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8-K - 8-K - Rovi Corpa8-kx12312014earningsrelea.htm

EXHIBIT 99.1
 
Rovi Corporation
2830 De La Cruz Blvd.
Santa Clara, CA 95050


ROVI CORPORATION REPORTS FOURTH QUARTER 2014 FINANCIAL RESULTS
Company reports better-than-expected results
SANTA CLARA, Calif.--(BUSINESS WIRE)-February 19, 2015 - Rovi Corporation (NASDAQ:ROVI) today reported financial results for the fourth quarter and full year ended December 31, 2014.
The Company reported fourth quarter revenue of $134.2 million, a decrease of 12% compared to $152.0 million in the fourth quarter of 2013. As expected, revenues were lower than in the comparable period in the prior year, which benefited from catch-up payments on several new deals and due to the continuing decline in analog copy protection revenues. Fourth quarter 2014 Loss from continuing operations, net of tax, was $5.9 million, compared to $10.6 million Income from continuing operations, net of tax, for the fourth quarter of 2013. Fourth quarter Diluted Loss Per Common Share from Continuing Operations was $0.06, compared to $0.11 Income Per Common Share in the fourth quarter of 2013. After taking into consideration discontinued operations, the Company reported a fourth quarter net loss of $5.8 million, compared to a net loss of $60.8 million for the same quarter of 2013. Fourth quarter Diluted Loss Per Common Share was $0.06, compared to $0.62 Loss Per Common Share in the fourth quarter of 2013.
On a Non-GAAP basis, fourth quarter Non-GAAP Net Income was $40.2 million, compared to $55.1 million in the fourth quarter of 2013, and fourth quarter Non-GAAP Diluted Income Per Common Share was $0.44, compared to $0.56 Per Common Share in the fourth quarter of 2013.
For the full year 2014, the Company reported revenues of $542.3 million, compared to $537.4 million for 2013. The full year 2014 Loss from continuing operations, net of tax was $13.5 million, compared to Income from continuing operations of $21.3 million for 2013. After taking into consideration discontinued operations, which include DivX and Main Concept, the full year 2014 net loss was $69.7 million, compared to a net loss of $172.1 million for 2013.
Non-GAAP Net Income for full year 2014 was $160.4 million, compared to $167.3 million for 2013. Non-GAAP Diluted Income Per Common Share was $1.74 for 2014, compared to $1.69 Income Per Common Share for 2013.
Non-GAAP Net Income and Non-GAAP Diluted Income Per Common Share are defined below in the section entitled “Non-GAAP Information.” Reconciliations between GAAP and Non-GAAP results from operations are provided in the tables below.
“I am pleased to announce better-than-expected results, above the mid-point of our initial and raised estimates for the year and for the quarter. During the fourth quarter, Rovi made progress on a number of initiatives to fuel future growth, including renewing and expanding a number of IP licensing agreements, deploying Rovi guides, and acquiring Fanhattan to advance our cloud-based discovery initiatives. We also expanded our metadata business, and signed up a major cable network for a pilot of our cloud-based advertising analytics platform,” said Tom Carson, President and CEO of Rovi. “Throughout the year, we funded investments in strategic growth areas through continued cost reductions and rationalization of legacy products. Looking ahead, we will continue to take a disciplined approach, and remove costs from the business as appropriate, as we invest in strategic growth areas. Based on the upcoming big-four intellectual property license renewals and demand for our growing portfolio of discovery and analytics products and services, we expect double-digit revenue growth with expanding margins in both 2016 and 2017.”
The Company repurchased 3.3 million shares of its stock for $73.4 million in the fourth quarter and repurchased a total of 8.3 million shares of stock for $196.5 million during fiscal 2014. As of today, Rovi now has approximately $125 million remaining in its existing share repurchase authorization and anticipates repurchasing five million additional shares in 2015.



