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FORM 10-Q
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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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RealNetworks, Inc.
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(Exact name of registrant as specified in its charter)
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Washington
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91-1628146
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(State of incorporation)
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(I.R.S. Employer
Identification Number)
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2601 Elliott Avenue, Suite 1000
Seattle, Washington
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98121
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(Address of principal executive offices)
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(Zip Code)
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(206) 674-2700
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(Registrant’s telephone number, including area code)
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Large accelerated filer
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¨
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Accelerated filer
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ý
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Page
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Item 1.
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Financial Statements
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June 30,
2013 |
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December 31,
2012 |
||||
ASSETS
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Current assets:
|
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||||
Cash and cash equivalents
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$
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129,210
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$
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163,198
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Short-term investments
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107,536
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|
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108,216
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||
Trade accounts receivable, net of allowances
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25,700
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30,754
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Deferred costs, current portion
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485
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|
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825
|
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Deferred tax assets, current
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3,845
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2,869
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Prepaid expenses and other current assets
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9,452
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17,002
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Total current assets
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276,228
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322,864
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Equipment, software, and leasehold improvements, at cost:
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Equipment and software
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94,231
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98,041
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Leasehold improvements
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22,740
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22,767
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Total equipment, software, and leasehold improvements, at cost
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116,971
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120,808
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Less accumulated depreciation and amortization
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92,342
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91,492
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Net equipment, software, and leasehold improvements
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24,629
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29,316
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Restricted cash equivalents and investments
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10,000
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10,000
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Equity method investment
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15,344
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19,204
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Available for sale securities
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36,156
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34,334
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Other assets
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3,262
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3,153
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Deferred costs, non-current portion
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1,300
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531
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Deferred tax assets, net, non-current portion
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1,534
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4,911
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Other intangible assets, net
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9,783
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|
