ARLINGTON, Va.--(BUSINESS WIRE)--Aug. 8, 2012--
Rosetta Stone Inc. (NYSE:RST), a leading provider of technology-based
language-learning solutions, today announced financial results for the
second quarter 2012, as summarized below:
US$ thousands
|
|
Three Months Ended
|
|
|
except per share data
|
|
June 30,
|
|
%
|
|
|
|
2012
|
|
|
|
2011
|
|
|
change
|
Total revenue
|
|
$
|
60,812
|
|
|
$
|
66,743
|
|
|
-9
|
%
|
|
|
|
|
|
|
|
Net income/(loss)
|
|
|
(4,544
|
)
|
|
|
(4,550
|
)
|
|
0
|
%
|
Net income/(loss) per share:
|
|
|
($0.22
|
)
|
|
|
($0.22
|
)
|
|
0
|
%
|
Adjusted EBITDA1
|
|
$
|
1,123
|
|
|
|
($1,329
|
)
|
|
184
|
%
|
|
|
|
|
|
|
|
Cash flow from operations
|
|
|
3,412
|
|
|
|
(2,939
|
)
|
|
216
|
%
|
Purchases of property and equipment
|
|
|
(1,031
|
)
|
|
|
(2,814
|
)
|
|
-63
|
%
|
Free cash flow1
|
|
|
2,381
|
|
|
|
(5,753
|
)
|
|
141
|
%
|
|
|
|
|
|
|
|
1Definitions and reconciliations for all non-GAAP measures
are provided in this press release.
“Second quarter results reflected the beginnings of our efforts to
improve profitability by better balancing the need to generate positive
margins on the bottom line with investments to drive growth,” said Steve
Swad, Rosetta Stone’s President and Chief Executive Officer. Swad added,
“We undertook a number of actions during the quarter that focused on
resetting our cost structure to enable us to pursue profitable growth.
Some of these actions included reducing and better managing our media
spending, continuing to optimize our distribution channels, streamlining
our European operations and carrying out a modest headcount reduction,
primarily in the U.S. The end result was positive Adjusted EBITDA of
$1.1 million, a $2.4 million improvement compared to last year’s second
quarter result of negative $1.3 million.”
Swad added, “At our Investor Day in May of this year, I laid out my
strategy and priorities for the company, which are (i) leveraging our
brand, (ii) innovating our platform and (iii) expanding distribution. I
believe that we are executing on that strategy and Rosetta Stone is
making progress towards our goals.”
Second Quarter 2012 Operational and Financial Highlights
-
Revenue decreased 9%: Revenue decreased 9% to $60.8 million
reflecting the rationalization of less efficient kiosks, lower sales
internationally and a decline in the Institutional business because of
the non-renewal of the Army and Marines contracts last year.
US$ thousands
|
|
Three Months Ended
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
|
2012
|
|
2011
|
|
% change
|
Revenue from:
|
|
|
|
|
|
|
US Consumer
|
|
$
|
36,895
|
|
$
|
38,606
|
|
-4
|
%
|
International Consumer
|
|
|
8,074
|
|
|
12,014
|
|
-33
|
%
|
Total Consumer
|
|
|
44,969
|
|
|
50,620
|
|
-11
|
%
|
Institutional
|
|
|
15,843
|
|
|
16,123
|
|
-2
|
%
|
Total
|
|
|
60,812
|
|
|
66,743
|
|
-9
|
%
|
|
|
|
|
|
|
|
|
|
|
-
Adjusted EBITDA: Adjusted EBITDA for the second quarter was
$1.1 million, an increase of $2.4 million from ($1.3) million in the
second quarter of 2011. The improvement in Adjusted EBITDA was
predominantly driven by a reduction in sales and marketing expenses,
including a decrease in media spending, as well as a decrease in
general and administrative expenses. Adjusted EBITDA in the quarter
includes approximately $1.7 million of restructuring and other
one-time costs.
-
Net Income: Rosetta Stone recorded a net loss of $4.5 million
in the second quarter 2012, compared to a net loss of $4.6 million in
the second quarter of 2011. Net loss per share was $0.22 unchanged
from a net loss of $0.22 per share in the prior year period.