Business Outlook
As announced at the Company’s investor meeting in early January, Rovi anticipates fiscal year 2015 revenue of $535 million to $565 million, and fiscal year 2015 Non-GAAP Diluted Income Per Common Share of $1.55 to $1.85.
“In terms of timing, we expect increasing revenues from our recently acquired advanced search and recommendation and FanTV products, as well as our Analytics business, to ramp up in the second half of the year,” said Peter Halt, CFO of Rovi. “We expect these acquisitions and spending ahead of our big-four renewals to impact first-half costs in 2015 when compared to the second half of 2014.”
Conference Call Information
Rovi management will host a conference call today, February 19, 2015, at 1:30 p.m. PT/4:30 p.m. ET to discuss the financial results. Investors and analysts interested in participating in the conference are welcome to call 1-866-621-1214 (or international +1-706-643-4013) and reference the conference ID 72248075. The conference call can also be accessed via live webcast in the Investor Relations section of Rovi's website at http://www.rovicorp.com/.
A telephonic replay of the conference call will be available through February 23, 2015 and can be accessed by calling 1-800-585-8367 (or international +1-404-537-3406) and entering access code 72248075. A replay of the audio webcast will be available on Rovi Corporation's website shortly after the live call ends and will remain on Rovi Corporation's website until its next quarterly earnings call.
Non-GAAP Information
Rovi Corporation provides Non-GAAP information to assist investors in assessing its current and future operations in the way that its management evaluates those operations. Non-GAAP Net Income, Non-GAAP Diluted Income Per Common Share, Non-GAAP COGS, Non-GAAP Research and Development Expenses, Non-GAAP Selling, General and Administrative Expenses, Non-GAAP Total OpEx and Non-GAAP Total COGS and OpEx are supplemental measures of the Company's performance that are not required by, and are not presented in accordance with GAAP. Non-GAAP information is not a substitute for any performance measure derived in accordance with GAAP.
Non-GAAP Net Income is defined as GAAP income (loss) from continuing operations, net of tax, adding back non-cash items such as equity-based compensation, amortization of intangibles, amortization or write-off of note issuance costs, non-cash interest expense recorded on convertible debt under Accounting Standards Codification (“ASC”) 470-20 (formerly known as FSP APB 14-1), mark-to-market fair value adjustments for interest rate swaps and the reversals of discrete tax items including reserves; as well as items which impact comparability that are required to be recorded under GAAP, but that the Company believes are not indicative of its core operating results such as changes in the fair value of contingent consideration, gains from the release of Sonic payroll tax withholding liabilities related to a stock option review, transaction, transition and integration costs, restructuring and asset impairment charges, payments to note holders and for expenses in connection with the early redemption or modification of debt and gains on sale of strategic investments. While depreciation expense is a non-cash item, it is included in Non-GAAP Net Income as a reasonable proxy for capital expenditures.
Non-GAAP Diluted Income Per Common Share is calculated using Non-GAAP Net Income.
Non-GAAP COGS is defined as GAAP cost of revenues excluding equity-based compensation and transition and integration expenses.
Non-GAAP Research and Development Expenses is defined as GAAP research and development expenses excluding equity-based compensation and transition and integration expenses.