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3,275
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Goodwill
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15,984
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|
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6,309
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Total assets
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$
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394,220
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$
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433,897
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable
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$
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18,600
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$
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19,013
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Accrued and other current liabilities
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47,972
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57,530
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Deferred revenue, current portion
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7,987
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8,675
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Total current liabilities
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74,559
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85,218
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Deferred revenue, non-current portion
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191
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169
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Deferred rent
|
441
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2,250
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Deferred tax liabilities, net, non-current portion
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3,194
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432
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Other long-term liabilities
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492
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3,100
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Total liabilities
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78,877
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91,169
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Commitments and contingencies
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Shareholders’ equity:
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||||
Preferred stock, $0.001 par value, no shares issued and outstanding:
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Series A: authorized 200 shares
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—
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—
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Undesignated series: authorized 59,800 shares
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—
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—
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Common stock, $0.001 par value authorized 250,000 shares; issued and outstanding 35,658 shares in 2013 and 35,324 shares in 2012
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36
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35
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Additional paid-in capital
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607,140
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603,770
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Accumulated other comprehensive loss
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(27,151
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)
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(26,540
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)
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Retained deficit
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(264,682
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)
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(234,537
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)
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Total shareholders’ equity
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315,343
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342,728
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Total liabilities and shareholders’ equity
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$
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394,220
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$
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433,897
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Quarters Ended
June 30, |
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Six Months Ended
June 30, |
||||||||||||
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2013
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2012
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2013
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2012
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||||||||
Net revenue (A)
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$
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49,850
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$
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65,526
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$
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106,643
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$
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132,490
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Cost of revenue (B)
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19,519
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25,962
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|
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40,025