-
Balance Sheet and Cash Flow: Cash, cash equivalents and
short-term investments were $120.4 million at June 30, 2012, an
increase of $4.1 million compared with $116.3 million at December 31,
2011 and an increase of $5.2 million from the prior year period. The
company has no debt. Net cash provided by operating activities in the
quarter was $3.4 million compared with ($2.9) million a year ago.
Capital expenditures were $1.0 million. Free cash flow for the quarter
was $2.4 million, compared with ($5.8) million in the second quarter
of 2011.
Financial Outlook
The company is providing the following update to its guidance for the
full year 2012:
-
Increasing the bottom end of the range for Adjusted EBITDA* to $6
million for a range of $6 million to $8 million with Adjusted EBITDA
margin of approximately 2% to 3% compared with previous guidance of $5
million to $8 million.
-
Capital expenditures of $8 million to $11 million
*Adjusted EBITDA excludes any potential expenses related to the
previously disclosed lawsuit seeking to prevent Google Inc. from
infringing upon Rosetta Stone's trademarks, and any restructuring costs.
Non-GAAP Financial Measures
This press release 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. Adjusted EBITDA excludes any potential expenses related to the
previously disclosed lawsuit seeking to prevent Google Inc. from
infringing upon Rosetta Stone's trademarks, and any restructuring costs.
Adjusted EBITDA for prior periods has been revised to conform to current
definition. 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 company’s financial condition and results of operations. 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. These measures are used in monthly financial reports prepared
for management and in quarterly financial reports presented to the
company's 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 company's 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 company’s operating performance and believes that the
resulting non-GAAP measures are useful to investors and financial
analysts in assessing the company’s 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 company’s 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 company’s EPS
calculation to the extent the shares are dilutive.
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 company's 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 company's 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
company’s website, which includes supplemental financial information.
In conjunction with this announcement, Rosetta Stone will host a webcast
today at 4:30 p.m. eastern time (ET) to discuss the results and the
company’s business outlook.
The webcast will be available live on the Investor Relations page of the
company’s website at http://investors.rosettastone.com.
Investors may also dial in to the conference line using one of the
following numbers:
1-877-407-4018 (toll-free) or 1-201-689-8471 (toll/international)
A recorded replay of the webcast will be available on the “Investor
Relations” page of the company’s web site http://investors.rosettastone.com
after the live discussion. The replay will also be available beginning
at 7:30PM ET until August 22, 2012 via telephone at the following
numbers:
1-877-870-5176 (toll-free) or 1-858-384-5517 (toll/international) Pass
Code: 397605
About Rosetta Stone
Rosetta Stone Inc. provides cutting-edge interactive technology that is
changing the way the world learns languages. The company’s proprietary
learning techniques—acclaimed for their power to unlock the natural
language-learning ability in everyone—are used by schools, businesses,
government organizations and millions of individuals around the world.
Rosetta Stone offers courses in 30 languages, from the most commonly
spoken (like English, Spanish and Mandarin) to the less prominent
(including Swahili, Swedish and Tagalog). The company was founded in
1992 on the core beliefs that learning to speak a language should be a
natural and instinctive process, and that interactive technology can
activate the language immersion method powerfully for learners of any
age. Rosetta Stone is based in Arlington, VA., and has offices in
Harrisonburg, VA, Boulder, CO, Tokyo, Seoul, London, and Sao Paulo.
“Rosetta Stone” is a registered trademark or trademark 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 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 language
learning software; the advantages of our products, services, technology,
brand and business model as compared to others; our strategic focus; 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 appeal and efficacy of
our products; 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 company's filings with the U.S. Securities
and Exchange Commission (SEC), including the company’s 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.