Non-GAAP Selling, General and Administrative Expenses is defined as GAAP selling, general and administrative expenses excluding equity-based compensation, changes in the fair value of contingent consideration and transaction, transition and integration expenses.
Non-GAAP Total OpEx is defined as the sum of GAAP research and development and selling, general and administrative expenses, depreciation and gain on sale of patents excluding equity-based compensation, changes in the fair value of contingent consideration and transaction, transition and integration expenses.
Non-GAAP Total COGS and OpEx is defined as GAAP Total Operating costs and expenses, excluding equity-based compensation, changes in the fair value of contingent consideration, amortization of intangible assets, restructuring and asset impairment charges and transaction, transition and integration expenses.
The Company's management has evaluated and made operating decisions about its business operations primarily based upon Non-GAAP Net Income and Non-GAAP Diluted Income Per Common Share. Management uses Non-GAAP Income and Non-GAAP Diluted Income Per Common Share as measures as they exclude items management does not consider to be “core costs” or “core proceeds” when making business decisions. Therefore, management presents these Non-GAAP financial measures along with GAAP measures. For each such Non-GAAP financial measure, the adjustment provides management with information about the Company's underlying operating performance that enables a more meaningful comparison of its financial results in different reporting periods. For example, since Rovi Corporation does not acquire businesses on a predictable cycle, management excludes amortization of intangibles from acquisitions, transaction costs and transition and integration costs in order to make more consistent and meaningful evaluations of the Company's operating expenses. Management also excludes the effect of restructuring and asset impairment charges, expenses in connection with the early redemption or modification of debt and gains on sale of strategic investments. Management excludes the impact of equity-based compensation to help it compare current period operating expenses against the operating expenses for prior periods and to eliminate the effects of this non-cash item, which, because it is based upon estimates on the grant dates, may bear little resemblance to the actual values realized upon the future exercise, expiration, termination or forfeiture of the equity-based compensation, and which, as it relates to stock options and stock purchase plan shares, is required for GAAP purposes to be estimated under valuation models, including the Black-Scholes model used by Rovi Corporation. Management excludes non-cash interest expense recorded on convertible debt under ASC 470-20, mark-to-market fair value adjustments for interest rate swaps, caps, foreign currency collars, and the reversals of discrete tax items including reserves as they are non-cash items and not considered “core costs” or meaningful when management evaluates the Company's operating expenses. Management reclassifies the current period benefit or cost of the interest rate swaps from gain or loss on interest rate swaps and caps, net to interest expense in order for interest expense to reflect the swap rates, as these instruments were entered into to control the interest rate the Company effectively pays on its debt.
Management is using these Non-GAAP measures to help it make budgeting decisions, including decisions that affect operating expenses and operating margin. Further, Non-GAAP financial information helps management track actual performance relative to financial targets. Making Non-GAAP financial information available to investors, in addition to GAAP financial information, may also help investors compare the Company's performance with the performance of other companies in our industry, which may use similar financial measures to supplement their GAAP financial information.
Management recognizes that the use of Non-GAAP measures has limitations, including the fact that management must exercise judgment in determining which types of charges should be excluded from the Non-GAAP financial information. Because other companies, including companies similar to Rovi Corporation, may calculate their non-GAAP financial measures differently than the Company calculates its Non-GAAP measures, these Non-GAAP measures may have limited usefulness in comparing companies. Management believes, however, that providing Non-GAAP financial information, in addition to GAAP financial information, facilitates consistent comparison of the Company's financial performance over time. The Company provides Non-GAAP financial information to the investment community, not as an alternative, but as an important supplement to GAAP financial information; to enable investors to evaluate the Company's core operating performance in the same way that management does. Reconciliations between historical and Non-GAAP results of operations are provided in the tables below.



About Rovi Corporation
Rovi is leading the way to a more personalized entertainment experience. The Company’s pioneering guides, data, and recommendations continue to drive program search and navigation on millions of devices on a global basis. With a new generation of cloud-based discovery capabilities and emerging solutions for interactive advertising and audience analytics, Rovi is enabling premier brands worldwide to increase their reach, drive consumer satisfaction and create a better entertainment experience across multiple screens. The Company holds over 5,000 issued or pending patents worldwide and is headquartered in Santa Clara, California. Discover more about Rovi at Rovicorp.com.
Forward Looking Statements
All statements contained herein, including the quotations attributed to Mr. Carson, that are not statements of historical fact, including statements that use the words “will,” “believes,” “anticipates,” “estimates,” “expects,” “intends” or similar words that describe the Company's or its management's future plans, objectives, or goals, are “forward-looking statements” and are made pursuant to the Safe-Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, the Company's estimates of future revenues, earnings and expenses, business strategies, anticipated contract signings, and stock repurchases.
Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to be materially different from the historical results and/or from any future results or outcomes expressed or implied by such forward-looking statements. Such factors include, among others, the Company's ability to successfully execute on its strategic plan and customer demand for and industry acceptance of the Company's technologies and integrated solutions. Such factors are further addressed in the Company's Annual Report on Form 10-K for the period ended December 31, 2014 and such other documents as are filed with the Securities and Exchange Commission from time to time (available at www.sec.gov). The Company assumes no obligation, except as required by law, to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

Investor Contacts
Peter Halt, CFO
Rovi Corporation
+1 (818) 295-6800

Peter Ausnit, VP IR
Rovi Corporation
+1 (818) 565-5200













ROVI BUSINESS AND OPERATING HIGHLIGHTS:

IP Licensing:
Approximately 178 million households worldwide use Rovi’s guide products or a guide under an IP license with Rovi. Excluding pre-paid licensees, total Rovi subscribers approximately 129 million
Licensed Bell Canada for its Mobile TV and Tablet TV services for the provider’s Bell Mobility customers
Renewed agreement with TV Storm, a leading middleware provider in Korea, covering over four million pay-TV subscribers
Renewed agreement with Portugal Telecom for their direct-to-home (satellite) TV service

