NeuLion Provides Non-GAAP Results for DivX for the Nine-Months Ended December 31, 2014
PLAINVIEW, NY--(Marketwired - April 16, 2015) - NeuLion, Inc. (NLN.TO), a leading technology product and service provider that specializes in the digital video broadcasting, distribution and monetization of live and on-demand content to Internet-enabled devices, is disclosing selected non-GAAP financial results for DivX Corporation ("DivX") for the nine-months ended December 31, 2014 as a supplement to the audited financial statements filed with the SEC in an 8-K/A on April 15.
For the nine months ended December 31, 2014, revenue was $19.3 million and the net loss was $14.7 million. On a Non-GAAP basis, revenues were $39.9 million and Adjusted EBITDA was $6.8 million. For a reconciliation of the GAAP to Non-GAAP figures, please see the reconciliation table at the end of this release.
The Company is also obligated to file audited consolidated financial statements relating to DivX as of and for the year ended December 31, 2013 and for the three months ended March 31, 2014, but the Company has not yet been able to complete such financial statements because the Company has not yet received the financial information it needs from the company that owned DivX prior to April 1, 2014. As a result of DivX's financial statements not being completed, the Company is also unable to file pro-forma financial information relating to the Merger. The Company will file the additional financial statements of DivX and the pro-forma financial information relating to the Merger as promptly as practicable after it receives the necessary financial information and completes the financial statements.
Use of Non-GAAP Financial Information
In addition to our U.S. GAAP results, this press release also includes disclosure on certain non-GAAP financial measures, as such term is used by the SEC. The Company defines Non-GAAP revenues as GAAP revenues before purchase price accounting adjustments as a result of an acquisition. The Company defines Non-GAAP Adjusted EBITDA as consolidated net loss before interest, income taxes, depreciation and amortization, purchase price accounting adjustments, stock-based compensation, acquisition-related expenses and foreign exchange loss. Non-GAAP Adjusted EBITDA is a key measure used by management to evaluate the Company's results and make strategic decisions about the Company, including potential acquisitions. Management believes this measure is useful to investors because it is an indicator of operational performance. Because not all companies use identical calculations, the Company's presentation of Non-GAAP Adjusted Revenue and EBITDA may not be comparable to similarly titled measures of other companies. This measure does not have any standardized meaning prescribed by U.S. GAAP and therefore is unlikely to be comparable to the calculation of similar measures used by other companies, and should not be viewed as an alternative to measures of financial performance or changes in cash flows calculated in accordance with U.S. GAAP.
Pursuant to the requirements of Regulation G, we have provided a reconciliation of Non-GAAP Revenues to U.S. GAAP revenues and Non-GAAP Adjusted EBITDA to U.S. GAAP consolidated net loss as an exhibit to this press release.
About NeuLion
NeuLion, Inc. (NLN.TO) offers solutions that power the highest quality digital experiences for live and on-demand content up to 4K on any device. Through its end-to-end technology platform, NeuLion enables digital content management, distribution and monetization for content owners worldwide. With the recent acquisition of DivX, the company also operates a robust consumer electronics licensing business that has enabled over 1 billion devices worldwide with secure, high-quality video playback and a DivX® consumer software offering that has been downloaded over 1 billion times. NeuLion's customers include major sports, entertainment and global content companies as well as major consumer electronics manufacturers and software companies. NeuLion is headquartered in PlainView, NY. For more information about NeuLion, visit www.NeuLion.com.
Forward-Looking Statements
Certain statements herein are forward-looking statements and represent NeuLion's current intentions in respect of future activities. Forward-looking statements can be identified by the use of the words "will," "expect," "seek," "anticipate," "believe," "plan," "estimate," "expect," and "intend" and statements that an event or result "may," "will," "can," "should," "could," or "might" occur or be achieved and other similar expressions. These statements, in addressing future events and conditions, involve inherent risks and uncertainties. Although the forward-looking statements contained in this release are based upon what management believes to be reasonable assumptions, NeuLion cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this release and NeuLion assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law. Many factors could cause NeuLion's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including: our ability to derive anticipated benefits from the acquisition of DivX; our ability to successfully integrate the operations of DivX; our ability to realize some or all of the anticipated benefits of our partnerships; general economic and market segment conditions; our customers' subscriber levels and financial health; our ability to pursue and consummate acquisitions in a timely manner; our continued relationships with our customers; our ability to negotiate favorable terms for contract renewals; competitor activity; product capability and acceptance rates; technology changes; regulatory changes; foreign exchange risk; interest rate risk; and credit risk. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. A more detailed assessment of the risks that could cause actual results to materially differ from current expectations is contained in the "Risk Factors" section of NeuLion's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 which is available on www.sec.gov and filed on www.sedar.com.
RECONCILIATION OF NON-GAAP MEASURES | |||||
(in thousands) | |||||
(unaudited) | |||||
Nine months | |||||
2014 | |||||
Revenue on a GAAP basis | $ | 19,304 | |||
Purchase price accounting adjustment | 20,603 | (a) | |||
Non-GAAP Revenue | $ | 39,907 | |||
Nine months | |||||
2014 | |||||
Consolidated net loss on a GAAP basis | $ | (14,720) | |||
Purchase price accounting adjustment - revenue | 20,603 | (a) | |||
Purchase price accounting adjustment - bargain purchase gain | (2,711) | ||||
Income tax benefit | (1,811) | ||||
Amortization and depreciation | 3,766 | ||||
Stock-based compensation | 26 | ||||
Interest and other income | (432) | ||||
Acquisition-related expenses | 2,080 | ||||
Non-GAAP Adjusted EBITDA | $ | 6,801 | |||
(a) Since DivX was acquired by Parallax Capital Partners in March 2014, the purchase price allocation included an adjustment to record the fair value of assumed contractual payments due to DivX for which no or little additional obligations existed in order to receive such payments. These contractual payments are for fixed multi-year site licenses and unbilled per unit royalties for units shipped prior to the acquisition. Prior to the March 2014 acquisition, revenue in such transactions was recognized during the period in which such customers reported the number of royalty-eligible units that they have shipped. Additionally, in certain multi-year site licenses and guaranteed minimum-royalty licenses DivX entered into extended payment programs. Revenue related to such extended payment programs were recognized at the earlier of when cash was received or when periodic payments became due. The payment terms extend over the term of the multi-year license and the remaining contractual payments that exist at the acquisition date will be received by DivX. As DivX assumed no additional obligations under such contracts, these payments are considered a fixed payment stream, rather than revenue. This fixed payment stream is accounted for as an element of accounts receivable and included as part of the purchase accounting.
The fair value of the remaining contractual payment due under the applicable contracts is estimated by calculating the discounted cash flows associated with such future billings. The reduction in revenues related directly to the transaction has been reflected as a non-GAAP financial measure to include the effect of the excluded revenues to allow investors and analysts to make meaningful comparisons between DivX's ongoing core business operating results and those of other companies.
