learning Vision |
|
[LOGO] |
|
24 Languages True-beginners through intermediate learners All ages (with restrictions on social features for kids) All areas of language: vocabulary, listening, speaking, reading, etc. Full range of activities from solo activities to practice with peers and guided sessions with native speakers. |
|
[LOGO] |
|
English in Asia Intermediate learners with beginner speaking ability Unlocks the ability to speak automatically and confidently Innovative approach using a 30-minute workout Adaptive dialog practice using speech recognition Live practice with American language coaches. |
|
2012 Investments in Core Capabilities Increased segmentation: Bundles Adaptive curriculum: Artificial Intelligence Live flexibility Social platform Additional mobile options |
|
Product Demonstrations |
|
Global Consumer Overview Prag Shah President Global Consumer Sales |
|
Global Consumer Overview 1) Homeschool Source: Rosetta Stone Revenues ($MM) (2%) 15% Kiosk 2% H/S1 17% Retail 66% DTC Growth Y-on-Y +2% 209 204 208 2009 2010 2011 |
|
Trends and Dynamics Source: Rosetta Stone (internal study); Gartner; Translated.net (T-index) 2011 U.S. International Competition Proliferation of apps and freemium Only ~12% of category is with < $100 / year spenders Fragmented industry Diverse competitors Inertia of classrooms Markets U.S. #1 in E-commerce Social commerce $30B by 2015 Japan #3 in E-commerce Korea #9 in E-commerce 650M+ tablets worldwide by 2016 Selected facts: |
|
Positioning Classroom Immersion Affordability and Convenience (Self-study, mobile, perpetual or time-based) Effectiveness Mass Instruction Other Audio / Software Solutions The most convenient + affordable + effective solution to learn a language via combined adaptive, online, and live components |
|
Strong Global Brand U.S. International Very high awareness Stable Positive brand attributes Significant brand awareness Growing Positive brand attributes |
|
Driving Sales & Marketing Efficiencies Increasing Decreasing Print Out-of-home Inefficient TV Other Sales & Marketing expenses PPC and online display Email and CRM Online affiliates Social marketing Mobile and video Targeted print and TV Marketing effectiveness + margin expansion |
|
Key 2012+ Plans: U.S. / North America Offering / Channels Targeting / Platforms Geo. / Segments High volume, high conversion emails Monetizing 1M+ social followers E-commerce infrastructure and tools CRM Subscription bundles/services New partnerships Tightly manage inventories and SKUs Optimize kiosk footprint Invest to grow U.S. Hispanic Expand North America Begin planning for Brazil consumer |
|
Key 2012+ Plans: International Japan Europe Korea Grow U.K. core Germany 100% online incubator Restructure for pan-European online approach Grow core direct web channels Launch and grow ReFLEX Build partnerships for greater & more efficient reach Close unprofitable kiosks Partnerships to further penetrate kids market Home Shopping Network channels Grow ReFLEX |
|
Global Institutions Overview Judy Verses President Global Institutions |
|
Global Institutions Overview Source: Rosetta Stone Revenues ($MM) 20% Govt 24% Corp. 56% Edu. 28% Growth Y-on-Y 9% 2009 2010 2011 43 55 60 Three Core Verticals Education: Foundational to Growth Corporate: Good Momentum Government: Tied to Budgets Significant Room to Grow |
|
Trends and Dynamics Selected trends in institutional language learning: Rising Awareness benefits of language learning Pressure on Budgets focus on ROI Technology Adoption online and mobile learning Spectrum of Proficiency need for higher content levels Budget Authority flexible payment models |
|