Discovery:
Acquired Fanhattan to advance our discovery initiatives through a set of cloud-based services that combine Live TV, VOD, nDVR & OTT Streaming discovery into a single user interface that can be deployed across multiple viewing platforms
Suddenlink, the seventh-largest U.S. cable broadband company, took a license to deploy Rovi DTA Guides to customers with high definition digital terminal adapters
Fully deployed Rovi’s Passport guides with América Móvil throughout Latin America
Signed first reseller agreements for Rovi’s cloud-based Media API Platform: Roku and Evolution

Metadata:
Rovi now provides metadata in 70 countries and covers more countries than any other major commercial metadata provider
Broadened data coverage further within China, India, Malaysia, Singapore, Taiwan, and Hong Kong
Rovi continued to develop robust metadata APIs for third-party developers and partners

Analytics:
Signed a pilot agreement with A+E Networks for Rovi’s Network Ad Optimizer

Post-year end:
Renewed an IP and product agreement with Sharp, one of the largest Consumer Electronics manufacturers in the world
Announced an agreement with Horizon Media for Rovi’s Agency Ad Optimizer






ROVI CORPORATION
GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31,
 
December 31,
 
 
2014
 
2013
 
2014
 
2013
Revenues
 
$
134,217

 
$
151,992

 
$
542,311

 
$
537,390

Costs and expenses:
 
 
 
 
 
 
 
 
Cost of revenues, exclusive of amortization of intangible assets
 
25,280

 
24,240

 
107,253

 
96,361

Research and development
 
28,887

 
27,340

 
108,746

 
111,326

Selling, general and administrative
 
31,160

 
37,703

 
136,736

 
147,544

Depreciation
 
4,333

 
4,492

 
17,540

 
16,775

Amortization of intangible assets
 
19,709

 
18,304

 
77,887

 
74,413

Restructuring and asset impairment charges
 
2,535

 

 
10,939

 
7,638

Gain on sale of patents
 

 

 
(500
)
 

Total costs and expenses
 
111,904

 
112,079

 
458,601

 
454,057

Operating income from continuing operations
 
22,313

 
39,913

 
83,710

 
83,333

Interest expense
 
(14,047
)
 
(15,733
)
 
(54,768
)
 
(62,019
)
Interest income and other, net
 
2,234

 
434

 
4,069

 
2,775

Debt modification expense
 

 

 
(3,775
)
 
(1,351
)
(Loss) income on interest rate swaps, net
 
(10,309
)
 
659

 
(17,874
)
 
2,898

Loss on debt redemption
 

 

 
(5,159
)
 
(2,761
)
Income from continuing operations before income taxes
 
191

 
25,273

 
6,203

 
22,875

Income tax expense
 
6,067

 
14,723

 
19,725

 
1,540

(Loss) income from continuing operations, net of tax
 
(5,876
)
 
10,550

 
(13,522
)
 
21,335

Discontinued operations, net of tax
 
69

 
(71,359
)
 
(56,222
)
 
(193,425
)
Net loss
 
$
(5,807
)
 
$
(60,809
)
 
$
(69,744
)
 
$
(172,090
)
Basic earnings per share:
 
 
 
 
 
 
 
 
Basic (loss) income per share from continuing operations
 
$
(0.06
)
 
$
0.11

 
$
(0.15
)
 
$
0.22

Basic loss per share from discontinued operations
 
0.00

 
(0.74
)
 
(0.61
)
 
(1.97
)
Basic net earnings per share
 
$
(0.06
)
 
$
(0.63
)
 
$
(0.76
)
 
$
(1.75
)
Shares used in computing basic net earnings per share
 
90,701

 
97,035

 
91,654

 
98,371

Diluted earnings per share:
 
 
 
 
 
 
 
 
Diluted (loss) income per share from continuing operations
 
$
(0.06
)
 
$
0.11

 
$
(0.15
)
 
$
0.22

Diluted loss per share from discontinued operations
 
0.00

 
(0.73
)
 
(0.61
)
 
(1.96
)
Diluted net earnings per share
 
$
(0.06
)
 
$
(0.62
)
 
$
(0.76
)
 
$
(1.74
)
Shares used in computing diluted net earnings per share
 
90,701

 
97,772

 
91,654

 
99,092



See notes to the GAAP Consolidated Financial Statements in our Form 10-K.