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53,389
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Gross profit
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30,331
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39,564
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66,618
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79,101
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Sale of patents and other technology assets, net of costs (See Note 1)
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—
|
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117,933
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—
|
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116,353
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||||
Operating expenses:
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Research and development
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14,993
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16,028
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30,244
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33,846
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Sales and marketing
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19,269
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22,694
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40,403
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46,490
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General and administrative
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8,691
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13,068
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18,637
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26,344
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Restructuring and other charges
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816
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1,539
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2,198
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3,148
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||||
Lease exit and related charges
|
3,066
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—
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3,066
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—
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||||
Total operating expenses
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46,835
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53,329
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94,548
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109,828
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Operating income (loss)
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(16,504
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)
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104,168
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(27,930
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)
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85,626
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Other income (expenses):
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||||||||
Interest income, net
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179
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225
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826
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|
869
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Gain (loss) on sale of equity and other investments, net
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—
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3,078
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—
|
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3,078
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Equity in net loss of Rhapsody investment
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(1,347
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)
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(2,114
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)
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(3,580
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)
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(2,482
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)
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||||
Other income (expense), net
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(137
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)
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(49
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)
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(28
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)
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1,426
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|
||||
Total other income (expenses), net
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(1,305
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)
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1,140
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(2,782
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)
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|
2,891
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|
||||
Income (loss) before income taxes
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(17,809
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)
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|
105,308
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(30,712
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)
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|
88,517
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|
||||
Income tax expense (benefit)
|
662
|
|
|
24,311
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|
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(567
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)
|
|
24,535