1 Improve Strategy, Structure, and Processes Improve strategic planning and KPI tracking Upgrade sales leadership talent and rationalize structure Differentiate and strategically adopt value-based pricing 2 Win Large Deals; Increase Average Order Value (AOV) Drive adoption of TOTALe Pro Align with strategic agendas to win six-figure+ deals Refine implementation model to win and support large deals 3 Improve retention Adopt a tiered client success structure Drive adoption and stickiness Strike multi-year deals 4 Invest in global marketing Use Pro branding to differentiate value proposition Refine segmentation and targeting Develop proof points and demonstrate efficacy 2012 Focus for Global Institutions |
|
2012 Priorities by Vertical Vertical United States International Education Develop proof points Educate on funding options Improve implementation models Partner with universities in LAC1 Target high schools and higher education in Middle East Focus on private sector in Asia Corporate Demonstrate business value Drive adoption of TOTALe Pro Offer flexible payment models Pursue large-scale deals in Europe Win in remedial market in Korea Expand reach through partners Government Show efficacy Develop senior relationships Rationalize pricing models Pursue strategic deals with international agencies and governments in EMEA2 Align with strategic agendas in LAC 1) Latin American Countries; 2) EMEA: Europe, Middle East and Africa |
|
Real Opportunity; Positioned for Success 1) High-level, rough estimates of total spend. Europe and LAC estimates include top 5 and 6 countries (by GDP), respectively Source: Rosetta Stone Global Institutions opportunity estimates (in key markets): Annual spend in $B |
|
Customer Success Jay Topper Senior VP, Customer Success |
|
Success Organization Social Media Self-help Webinars Consumer Services Technical Support Customer care Studio Coaches Community safety Account Management Integration Concierge and Training Online Experience Institutional Services Digital Services Seattle New York Washington DC Chicago Miami Harrisonburg |
|
Increase engagement and satisfaction leading to greater efficacy and financial value. Service Efficiencies Increased Value Positive Engagement Mission |
|
2,000,000+ Order Mgt License Mgt Returns Tech Support Prevents Usage NPS Renewals Advocacy Enables Positive engagement 200,000+ |
|
Usage is 3X Retention rate Is 6X Pulse NPS 55 NPS 3548 Retention rate is 5x Socially loud LTV +60% Support -50% Gamers 2X Renew Upfront Increased value Social Attendees Studio Participants 3-month Subscribers |
|
Leverage U.S. work from home model Satisfaction Cost Complexity Service Efficiencies |
|
Katrin, corporate learner German native, English bi-lingual, French and Mandarin learner; works at a resort hotel in Scotland. Due to my work, Im learning French. My employer bought Rosetta Stone for the whole hotel. We are able to speak with customers in their native language which makes the relations between the guests and us a little bit closer. Customer Testimonials |
|
May 8, 2012 Pamela Mulder Chief Marketing Officer STRATEGIC MARKETING VISION |
|
52 Be Relevant |
|
53 What do we look like? |
|
54 |
|
55 |
|
56 |
|
57 |
|
58 Building Our Brand with Our Community |
|
59 ESPANOL |
|
60 FRENCH |
|
61 CHINESE |
|
62 Global Brand Relevance What do we stand for? Unique Difference Adaptive + Live + Mobile Key Messaging Expand Your Horizons Emotional Speak Confidently Functional |
|
63 US Market Accessibility Enjoyable Journey Market Segment Media Mix Channel Mix Advertising Message |
|
64 Song TV Spot |
|
65 Customer Segment International Manager 59% Male Age 35-34 High Income Highly Educated 60% Married |
|
66 Ability & Confidence ADVERTISEMENTS |
|
67 How Do We Create Value in Marketing Short Term Value Timely, Relevant Communications Messaging Tools Lowering Risk of Engagement Accessible pricing models |