ROVI CORPORATION
GAAP CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)

 
 
December 31, 2014
 
December 31, 2013
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
154,568

 
$
156,487

Short-term investments
 
183,074

 
365,976

Trade accounts receivable, net
 
83,514

 
104,386

Taxes receivable
 
230

 
1,907

Deferred tax assets, net
 
18,553

 
18,621

Prepaid expenses and other current assets
 
12,621

 
14,936

Assets held for sale
 

 
106,688

Total current assets
 
452,560

 
769,001

Long-term marketable investment securities
 
131,378

 
118,658

Property and equipment, net
 
37,227

 
33,350

Finite-lived intangible assets, net
 
463,348

 
478,229

Long-term deferred tax assets
 
1,805

 

Other assets
 
15,420

 
16,907

Goodwill
 
1,343,652

 
1,298,448

Total assets
 
$
2,445,390

 
$
2,714,593

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
Current liabilities:
 
 

 
 

Accounts payable and accrued expenses
 
$
83,208

 
$
94,560

Deferred revenue
 
18,399

 
9,848

Current portion of long-term debt
 
302,375

 

Liabilities held for sale
 

 
5,513

Total current liabilities
 
403,982

 
109,921

Taxes payable, less current portion
 
10,100

 
44,038

Long-term debt, less current portion
 
804,557

 
1,186,564

Deferred revenue, less current portion
 
15,722

 
4,641

Long-term deferred tax liabilities, net
 
80,751

 
41,379

Other non-current liabilities
 
24,014

 
14,834

Total liabilities
 
1,339,126

 
1,401,377

Stockholders’ equity:
 
 
 
 
Common stock
 
131

 
128

Treasury stock
 
(1,013,218
)
 
(816,694
)
Additional paid-in capital
 
2,339,817

 
2,279,196

Accumulated other comprehensive loss
 
(5,307
)
 
(3,999
)
Accumulated deficit
 
(215,159
)
 
(145,415
)
Total stockholders’ equity
 
1,106,264

 
1,313,216

Total liabilities and stockholders’ equity
 
$
2,445,390

 
$
2,714,593



See notes to the GAAP Consolidated Financial Statements in our Form 10-K.








ROVI CORPORATION
REVENUE BY SEGMENT
(IN THOUSANDS)
(UNAUDITED)

 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31, 2014
 
December 31, 2013
 
December 31, 2014
 
December 31, 2013
Intellectual Property Licensing Revenues
 
 
 
 
 
 
 
 
Service Provider
 
$
52,286

 
$
59,397

 
$
200,799

 
$
194,324

Consumer Electronics
 
19,388

 
29,239

 
84,359

 
98,886

Total Intellectual Property Licensing
 
71,674

 
88,636

 
285,158

 
293,210

 
 
 
 
 
 
 
 
 
Product Revenues
 
 
 
 
 
 
 
 
Service Provider
 
52,839

 
48,841

 
204,877

 
187,065

Consumer Electronics
 
4,900

 
6,700

 
22,342

 
27,262

Other
 
4,804

 
7,815

 
29,934

 
29,853

Total Product
 
62,543

 
63,356

 
257,153

 
244,180

Total Revenues
 
$
134,217

 
$
151,992

 
$
542,311

 
$
537,390




ROVI CORPORATION
REVENUE BY SALES VERTICAL
(IN THOUSANDS)
(UNAUDITED)

 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31, 2014
 
December 31, 2013
 
December 31, 2014
 
December 31, 2013
Service Providers
 
$
105,125

 
$
108,238

 
$
405,676

 
$
381,389

Consumer Electronics
 
24,288

 
35,939

 
106,701

 
126,148

Other
 
4,804

 
7,815

 
29,934

 
29,853

Total Revenues
 
$
134,217

 
$
151,992

 
$
542,311

 
$
537,390







ROVI CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)

 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31, 2014
 
December 31, 2013
 
December 31, 2014
 
December 31, 2013
GAAP (Loss) income from continuing operations, net of tax
 
$
(5,876
)
 
$
10,550

 
$
(13,522
)
 
$
21,335

Equity-based compensation
 
10,204

 
12,488

 
42,017

 
54,661

Transaction, transition and integration costs
 
1,022

 

 
3,965

 
2,160

Reduction of contingent consideration liability for Veveo acquisition
 
(2,700
)
 