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in thousands, except per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
2012
|
|
|
|
2011
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
37,543
|
|
|
$
|
48,055
|
|
|
$
|
85,073
|
|
|
$
|
90,358
|
|
Subscription and service
|
|
|
23,269
|
|
|
|
18,688
|
|
|
|
45,188
|
|
|
|
33,362
|
|
Total revenue
|
|
|
60,812
|
|
|
|
66,743
|
|
|
|
130,261
|
|
|
|
123,720
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
Cost of product revenue
|
|
|
7,122
|
|
|
|
8,773
|
|
|
|
16,229
|
|
|
|
17,568
|
|
Cost of subscription and service revenue
|
|
|
4,198
|
|
|
|
2,747
|
|
|
|
8,565
|
|
|
|
5,414
|
|
Total cost of revenue
|
|
|
11,320
|
|
|
|
11,520
|
|
|
|
24,794
|
|
|
|
22,982
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
49,492
|
|
|
|
55,223
|
|
|
|
105,467
|
|
|
|
100,738
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
35,125
|
|
|
|
40,535
|
|
|
|
73,529
|
|
|
|
78,354
|
|
Research and development
|
|
|
6,493
|
|
|
|
6,354
|
|
|
|
12,766
|
|
|
|
12,838
|
|
General and administrative
|
|
|
12,919
|
|
|
|
13,809
|
|
|
|
26,576
|
|
|
|
28,617
|
|
Total operating expenses
|
|
|
54,537
|
|
|
|
60,698
|
|
|
|
112,871
|
|
|
|
119,809
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(5,045
|
)
|
|
|
(5,475
|
)
|
|
|
(7,404
|
)
|
|
|
(19,071
|
)
|
|
|
|
|
|
|
|
|
|
Other income and (expense):
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
21
|
|
|
|
83
|
|
|
|
99
|
|
|
|
162
|
|
Interest expense
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
(4
|
)
|
Other income (expense)
|
|
|
320
|
|
|
|
47
|
|
|
|
(44
|
)
|
|
|
49
|
|
Total other income (expense)
|
|
|
341
|
|
|
|
128
|
|
|
|
55
|
|
|
|
207
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(4,704
|
)
|
|
|
(5,347
|
)
|
|
|
(7,349
|
)
|
|
|
(18,864
|
)
|
Income tax benefit
|
|
|
(160
|
)
|
|
|
(797
|
)
|
|
|
(902
|
)
|
|
|
(5,033
|
)
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(4,544
|
)
|
|
$
|
(4,550
|
)
|
|
$
|
(6,447
|
)
|
|
$
|
(13,831
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.22
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.67
|
)
|
Diluted
|
|
$
|
(0.22
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.67
|
)
|
|
|
|
|
|
|
|
|
|
Common shares and equivalents outstanding:
|
|
|
|
|
|
|
|
|
Basic weighted average shares
|
|
|
20,995
|
|
|
|
20,716
|
|
|
|
20,969
|
|
|
|
20,695
|
|
Diluted weighted average shares
|
|
|
20,995
|
|
|
|
20,716
|
|
|
|
20,969
|
|
|
|
20,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROSETTA STONE INC.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(in thousands, except per share amounts)
|
(unaudited)
|
|
|
June 30,
|
|
December 31,
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
118,774
|
|
$
|
106,516
|
Restricted cash
|
|
|
46
|
|
|
74
|
Short term investments
|
|
|
1,600
|
|
|
9,711
|
Accounts receivable (net of allowance for doubtful accounts of
$1,043 and $1,951, respectively)
|
|
|
35,088
|
|
|
51,997
|
Inventory
|
|
|
6,238
|
|
|
6,723
|
Prepaid expenses and other current assets