|
68 How Do We Create Value in Marketing Long Term Value Stay Fresh and Relevant Stay Fresh and Relevant Keep product and brand in sync Keep the customer at the center of your marketing Bundles Example Balance |
|
Financial Review Steve Somers VP, Investor Relations |
|
Historical Financial Review 70 |
|
Worldwide Revenues 71 |
|
Revenue by Geography 72 |
|
Consumer Revenue 73 |
|
Institutional Revenues 74 |
|
Adjusted EBITDA & Free Cash Flow (1) Adjusted EBITDA equals GAAP net income or loss plus interest expense, income tax expense, depreciation, amortization, and stock-based compensation expenses. (2) Free cash flow is defined as cash generated by operating activities less cash used for purchases of property and equipment (capex) 75 |
|
1Q12 Earnings Review 76 |
|
Worldwide Revenues & Bookings (Millions) 1Q11 1Q12 % Change Total Bookings $ 55.6 $ 65.3 17% Total Revenues $ 57.0 $ 69.4 22% 77 |
|
Worldwide Revenue by Segment (Millions) 1Q11 1Q12 % Change Consumer $ 42.7 $ 55.3 30% Institutional $ 14.3 $ 14.2 -1% Total $ 57.0 $ 69.4 22% 78 |
|
Consumer Revenue (MM) 1Q11 1Q12 % Change US $ 28.1 $ 42.7 52% Int'l $ 14.6 $ 12.6 -14% Total $ 42.7 $ 55.3 30% 79 |
|
Consumer Units & Pricing 80 |
|
Consumer Revenues by Channel (Millions) 1Q11 1Q12 % Change Direct $ 31.9 $ 36.8 16% Kiosk $ 7.3 $ 6.5 -11% Global Retail $ 2.6 $ 11.0 325% Homeschool $ 0.9 $ 1.0 6% Total $ 42.7 $ 55.3 30% 81 |
|
Institutional Revenues (Millions) 1Q11 1Q12 % Change Institutional $ 14.3 $ 14.2 -1% 82 |
|
Adjusted EBITDA & Free Cash Flow (1) Adjusted EBITDA equals GAAP net income or loss plus interest expense, income tax expense, depreciation, amortization, stock-based compensation expenses (2) Operating EBITDA equals GAAP net income or loss plus interest expense, income tax expense, depreciation, amortization, stock-based compensation expenses and change in deferred revenue. (3) Free cash flow is defined as cash generated by operating activities less cash used for purchases of property and equipment (capex) (Millions) 1Q11 1Q12 % Change Adjusted EBITDA(1) $ (10.0) $ 1.3 113% Operating EBITDA(2) $ (11.4) $ (2.8) 75% Free Cash Flow(3) $ (1.7) $ 1.7 198% Adjusted EBITDA & Free Cash Flow 83 |
|
Balance Sheet Summary Balance Sheet 12/31/2011 3/31/2012 Cash, cash equivalents & ST investments $116.3 $118.5 Accounts receivable, net $52.0 $34.3 Inventory $6.7 $7.4 Total assets $277.2 $264.2 Deferred revenue $51.9 $47.7 Total debt - - Total liabilities $106.0 $93.1 Equity $171.2 $171.1 Total liabilities and stockholders equity $277.2 $264.2 - - 84 |
|
Financial Outlook 2012 2012 Guidance Revenue $270MM to $285MM Adjusted EBITDA(1) $5MM to $8MM Net Loss ($6MM) to ($4MM) Loss per share ($0.33) to ($0.20) Shares outstanding ~21MM Capital Expenditures $10MM to $13MM (1) Adjusted EBITDA equals GAAP net income or loss plus interest expense, income tax expense, depreciation, amortization, and stock-based compensation expenses. Modest US Consumer growth - Driven by DTC & retail channels Reset International Consumer Stabilize and focus on profitable revenue Flattish Institutional revenues - Grow in Corporate and International offset by Government Improving S&M and G&A efficiencies Cost reduction and efficiency programs Majority of Adjusted EBITDA expected to be generated in 4Q12 - 85 |
|
2012 Investor Calendar ' 12 May 2012 Jun Jul Aug Sep Oct Nov ' 12 3Q12 Earnings 11/7/12 Barrington Conference (Chicago) 9/5/12 2Q12 Earnings 8/8/12 William Blair Conference (Chicago) 6/13/12 2012 Annual Meeting 5/23/12 Baird Conference (Chicago) 5/10/12 Investor Day (NYC) & 1Q12 Earnings 5/8/12 86 |
|
Q&A the ABILITY TO LEARN A NEW LANGUAGE. the CONFIDENCE TO ACTUALLY SPEAK IT. 87 |
Exhibit 99.3
Rosetta Stone Inc.