 
(2,700
)
 

Amortization of note issuance costs
 
748

 
1,843

 
3,376

 
5,004

Amortization of convertible note discount
 
3,589

 
3,325

 
13,953

 
12,927

Loss on debt redemption
 

 

 
5,159

 
2,761

Debt modification expense
 

 

 
3,775

 
1,351

Mark-to-market (gain) loss related to interest rate swaps and caps
 
9,566

 
(112
)
 
15,586

 
1,692

Amortization of intangible assets
 
19,709

 
18,304

 
77,887

 
74,413

Restructuring and asset impairment charges
 
2,535

 

 
10,939

 
7,638

Release of Sonic payroll tax withholding liabilities related to stock option review
 

 

 
(1,182
)
 

Income tax expense (1)
 
1,356

 
8,733

 
1,120

 
(16,637
)
Non-GAAP Net Income
 
$
40,153

 
$
55,131

 
$
160,373

 
$
167,305

 
 
 
 
 
 
 
 
 
GAAP Diluted (loss) income per share from continuing operations
 
$
(0.06
)
 
$
0.11

 
$
(0.15
)
 
$
0.22

Non-GAAP Diluted Income Per Common Share (2)
 
$
0.44

 
$
0.56

 
$
1.74

 
$
1.69

 
 
 
 
 
 
 
 
 
(1) Adjusts tax expense to the Non-GAAP cash tax rate.
(2) For the 2014 period, since the adjustments resulted in Non-GAAP Net Income, 91,434 shares and 92,377 shares were used for the three months and twelve months ended December 31, 2014, respectively, in computing Non-GAAP Diluted Income Per Common Share, which includes dilutive common equivalent shares outstanding.



 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31, 2014
 
December 31, 2013
 
December 31, 2014
 
December 31, 2013
GAAP Total Operating costs and expenses
 
$
111,904

 
$
112,079

 
$
458,601

 
$
454,057

Equity-based compensation
 
(10,204
)
 
(12,488
)
 
(42,017
)
 
(54,661
)
Transaction, transition and integration costs
 
(1,022
)
 

 
(3,965
)
 
(2,160
)
Reduction of contingent consideration liability for Veveo acquisition
 
2,700

 

 
2,700

 

Amortization of intangible assets
 
(19,709
)
 
(18,304
)
 
(77,887
)
 
(74,413
)
Restructuring and asset impairment charges
 
(2,535
)
 

 
(10,939
)
 
(7,638
)
Non-GAAP Total COGS and OpEx
 
$
81,134

 
$
81,287

 
$
326,493

 
$
315,185









 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31, 2014
 
December 31, 2013
 
December 31, 2014
 
December 31, 2013
GAAP Cost of revenues
 
$
25,280

 
$
24,240

 
$
107,253

 
$
96,361

Equity-based compensation
 
(1,089
)
 
(728
)
 
(5,383
)
 
(3,514
)
Transition and integration costs
 

 

 
(96
)
 
(380
)
Non-GAAP COGS
 
$
24,191

 
$
23,512

 
$
101,774

 
$
92,467



 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31, 2014
 
December 31, 2013
 
December 31, 2014
 
December 31, 2013
GAAP Research and development expenses
 
$
28,887

 
$
27,340

 
$
108,746

 
$
111,326

Equity-based compensation
 
(3,219
)
 
(4,316
)
 
(10,752
)
 
(17,752
)
Transition and integration costs
 
(73
)
 

 
(530
)
 
(779
)
Non-GAAP Research & Development Expenses
 
$
25,595

 
$
23,024

 
$
97,464

 
$
92,795



 
 
Three Months Ended
 
Twelve Months Ended
 
 
December 31, 2014
 
December 31, 2013
 
December 31, 2014
 
December 31, 2013
GAAP Selling, general and administrative expenses
 
$
31,160

 
$
37,703

 
$
136,736

 
$
147,544

Equity-based compensation
 
(5,896
)
 
(7,444
)
 
(25,882
)
 
(33,395
)
Transaction, transition and integration costs
 
(949
)
 

 
(3,339
)
 
(1,001
)
Reduction of contingent consideration liability for Veveo acquisition
 
2,700

 

 
2,700

 

Non-GAAP Selling, General and Administrative Expenses
 
$
27,015

 
$
30,259

 
$
110,215

 
$
113,148