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): March 1, 2010
RealNetworks, Inc.
(Exact name of registrant as specified in its charter)
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| WASHINGTON
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0-23137
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91-1628146 |
(State or other jurisdiction
of incorporation)
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(Commission File
Number)
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(I.R.S. Employer
Identification No.) |
2601 Elliott Avenue, Suite 1000
Seattle, Washington 98121
(Address of principal executive offices) (Zip code)
(206) 674-2700
Registrant’s telephone number, including area code
Not Applicable
(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:
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.
2009 Subsequent Event — Settlement of RealDVD Litigation
On March 1, 2010, RealNetworks, Inc. (the “Company” or “RealNetworks”) entered into a
settlement agreement resolving the litigation involving its RealDVD product, as more
specifically described in Item 7.01 of this report. Under the terms of the settlement agreement,
the Company is obligated to pay $4.5 million to certain other parties in the litigation.
In accordance with U.S. generally accepted accounting principles, the Company is required to
recognize this subsequent event in its 2009 fiscal year results since it related to conditions that
existed at the balance sheet date of December 31, 2009. As a result, the Company’s financial
results for the quarter and year ended December 31, 2009, which
were set forth in the Company’s earnings
release issued on February 11, 2010 and furnished to the Securities and Exchange
Commission as Exhibit 99.1 to the Company’s Current Report on Form 8-K dated February 11, 2010, are
being revised to reflect the subsequent event. The revised condensed consolidated financial
statements are set forth in Exhibit 99.1 attached to this report.
Key highlights of the Company’s
revised condensed consolidated financial statements for the quarter and year ended December 31,
2009 as changed from the financial results announced by the Company
on February 11, 2010 include the following:
Fourth Quarter ended December 31, 2009
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Operating expenses of $110.2 million, changed from $105.7 million |
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Net loss per share of ($0.14), changed from ($0.11) |
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Adjusted EBITDA excluding impairments of $8.4 million, changed from $12.9 million |
Full Year ended December 31, 2009
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Operating expenses of $577.4 million, changed from $572.9 million |
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Net loss per share of ($1.64), changed from $(1.60) |
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Adjusted EBITDA excluding impairments of $35.2 million, changed from $39.7 million |
To supplement RealNetworks’ condensed consolidated financial statements presented in
accordance with GAAP in Exhibit 99.1 attached to this report, the Company also discloses certain
non-GAAP financial measures, including adjusted EBITDA excluding impairments, adjusted EBITDA,
adjusted EBITDA excluding impairments by reporting segment, adjusted cost of revenue and adjusted
operating expenses, which management believes provide investors with useful information. In the
financial statements included in Exhibit 99.1 attached to this report, the Company has included
reconciliations of GAAP net income (loss) attributable to common shareholders to adjusted EBITDA,
to adjusted EBITDA excluding impairments, and to adjusted EBITDA excluding impairments by reporting
segment; GAAP cost of revenue to adjusted cost of revenue; and GAAP operating expenses to adjusted
operating expenses for the relevant periods. Additional information regarding the inclusion of
non-GAAP financial measures in certain of the Company’s public disclosures, including in this
report and in the financial information included in Exhibit 99.1 attached to this report, is
included as Exhibit 99.2 attached to this report.
The information in Item 2.02 of this Form 8-K is intended to be furnished to the Securities
and Exchange Commission (“SEC”). This information shall not be deemed “filed” for purposes of
Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or
incorporated by reference in any filing 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.
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Item 7.01. Regulation FD Disclosure.
On March 1, 2010, the Company entered into a settlement agreement with Disney Enterprises,
Inc., Walt Disney Pictures, Paramount Pictures Corp., Sony Pictures Entertainment, Inc., Sony
Pictures Television, Inc. Twentieth Century Fox Film Corp., NBC Universal, Inc., Universal City
Studios Production LLLP, Universal City Studios LLLP, Warner Bros. Entertainment, Inc., Columbia
Pictures Industries, Inc., and Viacom, Inc. (collectively, the “Studios”) and the DVD Copy Control
Association (“DVD CCA”) with respect to litigation involving the Company’s RealDVD product (the
“RealDVD Litigation”). Under the terms of the settlement agreement, RealNetworks is obligated to
pay $4.5 million to the Studios for the Studios’ fees and costs in connection with the RealDVD
Litigation. In addition, the Company agreed to the terms of a consent
judgment, as entered by the
District Court in the Northern District of California on March 3, 2010, which, among other things,
permanently enjoins the Company from distributing or offering RealDVD or any other technology,
product, service, or device that enables the duplication of, redistribution of, or unauthorized
access to, copyrighted content protected by the Content Scramble System or technologies known as ARccOS or RipGuard. Prior to the entry
of the consent judgment, the Company was subject to a preliminary
injunction entered on August 11,
2009 that enjoined the Company from selling or otherwise distributing RealDVD to the public. All
claims and counterclaims in the RealDVD Litigation, including the Company’s claims of breach of
federal antitrust laws against the Studios, were either resolved by the consent judgment or
dismissed with prejudice, and the Company will withdraw its appeal to the U.S. Court of Appeals for the
Ninth Circuit relating to the preliminary injunction.
On
March 3, 2010 the Company issued a press release announcing the settlement of the RealDVD
Litigation, a copy of which is included as Exhibit 99.3 attached to this report.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Pursuant to the rules and regulations of the SEC, the attached exhibits are deemed to have
been furnished to, but not filed with, the SEC.
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| Exhibit No. |
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Description |
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99.1 |
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Unaudited Condensed Consolidated Financial Statements and
Supplementary Schedules of RealNetworks, Inc., at and as of
December 31, 2009 and 2008 |
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99.2 |
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Information
Regarding Non-GAAP Financial Measures |
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99.3 |
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Press Release issued by RealNetworks, Inc. dated March 3, 2010 |
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