Business Metrics
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter-Ended |
|
|
|
Quarter-Ended |
|
|
|
Quarter-Ended |
|
|
| ||||||||||||||||||
|
|
3/31/10 |
|
6/30/10 |
|
9/30/10 |
|
12/31/10 |
|
2010 |
|
3/31/11 |
|
6/30/11 |
|
9/30/11 |
|
12/31/11 |
|
2011 |
|
3/31/12 |
|
6/30/12 |
|
9/30/12 |
|
12/31/12 |
|
2012 |
|
Net Bookings by Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US Consumer |
|
41,631 |
|
38,746 |
|
41,138 |
|
52,243 |
|
173,758 |
|
29,814 |
|
36,828 |
|
35,562 |
|
54,786 |
|
156,990 |
|
41,237 |
|
|
|
|
|
|
|
|
|
International Consumer |
|
10,029 |
|
8,177 |
|
9,860 |
|
15,176 |
|
43,242 |
|
14,996 |
|
12,910 |
|
11,945 |
|
14,589 |
|
54,440 |
|
13,046 |
|
|
|
|
|
|
|
|
|
Worldwide Consumer |
|
51,660 |
|
46,923 |
|
50,998 |
|
67,419 |
|
217,000 |
|
44,810 |
|
49,738 |
|
47,507 |
|
69,375 |
|
211,430 |
|
54,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide Institutional |
|
9,108 |
|
17,110 |
|
22,307 |
|
14,395 |
|
62,920 |
|
10,770 |
|
16,973 |
|
18,555 |
|
15,459 |
|
61,757 |
|
10,984 |
|
|
|
|
|
|
|
|
|
Total |
|
60,768 |
|
64,033 |
|
73,305 |
|
81,814 |
|
279,920 |
|
55,580 |
|
66,711 |
|
66,062 |
|
84,834 |
|
273,187 |
|
65,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YoY Growth (%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US Consumer |
|
6 |
% |
-9 |
% |
-19 |
% |
-11 |
% |
-9 |
% |
-28 |
% |
-5 |
% |
-14 |
% |
5 |
% |
-10 |
% |
38 |
% |
|
|
|
|
|
|
|
|
International Consumer |
|
304 |
% |
168 |
% |
135 |
% |
93 |
% |
146 |
% |
50 |
% |
58 |
% |
21 |
% |
-4 |
% |
26 |
% |
-13 |
% |
|
|
|
|
|
|
|
|
Worldwide Consumer |
|
23 |
% |
3 |
% |
-7 |
% |
1 |
% |
4 |
% |
-13 |
% |
6 |
% |
-7 |
% |
3 |
% |
-3 |
% |
21 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide Institutional |
|
8 |
% |
28 |
% |
5 |
% |
37 |
% |
18 |
% |
18 |
% |
-1 |
% |
-17 |
% |
7 |
% |
-2 |
% |
2 |
% |
|
|
|
|
|
|
|
|
Total |
|
21 |
% |
9 |
% |
-4 |
% |
6 |
% |
7 |
% |
-9 |
% |
4 |
% |
-10 |
% |
4 |
% |
-2 |
% |
17 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Total Net Bookings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US Consumer |
|
69 |
% |
60 |
% |
56 |
% |
64 |
% |
62 |
% |
54 |
% |
55 |
% |
54 |
% |
65 |
% |
57 |
% |
63 |
% |
|
|
|
|
|
|
|
|
International Consumer |
|
16 |
% |
13 |
% |
14 |
% |
18 |
% |
15 |
% |
27 |
% |
20 |
% |
18 |
% |
17 |
% |
20 |
% |
20 |
% |
|
|
|
|
|
|
|
|
Worldwide Consumer |
|
85 |
% |
73 |
% |
70 |
% |
82 |
% |
78 |
% |
81 |
% |
75 |
% |
72 |
% |
82 |
% |
77 |
% |
83 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide Institutional |
|
15 |
% |
27 |
% |
30 |
% |
18 |
% |
23 |
% |
19 |
% |
25 |
% |
28 |
% |
18 |
% |
23 |
% |
17 |
% |