|
|
|
6,425
|
|
|
7,081
|
Income tax receivable
|
|
|
10,151
|
|
|
7,678
|
Deferred income taxes
|
|
|
12,169
|
|
|
10,985
|
Total current assets
|
|
|
190,491
|
|
|
200,765
|
|
|
|
|
|
Property and equipment, net
|
|
|
17,936
|
|
|
20,869
|
Goodwill
|
|
|
34,849
|
|
|
34,841
|
Intangible assets, net
|
|
|
10,845
|
|
|
10,865
|
Deferred income taxes
|
|
|
7,913
|
|
|
8,038
|
Other assets
|
|
|
2,840
|
|
|
1,803
|
Total assets
|
|
$
|
264,874
|
|
$
|
277,181
|
|
|
|
|
|
Liabilities and stockholders' equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
4,434
|
|
$
|
7,291
|
Accrued compensation
|
|
|
13,467
|
|
|
11,703
|
Other current liabilities
|
|
|
26,971
|
|
|
34,911
|
Deferred revenue
|
|
|
46,012
|
|
|
49,375
|
Total current liabilities
|
|
|
90,884
|
|
|
103,280
|
|
|
|
|
|
Deferred revenue
|
|
|
3,931
|
|
|
2,520
|
Other long-term liabilities
|
|
|
1,826
|
|
|
176
|
Total liabilities
|
|
|
96,641
|
|
|
105,976
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Preferred stock, $0.001 par value; 10,000 and 10,000 authorized;
zero and zero shares issued and outstanding June 30, 2012 and
December 31, 2011
|
|
|
-
|
|
|
-
|
Non-designated common stock, $0.00005 par value, 190,000 and
190,000 shares authorized, 21,776 and 21,258 shares issued and
outstanding at June 30, 2012 and December 31, 2011, respectively
|
|
|
2
|
|
|
2
|
Additional paid-in capital
|
|
|
155,305
|
|
|
151,823
|
Accumulated income
|
|
|
12,635
|
|
|
19,082
|
Accumulated other comprehensive income
|
|
|
291
|
|
|
298
|
Total stockholders' equity
|
|
|
168,233
|
|
|
171,205
|
Total liabilities and stockholders' equity
|
|
$
|
264,874
|
|
$
|
277,181
|
|
|
|
|
|
ROSETTA STONE INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(4,544
|
)
|
|
|
(4,550
|
)
|
|
|
(6,447
|
)
|
|
|
(13,831
|
)
|
Adjustments to reconcile net loss to cash provided by (used in)
operating activities,
|
|
|
|
|
|
|
|
net of business acquisitions
|
|
|
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
2,096
|
|
|
|
1,704
|
|
|
|
3,731
|
|
|
|
3,141
|
|
Bad debt expense
|
|
|
431
|
|
|
|
92
|
|
|
|
596
|
|
|
|
308
|
|
Depreciation and amortization
|
|
|
2,046
|
|
|
|
2,141
|
|
|
|
4,482
|
|
|
|
4,255
|
|
Deferred income tax benefit
|
|
|
158
|
|
|
|
5,941
|
|
|
|
(1,156
|
)
|
|
|
2,964
|
|
Loss on sales of equipment
|
|
|
348
|
|
|
|
1
|
|
|
|
380
|
|
|
|
16
|
|
Net change in:
|
|
|
|
|
|
|
|
|
Restricted cash
|
|
|
5
|
|
|
|
(5
|
)
|
|
|
28
|
|
|
|
23
|
|
Accounts receivable
|
|
|
(1,261
|
)
|
|
|
(10,332
|
)
|
|
|
16,314
|
|
|
|
7,987
|
|
Inventory
|
|
|
1,189
|
|
|
|
652
|
|
|
|
480
|
|
|
|
240
|
|
Prepaid expenses and other current assets
|
|
|
146
|
|
|
|
485
|
|
|
|
649
|
|
|
|
551
|
|
Income tax receivable
|
|
|
(1,504
|
)
|
|
|
(6,237
|
)
|
|
|
(2,740
|
)
|
|
|
(8,241
|
)
|
Other assets
|
|
|
144
|
|
|
|
(1,253
|
)
|
|
|
(1,065
|
)
|
|
|
(1,316
|
)
|
Accounts payable
|
|
|
(2,281
|
)
|
|
|
3,770
|
|
|
|
(2,868
|
)
|
|
|
2,757
|
|
Accrued compensation
|
|
|
3,850
|
|
|
|
3,264
|
|
|
|
1,774
|
|
|
|
397
|
|
Other current liabilities
|