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|
||||
Net income (loss)
|
$
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(18,471
|
)
|
|
$
|
80,997
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|
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$
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(30,145
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)
|
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$
|
63,982
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Basic net income (loss) per share
|
$
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(0.52
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)
|
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$
|
2.33
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|
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$
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(0.85
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)
|
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$
|
1.85
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Diluted net income (loss) per share
|
$
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(0.52
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)
|
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$
|
2.32
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$
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(0.85
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)
|
|
$
|
1.83
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|
Shares used to compute basic net income (loss) per share
|
35,455
|
|
|
34,752
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|
|
35,399
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|
|
34,620
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|
||||
Shares used to compute diluted net income (loss) per share
|
35,455
|
|
|
34,900
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|
|
35,399
|
|
|
34,914
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|
||||
Comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Unrealized investment holding gains (losses)
|
$
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(1,622
|
)
|
|
$
|
(12,061
|
)
|
|
$
|
1,015
|
|
|
$
|
(3,567
|
)
|
Foreign currency translation adjustments, net of reclassification adjustments
|
(388
|
)
|
|
(1,852
|
)
|
|
(1,626
|
)
|
|
(2,236
|
)
|
||||
Total other comprehensive income (loss)
|
(2,010
|
)
|
|
(13,913
|
)
|
|
(611
|
)
|
|
(5,803
|
)
|
||||
Net income (loss)
|
(18,471
|
)
|
|
80,997
|
|
|
(30,145
|
)
|
|
63,982
|
|
||||
Comprehensive income (loss)
|
$
|
(20,481
|
)
|
|
$
|
67,084
|
|
|
$
|
(30,756
|
)
|
|
$
|
58,179
|
|
(A) Components of net revenue:
|
|
|
|
|
|
|
|
||||||||
License fees
|
$
|
10,162
|
|
|
$
|
14,224
|
|
|
$
|
22,991
|
|
|
$
|
29,180
|
|
Service revenue
|
39,688
|
|
|
51,302
|
|
|
83,652
|
|
|
103,310
|
|
||||
|
$
|
49,850
|
|
|
$
|
65,526
|
|
|
$
|
106,643
|
|
|
$
|
132,490
|
|
(B) Components of cost of revenue:
|
|
|
|
|
|
|
|
||||||||
License fees
|
$
|
2,161
|
|
|
$
|
2,645
|
|
|
$
|
4,315
|
|
|
$
|
5,917
|
|
Service revenue
|
17,358
|
|
|
23,317
|
|
|
35,710
|
|
|
47,472
|
|
||||
|
$
|
19,519
|
|
|
$
|
25,962
|
|
|
$
|
40,025
|
|
|
$
|
53,389
|
|
|
Six Months Ended
June 30, |
||||||
|
2013
|
|
2012
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(30,145
|
)
|
|
$
|
63,982
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
9,874
|
|
|
8,162
|
|
||
Stock-based compensation
|
4,058
|
|
|
4,065
|
|
||
Equity in net loss of Rhapsody
|
3,580
|
|
|
2,482
|
|
||
Deferred income taxes, net
|
(1,668
|
)
|
|
22,496
|
|
||
Gain on sale of patent and other technology assets, net of costs
|
—
|
|
|
(116,353
|
)
|
||
Gain on sale of equity and other investments, net
|
—
|
|
|
(3,078
|
)
|
||
Realized translation gain
|
(35
|
)
|
|
(1,611
|
)
|
||
Other
|
51
|
|
|
(79
|
)
|
||
Net change in certain operating assets and liabilities:
|
|
|
|
||||
Trade accounts receivable
|
5,355
|
|
|
2,691
|
|
||
Prepaid expenses and other assets
|
6,749
|
|
|
(1,144
|
)
|
||
Accounts payable
|
(92
|
)
|
|
4,013
|
|
||
Accrued and other liabilities
|
(10,612
|
)
|
|
(3,067
|
)
|
||
Net cash provided by (used in) operating activities
|
(12,885
|
)
|
|
(17,441
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of equipment, software, and leasehold improvements
|
(3,181
|
)
|
|
(4,989
|
)
|
||
Proceeds from sale of patents and other technology assets, net of costs
|
—
|
|
|
116,353
|
|
||
Proceeds from sale of equity and other investments
|
—
|
|
|
4,165
|
|
||
Purchases of short-term investments
|
(70,647
|
)
|
|
(18,637
|
)
|
||
Proceeds from sales and maturities of short-term investments
|
71,327
|
|
|
13,970
|
|
||
Decrease (increase) in restricted cash equivalents and investments, net
|
—
|
|
|
(5
|
)
|
||
Acquisitions of businesses, net of cash acquired
|
(16,107
|
)
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
(18,608
|
)
|
|
110,857
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of common stock (stock options and stock purchase plan)
|
392
|
|
|
1,221
|
|
||
Tax payments from shares withheld upon vesting of restricted stock
|
(800
|
)
|
|
(884
|
)
|
||
Payment of contingent consideration
|
(828
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
(1,236
|
)
|
|
337
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(1,259
|
)
|
|
(546
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
(33,988
|
)
|
|
93,207
|
|
||
Cash and cash equivalents, beginning of period
|
163,198
|
|
|
106,333
|
|
||
Cash and cash equivalents, end of period
|
$
|
129,210
|
|
|
$
|
199,540
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash received from income tax refunds
|
$
|
8,100
|
|
|
$
|
149
|
|
Cash paid for income taxes
|
$
|
2,147
|
|
|
$
|
1,575
|
|
Non-cash investing activities:
|
|
|
|
||||
Increase (decrease) in accrued purchases of equipment, software, and leasehold improvements
|
$
|
483
|
|
|
$
|
1,189
|
|
|
June 30,
2013 |
|
December 31,
2012 |
||||
Unrealized gains on investments, net of tax effects of $(129) and $(846) at June 30, 2013 and December 31, 2012, respectively