|
|
|
|
|
|
|
|
Total |
|
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US Consumer |
|
41,407 |
|
38,748 |
|
36,902 |
|
44,516 |
|
161,573 |
|
28,061 |
|
38,606 |
|
37,710 |
|
52,794 |
|
157,171 |
|
42,671 |
|
|
|
|
|
|
|
|
|
International Consumer |
|
9,815 |
|
7,651 |
|
9,708 |
|
15,516 |
|
42,690 |
|
14,601 |
|
12,014 |
|
11,002 |
|
13,238 |
|
50,855 |
|
12,617 |
|
|
|
|
|
|
|
|
|
Worldwide Consumer |
|
51,222 |
|
46,399 |
|
46,610 |
|
60,032 |
|
204,263 |
|
42,662 |
|
50,620 |
|
48,712 |
|
66,032 |
|
208,026 |
|
55,288 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide Institutional |
|
11,792 |
|
14,249 |
|
14,316 |
|
14,248 |
|
54,605 |
|
14,316 |
|
16,123 |
|
15,490 |
|
14,494 |
|
60,423 |
|
14,161 |
|
|
|
|
|
|
|
|
|
Total |
|
63,014 |
|
60,648 |
|
60,926 |
|
74,280 |
|
258,868 |
|
56,978 |
|
66,743 |
|
64,202 |
|
80,526 |
|
268,449 |
|
69,449 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YoY Growth (%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US Consumer |
|
5 |
% |
-8 |
% |
-28 |
% |
-25 |
% |
-16 |
% |
-32 |
% |
0 |
% |
2 |
% |
19 |
% |
-3 |
% |
52 |
% |
|
|
|
|
|
|
|
|
International Consumer |
|
297 |
% |
154 |
% |
137 |
% |
101 |
% |
147 |
% |
49 |
% |
57 |
% |
13 |
% |
-15 |
% |
19 |
% |
-14 |
% |
|
|
|
|
|
|
|
|
Worldwide Consumer |
|
22 |
% |
3 |
% |
-16 |
% |
-10 |
% |
-2 |
% |
-17 |
% |
9 |
% |
5 |
% |
10 |
% |
2 |
% |
30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide Institutional |
|
39 |
% |
23 |
% |
21 |
% |
26 |
% |
26 |
% |
21 |
% |
13 |
% |
8 |
% |
2 |
% |
11 |
% |
-1 |
% |
|
|
|
|
|
|
|
|
Total |
|
25 |
% |
7 |
% |
-9 |
% |
-5 |
% |
3 |
% |
-10 |
% |
10 |
% |
5 |
% |
8 |
% |
4 |
% |
22 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Total Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US Consumer |
|
66 |
% |
64 |
% |
61 |
% |
60 |
% |
62 |
% |
49 |
% |
58 |
% |
59 |
% |
66 |
% |
58 |
% |
62 |
% |
|
|
|
|
|
|
|
|
International Consumer |
|
15 |
% |
13 |
% |
16 |
% |
21 |
% |
17 |
% |
26 |
% |
18 |
% |
17 |
% |
16 |
% |
19 |
% |
18 |
% |
|
|
|
|
|
|
|
|
Worldwide Consumer |
|
81 |
% |
77 |
% |
77 |
% |
81 |
% |
79 |
% |
75 |
% |
76 |
% |
76 |
% |
82 |
% |
77 |
% |
80 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide Institutional |
|
19 |
% |
23 |
% |
23 |
% |
19 |
% |
21 |
% |
25 |
% |
24 |
% |
24 |
% |
18 |
% |
23 |
% |
20 |
% |
|
|
|
|
|
|
|
|
Total |
|
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior period data has been modifed where applicable to conform to current presentation for comparative purposes.
Immaterial rounding differences may be present in this data in order to conform to Financial Statement totals.
Rosetta Stone Inc.