|
|
207
|
|
|
|
1,476
|
|
|
|
(7,813
|
)
|
|
|
357
|
|
Excess tax benefit from stock options exercised
|
|
|
(18
|
)
|
|
|
(13
|
)
|
|
|
(18
|
)
|
|
|
(31
|
)
|
Other long-term liabilities
|
|
|
9
|
|
|
|
(6
|
)
|
|
|
1,596
|
|
|
|
(12
|
)
|
Deferred revenue
|
|
|
2,391
|
|
|
|
(69
|
)
|
|
|
(1,855
|
)
|
|
|
(1,572
|
)
|
Net cash provided by (used in) operating activities
|
|
|
3,412
|
|
|
|
(2,939
|
)
|
|
|
6,068
|
|
|
|
(2,007
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(1,031
|
)
|
|
|
(2,814
|
)
|
|
|
(1,998
|
)
|
|
|
(5,465
|
)
|
Proceeds from (purchases of) available-for-sale securities
|
|
|
4,805
|
|
|
|
(99
|
)
|
|
|
8,112
|
|
|
|
(1,906
|
)
|
Acquisition, net of cash acquired
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(75
|
)
|
Net cash provided by (used in) investing activities
|
|
|
3,774
|
|
|
|
(2,913
|
)
|
|
|
6,114
|
|
|
|
(7,446
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from the exercise of stock options
|
|
|
-
|
|
|
|
40
|
|
|
|
-
|
|
|
|
80
|
|
Tax benefit of stock options exercised
|
|
|
18
|
|
|
|
13
|
|
|
|
18
|
|
|
|
31
|
|
Payments under capital lease obligations
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
(5
|
)
|
Net cash provided by financing activities
|
|
|
17
|
|
|
|
51
|
|
|
|
15
|
|
|
|
106
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
7,203
|
|
|
|
(5,801
|
)
|
|
|
12,197
|
|
|
|
(9,347
|
)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes in cash and cash equivalents
|
|
|
(502
|
)
|
|
|
76
|
|
|
|
61
|
|
|
|
405
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
6,701
|
|
|
|
(5,725
|
)
|
|
|
12,258
|
|
|
|
(8,942
|
)
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents—beginning of period
|
|
|
112,073
|
|
|
|
112,539
|
|
|
|
106,516
|
|
|
|
115,756
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents—end of period
|
|
$
|
118,774
|
|
|
$
|
106,814
|
|
|
$
|
118,774
|
|
|
$
|
106,814
|
|
|
|
|
|
|
|
|
|
|
ROSETTA STONE INC.
|
Reconciliation of Net Loss to Adjusted EBITDA
|
(in thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(4,544
|
)
|
|
$
|
(4,550
|
)
|
|
$
|
(6,447
|
)
|
|
$
|
(13,831
|
)
|
Interest (income)/expense, net
|
|
|
(21
|
)
|
|
|
(81
|
)
|
|
|
(99
|
)
|
|
|
(158
|
)
|
Income tax benefit
|
|
|
(160
|
)
|
|
|
(797
|
)
|
|
|
(902
|
)
|
|
|
(5,033
|
)
|
Depreciation and amortization
|
|
|
2,046
|
|
|
|
2,141
|
|
|
|
4,482
|
|
|
|
4,255
|
|
Stock-based compensation
|
|
|
2,096
|
|
|
|
1,704
|
|
|
|
3,731
|
|
|
|
3,141
|
|
Other EBITDA Adjustments
|
|
|
1,706
|
|
|
|
254
|
|
|
|
2,093
|
|
|
|
254
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA*
|
|
$
|
1,123
|
|
|
$
|
(1,329
|
)
|
|
$
|
2,858
|
|
|
$
|
(11,372
|
)
|
|
|
|
|
|
|
|
|
|
*Adjusted EBITDA equals GAAP net income or loss plus interest
expense, income tax expense, depreciation, amortization,
stock-based compensation expenses, restructuring costs and any
expenses related to the previously disclosed lawsuit against
Google, Inc.
|
Prior period Adjusted EBITDA has been conformed to current
definition.
|
|
ROSETTA STONE INC.