|
$
|
27,700
|
|
|
$
|
26,685
|
|
Foreign currency translation adjustments
|
(54,851
|
)
|
|
(53,225
|
)
|
||
Accumulated other comprehensive income (loss)
|
$
|
(27,151
|
)
|
|
$
|
(26,540
|
)
|
|
Quarters Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Total stock-based compensation expense
|
$
|
2,020
|
|
|
$
|
1,722
|
|
|
$
|
4,058
|
|
|
$
|
4,065
|
|
|
Quarters Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||
Expected dividend yield
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Risk-free interest rate
|
0.52
|
%
|
|
0.55
|
%
|
|
0.55
|
%
|
|
0.65
|
%
|
Expected life (years)
|
5.4
|
|
|
3.8
|
|
|
4.3
|
|
|
3.8
|
|
Volatility
|
48
|
%
|
|
58
|
%
|
|
48
|
%
|
|
58
|
%
|
|
Quarters Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net revenue
|
$
|
34,679
|
|
|
$
|
37,809
|
|
|
$
|
68,641
|
|
|
$
|
72,979
|
|
Gross profit
|
8,767
|
|
|
9,879
|
|
|
16,612
|
|
|
19,491
|
|
||||
Net loss
|
(4,375
|
)
|
|
(4,537
|
)
|
|
(9,191
|
)
|
|
(5,607
|
)
|
•
|
Level 1: Quoted prices in active markets for identical assets or liabilities
|
•
|
Level 2: Directly or indirectly observed inputs for the asset or liability, including quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active
|
•
|
Level 3: Significant unobservable inputs that reflect our own estimates of assumptions that market participants would use
|
|
Fair Value Measurements as of
|
||||||||||||||
|
June 30, 2013
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
12,788
|
|
|
$
|
2
|
|
|
$
|
12,786
|
|
|
$
|
—
|
|
Corporate notes and bonds
|
63,490
|
|
|
—
|
|
|
63,490
|
|
|
—
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Corporate notes and bonds
|
73,135
|
|
|
—
|
|
|
73,135
|
|
|
—
|
|
||||
U.S. government agency securities
|
34,401
|
|
|
34,276
|
|
|
125
|
|
|
—
|
|
||||
Restricted cash equivalents and investments
|
10,000
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
||||
Equity investments in publicly traded securities
|
36,156
|
|
|
36,156
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
229,970
|
|
|
$
|
70,434
|
|
|
$
|
159,536
|
|
|
$
|
—
|
|
|
Fair Value Measurements as of
|
||||||||||||||
|
December 31, 2012
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
10,680
|
|
|
$
|
—
|
|
|
$
|
10,680
|
|
|
$
|
—
|
|
Corporate notes and bonds
|
81,235
|
|
|
—
|
|
|
81,235
|
|
|
—
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Corporate notes and bonds
|
65,502
|
|
|
—
|
|
|
65,502
|
|
|
—
|
|
||||
U.S. government agency securities
|
42,714
|
|
|
42,113
|
|
|
601
|
|
|
—
|
|
||||
Restricted cash equivalents and investments
|
10,000
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
||||
Equity investments in publicly traded securities
|
34,334
|
|
|
34,334
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
244,465
|
|
|
$
|
76,447
|
|
|
$
|
168,018
|
|
|
$
|
—
|
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
Cash and cash equivalents:
|
|
|
|
||||
Cash
|
$
|
52,932
|
|
|
$
|
52,932
|
|
Money market mutual funds
|
12,788
|
|
|
12,788
|
|
||
Corporate notes and bonds
|
63,490
|
|
|
63,490
|
|
||
Total cash and cash equivalents
|
129,210
|
|
|
129,210
|
|
||
Short-term investments:
|
|
|
|
||||
Corporate notes and bonds
|
73,143
|
|
|
73,135
|
|
||
U.S. government agency securities
|
34,390
|
|
|
34,401
|
|
||
Total short-term investments
|
107,533
|
|
|
107,536
|
|
||
Total cash, cash equivalents and short-term investments
|
$
|
236,743
|
|
|
$
|
236,746
|
|
Restricted cash equivalents and investments
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
Cash and cash equivalents:
|
|
|
|
||||
Cash
|
$
|
71,283
|
|
|
$
|
71,283
|
|
Money market mutual funds
|
10,680
|
|
|
10,680
|
|
||
Corporate notes and bonds
|
81,237
|
|
|
81,235
|
|
||
Total cash and cash equivalents
|
163,200
|
|
|
163,198
|
|
Short-term investments:
|
|
|
|
||||
Corporate notes and bonds
|
65,426
|
|
|
65,502
|
|
||
U.S. Government agency securities
|
42,693
|
|
|
42,714
|
|
||
Total short-term investments
|
108,119
|
|
|
108,216
|
|
||
Total cash, cash equivalents, and short-term investments
|
$
|
271,319
|
|
|
$
|
271,414
|
|
Restricted cash equivalents and investments
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
Estimated
Fair Value
|
||
Within one year
|
$
|
82,261
|
|
Between one year and five years
|
25,275
|
|
|
Total short-term investments
|
$
|
107,536
|
|
|
Allowance For
|
||||||
|
Doubtful
Accounts
Receivable
|
|
Sales
Returns
|
||||
Balances, December 31, 2012
|
$
|
1,010
|
|
|
$
|
653
|
|
Addition (reduction) to allowance
|
42
|
|
|
(10
|
)
|
||
Amounts written off
|
(48
|
)
|
|
(16
|
)
|
||
Foreign currency translation
|
(17
|
)
|
|
—
|
|
||
Balances, June 30, 2013
|
$
|
987
|
|
|
$
|
627
|
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||
Customer relationships
|
$
|
30,441
|
|
|
$
|
27,775
|
|
|
$
|
2,666
|
|
Developed technology
|
25,876
|
|
|
23,439
|
|
|
2,437
|
|
|||
Patents, trademarks and tradenames
|
7,869
|
|
|
3,369
|
|
|
4,500
|
|
|||
Service contracts and other
|
5,500
|
|
|
5,320
|
|
|
180
|
|
|||
Total other intangible assets, June 30, 2013
|
$
|
69,686
|
|
|
$
|
59,903
|
|
|
$
|
9,783
|
|
Balance, December 31, 2012
|
$
|
6,309
|
|
Increases due to current year acquisitions
|
10,026
|
|
|
Effects of foreign currency translation
|
(351
|
)
|
|
Balance, June 30, 2013
|
$
|
15,984
|
|
|
June 30,
2013 |
||
RealPlayer Group
|
$
|
580
|
|
Mobile Entertainment
|
688
|
|
|
Games
|
14,716
|
|
|
Total goodwill
|
$
|
15,984
|
|
|
June 30, 2013
|
|
December 31, 2012
|
||||
Royalties and other fulfillment costs
|
$
|
17,697
|
|
|
$
|
19,435
|
|
Employee compensation, commissions and benefits
|
10,379
|
|
|
13,368
|
|
||
Sales, VAT and other taxes payable
|
8,353
|
|
|
10,959
|
|
||
Deferred tax liabilities—current
|
432
|
|
|
3,894
|
|
||
Accrued lease exit and related charges
|
4,209
|
|
|
2,463
|
|
||
Other
|
6,902
|
|
|
7,411
|
|
||
Total accrued and other current liabilities
|
$
|
47,972
|
|
|
$
|
57,530
|
|
|
|
|
||||||
|
Employee Separation Costs
|
Asset Disposal Expense and Other
|
Total
|