Business Metrics
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter-Ended |
|
|
|
Quarter-Ended |
|
|
|
Quarter-Ended |
|
|
| ||||||||||||||||||
|
|
3/31/10 |
|
6/30/10 |
|
9/30/10 |
|
12/31/10 |
|
2010 |
|
3/31/11 |
|
6/30/11 |
|
9/30/11 |
|
12/31/11 |
|
2011 |
|
3/31/12 |
|
6/30/12 |
|
9/30/12 |
|
12/31/12 |
|
2012 |
|
Consumer Revenue by Channel |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DTC |
|
31,026 |
|
25,142 |
|
27,500 |
|
34,496 |
|
118,164 |
|
31,856 |
|
30,984 |
|
31,177 |
|
42,368 |
|
136,385 |
|
36,839 |
|
|
|
|
|
|
|
|
|
Kiosk |
|
9,391 |
|
8,683 |
|
7,392 |
|
9,533 |
|
34,999 |
|
7,312 |
|
7,368 |
|
6,987 |
|
8,504 |
|
30,171 |
|
6,483 |
|
|
|
|
|
|
|
|
|
Global Retail |
|
9,608 |
|
11,200 |
|
9,832 |
|
15,413 |
|
46,053 |
|
2,585 |
|
10,752 |
|
9,015 |
|
14,265 |
|
36,616 |
|
10,999 |
|
|
|
|
|
|
|
|
|
Home School |
|
1,197 |
|
1,374 |
|
1,886 |
|
590 |
|
5,047 |
|
909 |
|
1,516 |
|
1,533 |
|
895 |
|
4,854 |
|
967 |
|
|
|
|
|
|
|
|
|
Total |
|
51,222 |
|
46,399 |
|
46,610 |
|
60,032 |
|
204,263 |
|
42,662 |
|
50,620 |
|
48,712 |
|
66,032 |
|
208,026 |
|
55,288 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YoY Growth (%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DTC |
|
24 |
% |
-5 |
% |
-6 |
% |
-2 |
% |
2 |
% |
3 |
% |
23 |
% |
13 |
% |
23 |
% |
15 |
% |
16 |
% |
|
|
|
|
|
|
|
|
Kiosk |
|
14 |
% |
-7 |
% |
-25 |
% |
-28 |
% |
-14 |
% |
-22 |
% |
-15 |
% |
-5 |
% |
-11 |
% |
-14 |
% |
-11 |
% |
|
|
|
|
|
|
|
|
Global Retail |
|
34 |
% |
46 |
% |
-27 |
% |
-12 |
% |
0 |
% |
-73 |
% |
-4 |
% |
-8 |
% |
-7 |
% |
-20 |
% |
325 |
% |
|
|
|
|
|
|
|
|
Home School |
|
-19 |
% |
-12 |
% |
-28 |
% |
-50 |
% |
-26 |
% |
-24 |
% |
10 |
% |
-19 |
% |
52 |
% |
-4 |
% |
6 |
% |
|
|
|
|
|
|
|
|
Total |
|
22 |
% |
3 |
% |
-16 |
% |
-10 |
% |
-2 |
% |
-17 |
% |
9 |
% |
5 |
% |
10 |
% |
2 |
% |
30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Total Consumer Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DTC |
|
61 |
% |
54 |
% |
59 |
% |
57 |
% |
58 |
% |
75 |
% |
61 |
% |
64 |
% |
64 |
% |
66 |
% |
66 |
% |
|
|
|
|
|
|
|
|
Kiosk |
|
18 |
% |
19 |
% |
16 |
% |
16 |
% |
17 |
% |
17 |
% |
15 |
% |
14 |
% |
13 |
% |
15 |
% |
12 |
% |
|
|
|
|
|
|
|
|
Global Retail |
|
19 |
% |
24 |
% |
21 |
% |
26 |
% |
23 |
% |
6 |
% |
21 |
% |
19 |
% |
22 |
% |
17 |
% |
20 |
% |
|
|
|
|
|
|
|
|
Home School |
|
2 |
% |
3 |
% |
4 |
% |
1 |
% |
2 |
% |
2 |
% |
3 |
% |
3 |
% |
1 |
% |
2 |
% |
2 |
% |
|
|
|
|
|
|
|
|
Total |
|
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit Metrics Updated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer unit volume (in thousands) |
|
|
132.1 |
|
|
120.0 |
|
|
128.3 |
|
|
173.4 |
|
|
553.8 |
|
|
114.2 |
|
|
139.9 |
|
|