|
Reconciliation of Previously Reported Adjusted EBITDA to Current
Presentation
|
(in thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
Quarter Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2011
|
|
|
|
6/30/2011
|
|
|
|
9/30/2011
|
|
|
|
12/31/2011
|
|
|
|
2011
|
|
|
|
3/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(9,281
|
)
|
|
$
|
(4,550
|
)
|
|
$
|
(1,177
|
)
|
|
$
|
(4,979
|
)
|
|
$
|
(19,987
|
)
|
|
$
|
(1,903
|
)
|
Interest (income)/expense, net
|
|
|
(77
|
)
|
|
|
(81
|
)
|
|
|
(61
|
)
|
|
|
(78
|
)
|
|
|
(297
|
)
|
|
|
(78
|
)
|
Income tax (benefit) expense
|
|
|
(4,236
|
)
|
|
|
(797
|
)
|
|
|
(4,762
|
)
|
|
|
1,814
|
|
|
|
(7,981
|
)
|
|
|
(742
|
)
|
Depreciation and amortization
|
|
|
2,114
|
|
|
|
2,141
|
|
|
|
2,184
|
|
|
|
2,285
|
|
|
|
8,724
|
|
|
|
2,436
|
|
Stock-based compensation
|
|
|
1,437
|
|
|
|
1,704
|
|
|
|
1,836
|
|
|
|
7,376
|
|
|
|
12,353
|
|
|
|
1,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previously Reported Adjusted EBITDA
|
|
$
|
(10,043
|
)
|
|
$
|
(1,583
|
)
|
|
$
|
(1,980
|
)
|
|
$
|
6,418
|
|
|
$
|
(7,188
|
)
|
|
$
|
1,348
|
|
Other EBITDA Adjustments
|
|
|
-
|
|
|
|
254
|
|
|
|
189
|
|
|
|
655
|
|
|
|
1,098
|
|
|
|
387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revised Adjusted EBITDA*
|
|
$
|
(10,043
|
)
|
|
$
|
(1,329
|
)
|
|
$
|
(1,791
|
)
|
|
$
|
7,073
|
|
|
$
|
(6,090
|
)
|
|
$
|
1,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Adjusted EBITDA equals GAAP net income or loss plus interest
expense, income tax expense, depreciation, amortization,
stock-based compensation expenses, restructuring costs and any
expenses related to the previously disclosed lawsuit against
Google, Inc.
|
Prior period Adjusted EBITDA has been conformed to current
definition.
|
|
ROSETTA STONE INC.
|
Reconciliation of Net Loss to Non-GAAP Net Loss
|
(in thousands, except per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(4,544
|
)
|
|
$
|
(4,550
|
)
|
|
$
|
(6,447
|
)
|
|
$
|
(13,831
|
)
|
Stock-based compensation, net of tax (1)
|
|
|
1,310
|
|
|
|
1,065
|
|
|
|
2,332
|
|
|
|
1,963
|
|
Amortization of intangibles, net of tax (1)
|
|
|
6
|
|
|
|
15
|
|
|
|
13
|
|
|
|
29
|
|
Non-GAAP net loss
|
|
$
|
(3,228
|
)
|
|
$
|
(3,470
|
)
|
|
$
|
(4,102
|
)
|
|
$
|
(11,839
|
)
|
|
|
|
|
|
|
|
|
|
Non-GAAP net loss per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.15
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.57
|
)
|
Diluted
|
|
$
|
(0.15
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.57
|
)
|
|
|
|
|
|
|
|
|
|
Common shares and equivalents outstanding:
|
|
|
|
|
|
|
|
|
Basic weighted average shares
|
|
|
20,995
|
|
|
|
20,716
|
|
|
|
20,969
|
|
|
|
20,695
|
|
Diluted weighted average shares
|
|
|
20,995
|
|
|
|
20,716
|
|
|
|
20,969
|
|
|
|
20,695
|
|
|
|
|
|
|
|
|
|
|
(1) Non-GAAP tax rate of 37.5%
|
|
|
|
|
|
|
|
|

Source: Rosetta Stone Inc.
Rosetta Stone Inc. Investor Contact: Steve Somers, CFA 703-387-5876 ssomers@rosettastone.com or Media
Contact: Jonathan Mudd 571-357-7148 jmudd@rosettastone.com
|