|||||
Costs incurred and charged to expense for the six months ended June 30, 2013
|
$
|
1,818
|
|
380
|
|
$
|
2,198
|
|
Costs incurred and charged to expense for the six months ended June 30, 2012
|
$
|
3,148
|
|
—
|
|
$
|
3,148
|
|
|
By Type of Cost
|
|
|||||||
|
Employee Separation Costs
|
Contract Assignment Costs
|
Total
|
||||||
Accrued liability as of December 31, 2012
|
$
|
731
|
|
$
|
1,700
|
|
$
|
2,431
|
|
Costs incurred and charged to expense for the six months ended June 30, 2013
|
1,818
|
|
—
|
|
1,818
|
|
|||
Cash payments
|
(2,348
|
)
|
—
|
|
(2,348
|
)
|
|||
Accrued liability as of June 30, 2013
|
$
|
201
|
|
$
|
1,700
|
|
$
|
1,901
|
|
Accrued loss December 31, 2012
|
$
|
4,213
|
|
Additions and adjustments to the lease exit charges accrual, including sublease income estimate revision
|
1,275
|
|
|
Less amounts paid, net of sublease amounts
|
(1,279
|
)
|
|
Accrued loss June 30, 2013 (included in Accrued and other current liabilities)
|
$
|
4,209
|
|
|
Quarters Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net income (loss) available to common shareholders
|
$
|
(18,471
|
)
|
|
$
|
80,997
|
|
|
$
|
(30,145
|
)
|
|
$
|
63,982
|
|
Weighted average common shares outstanding used to compute basic EPS
|
35,455
|
|
|
34,752
|
|
|
35,399
|
|
|
34,620
|
|
||||
Dilutive effect of stock based awards
|
—
|
|
|
148
|
|
|
—
|
|
|
294
|
|
||||
Weighted average common shares outstanding used to compute diluted EPS
|
35,455
|
|
|
34,900
|
|
|
35,399
|
|
|
34,914
|
|
||||
Basic EPS
|
$
|
(0.52
|
)
|
|
$
|
2.33
|
|
|
$
|
(0.85
|
)
|
|
$
|
1.85
|
|
Diluted EPS
|
$
|
(0.52
|
)
|
|
$
|
2.32
|
|
|
$
|
(0.85
|
)
|
|
$
|
1.83
|
|
|
Quarters Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Revenue
|
$
|
18,383
|
|
|
$
|
22,158
|
|
|
$
|
40,766
|
|
|
$
|
44,239
|
|
Cost of revenue
|
4,409
|
|
|
4,727
|
|
|
9,720
|
|
|
9,291
|
|
||||
Gross profit
|
13,974
|
|
|
17,431
|
|
|
31,046
|
|
|
34,948
|
|
||||
Operating expenses
|
14,001
|
|
|
12,792
|
|
|
30,207
|
|
|
28,767
|
|
||||
Operating income (loss)
|
$
|
(27
|
)
|
|
$
|
4,639
|
|
|
$
|
839
|
|
|
$
|
6,181
|
|
|
Quarters Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Revenue
|
$
|
18,592
|
|
|
$
|
26,005
|
|
|
$
|
39,087
|
|
|
$
|
51,780
|
|
Cost of revenue
|
11,170
|
|
|
14,875
|
|
|
22,002
|
|
|
30,353
|
|
||||
Gross profit
|
7,422
|
|
|
11,130
|
|
|
17,085
|
|
|
21,427
|
|
||||
Operating expenses
|
8,412
|
|
|
13,851
|
|
|
17,523
|
|
|
28,655
|
|
||||
Operating income (loss)
|
$
|
(990
|
)
|
|
$
|
(2,721
|
)
|
|
$
|
(438
|
)
|
|
$
|
(7,228
|
)
|
|
Quarters Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Revenue
|
$
|
12,875
|
|
|
$
|
17,363
|
|
|
$
|
26,790
|
|
|
$
|
36,471
|
|
Cost of revenue
|
3,381
|
|
|
5,630
|
|
|
7,181
|
|
|
12,343
|
|
||||
Gross profit
|
9,494
|
|
|
11,733
|
|
|
19,609
|
|
|
24,128
|
|
||||
Operating expenses
|
11,755
|
|
|
13,801
|
|
|
23,607
|
|
|
27,939
|
|
||||
Operating income (loss)
|
$
|
(2,261
|
)
|
|
$
|
(2,068
|
)
|
|
$
|
(3,998
|
)
|
|
$
|
(3,811
|
)
|
|
Quarters Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Cost of revenue
|
$
|
559
|
|
|
$
|
730
|
|
|
$
|
1,122
|
|
|
$
|
1,402
|
|
Sale of patents and other technology assets, net of costs
|
—
|
|
|
117,933
|
|
|
—
|
|
|
116,353
|
|
||||
Operating expenses
|
12,667
|
|
|
12,885
|
|
|
23,211
|
|
|
24,467
|
|
||||
Operating income (loss)
|
$
|
(13,226
|
)
|
|
$
|
104,318
|
|
|
$
|
(24,333
|
)
|
|
$
|
90,484
|
|
|
Quarters Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
United States
|
$
|
21,463
|
|
|
$
|
28,614
|
|
|
$
|
49,486
|
|
|
$
|
60,428
|
|
Europe
|
9,272
|
|
|
14,339
|
|
|
20,528
|
|
|
30,551
|
|
||||
Rest of the world
|
19,115
|
|
|
22,573
|
|
|
36,629
|
|
|
41,511
|
|
||||
Total net revenue
|
$
|
49,850
|
|
|
$
|
65,526
|
|
|
$
|
106,643
|
|
|
$
|
132,490
|
|
|
June 30,
2013 |
|
December 31,
2012 |
||||
United States
|
$
|
42,264
|
|
|
$
|
27,915
|
|
Europe
|
1,921
|
|
|
2,350
|
|
||
Rest of the world
|
6,211
|
|
|
8,635
|
|
||
Total long-lived assets
|
$
|
50,396
|
|
|
$
|
38,900
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
future revenues, operating expenses, income and other taxes, tax benefits, net income (loss) per diluted share available to common shareholders, acquisition costs and related amortization, and other measures of results of operations;
|
•
|
the effects of our past acquisitions and expectations for future acquisitions and divestitures;
|
•
|
plans, strategies and expected opportunities for future growth, increased profitability and innovation;
|
•
|
the prospects for creation and growth of strategic partnerships and the resulting financial benefits from such partnerships;
|
•
|
the expected financial position, performance, growth and profitability of, and investment in, our businesses and the availability of resources;
|
•
|
our involvement in potential claims, legal proceedings and government investigations, the expected course and costs of existing claims, legal proceedings and government investigations, and the potential outcomes and effects of both existing and potential claims, legal proceedings and governmental investigations on our business, prospects, financial condition or results of operations;
|
•
|
the expected benefits and other consequences of our growth plans, strategic initiatives, and restructurings;
|
•
|
our expected introduction of new and enhanced products, services and technologies across our businesses;
|
•
|
the effects of legislation, regulations, administrative proceedings, court rulings, settlement negotiations and other factors that may impact our businesses;
|
•
|
the continuation and expected nature of certain customer relationships;
|
•
|
impacts of competition and certain customer relationships on the future financial performance and growth of our businesses;
|
•
|
the effects of U.S. and foreign income and other taxes on our business, prospects, financial condition or results of operations; and
|
•
|
the effect of economic and market conditions on our business, prospects, financial condition or results of operations.