145.7 |
|
|
221.7 |
|
|
621.5 |
|
|
190.8 |
|
|
|
|
|
|
|
|
|
Average Net Revenue per Unit |
|
$ |
388 |
|
$ |
387 |
|
$ |
363 |
|
$ |
346 |
|
$ |
369 |
|
$ |
374 |
|
$ |
362 |
|
$ |
334 |
|
$ |
298 |
|
$ |
335 |
|
$ |
290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
YoY Unit Metrics Growth (%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Consumer unit volume |
|
10 |
% |
-3 |
% |
-18 |
% |
-11 |
% |
-7 |
% |
-14 |
% |
17 |
% |
14 |
% |
28 |
% |
12 |
% |
67 |
% |
|
|
|
|
|
|
|
| |||||||||||
Average Net Revenue per Unit |
|
12 |
% |
7 |
% |
3 |
% |
1 |
% |
5 |
% |
-4 |
% |
-6 |
% |
-8 |
% |
-14 |
% |
-9 |
% |
-22 |
% |
|
|
|
|
|
|
|
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
# of Kiosks (end of period) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
US |
|
190 |
|
186 |
|
180 |
|
173 |
|
173 |
|
144 |
|
117 |
|
114 |
|
103 |
|
103 |
|
57 |
|
|
|
|
|
|
|
|
| |||||||||||
Europe |
|
9 |
|
10 |
|
13 |
|
15 |
|
15 |
|
15 |
|
16 |
|
14 |
|
13 |
|
13 |
|
1 |
|
|
|
|
|
|
|
|
| |||||||||||
Asia Pacific |
|
41 |
|
50 |
|
64 |
|
71 |
|
71 |
|
78 |
|
76 |
|
69 |
|
58 |
|
58 |
|
44 |
|
|
|
|
|
|
|
|
| |||||||||||
Total # of Kiosks (end of period) |
|
240 |
|
246 |
|
257 |
|
259 |
|
259 |
|
237 |
|
209 |
|
197 |
|
174 |
|
174 |
|
102 |
|
|
|
|
|
|
|
|
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Revenues by Geography |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
United States |
|
52,476 |
|
52,139 |
|
50,390 |
|
57,624 |
|
212,629 |
|
41,271 |
|
53,418 |
|
51,708 |
|
65,725 |
|
212,122 |
|
54,914 |
|
|
|
|
|
|
|
|
| |||||||||||
International |
|
10,538 |
|
8,509 |
|
10,536 |
|
16,656 |
|
46,239 |
|
15,707 |
|
13,325 |
|
12,494 |
|
14,801 |
|
56,327 |
|
14,535 |
|
|
|
|
|
|
|
|
| |||||||||||
Total |
|
63,014 |
|
60,648 |
|
60,926 |
|
74,280 |
|
258,868 |
|
56,978 |
|
66,743 |
|
64,202 |
|
80,526 |
|
268,449 |
|
69,449 |
|
|
|
|
|
|
|
|
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Revenues by Geography (as a %) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
United States |
|
83 |
% |
86 |
% |
83 |
% |
78 |
% |
82 |
% |
72 |
% |
80 |
% |
81 |
% |
82 |
% |
79 |
% |
79 |
% |
|
|
|
|
|
|
|
| |||||||||||
International |
|
17 |
% |
14 |
% |
17 |
% |
22 |
% |
18 |
% |
28 |
% |
20 |
% |
19 |
% |
18 |
% |
21 |
% |
21 |
% |
|
|
|
|
|
|
|
| |||||||||||
Total |
|
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
|
|
|
|
|
|
|
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior period data has been modifed where applicable to conform to current presentation for comparative purposes.
Immaterial rounding differences may be present in this data in order to conform to Financial Statement totals.
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