|
|
Quarters Ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||||||||||
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
||||||||||||||
Total revenue
|
$
|
49,850
|
|
|
$
|
65,526
|
|
|
$
|
(15,676
|
)
|
|
(24
|
)%
|
|
$
|
106,643
|
|
|
$
|
132,490
|
|
|
$
|
(25,847
|
)
|
|
(20
|
)%
|
Cost of revenue
|
19,519
|
|
|
25,962
|
|
|
(6,443
|
)
|
|
(25
|
)%
|
|
40,025
|
|
|
53,389
|
|
|
(13,364
|
)
|
|
(25
|
)%
|
||||||
Gross profit
|
30,331
|
|
|
39,564
|
|
|
(9,233
|
)
|
|
(23
|
)%
|
|
66,618
|
|
|
79,101
|
|
|
(12,483
|
)
|
|
(16
|
)%
|
||||||
Gross margin
|
61
|
%
|
|
60
|
%
|
|
|
|
|
|
62
|
%
|
|
60
|
%
|
|
|
|
|
||||||||||
Sale of patent assets and other technology assets, net of costs
|
—
|
|
|
117,933
|
|
|
(117,933
|
)
|
|
(100
|
)%
|
|
—
|
|
|
116,353
|
|
|
(116,353
|
)
|
|
(100
|
)%
|
||||||
Operating expenses
|
46,835
|
|
|
53,329
|
|
|
(6,494
|
)
|
|
(12
|
)%
|
|
94,548
|
|
|
109,828
|
|
|
(15,280
|
)
|
|
(14
|
)%
|
||||||
Operating income (loss)
|
$
|
(16,504
|
)
|
|
$
|
104,168
|
|
|
$
|
(120,672
|
)
|
|
(116
|
)%
|
|
$
|
(27,930
|
)
|
|
$
|
85,626
|
|
|
$
|
(113,556
|
)
|
|
(133
|
)%
|
|
Quarters Ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||||||||||
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
||||||||||||||
Revenue
|
$
|
18,383
|
|
|
$
|
22,158
|
|
|
$
|
(3,775
|
)
|
|
(17
|
)%
|
|
$
|
40,766
|
|
|
$
|
44,239
|
|
|
$
|
(3,473
|
)
|
|
(8
|
)%
|
Cost of revenue
|
4,409
|
|
|
4,727
|
|
|
(318
|
)
|
|
(7
|
)%
|
|
9,720
|
|
|
9,291
|
|
|
429
|
|
|
5
|
%
|
||||||
Gross profit
|
13,974
|
|
|
17,431
|
|
|
(3,457
|
)
|
|
(20
|
)%
|
|
31,046
|
|
|
34,948
|
|
|
(3,902
|
)
|
|
(11
|
)%
|
||||||
Gross margin
|
76
|
%
|
|
79
|
%
|
|
|
|
|
|
76
|
%
|
|
79
|
%
|
|
|
|
|
||||||||||
Operating expenses
|
14,001
|
|
|
12,792
|
|
|
1,209
|
|
|
9
|
%
|
|
30,207
|
|
|
28,767
|
|
|
1,440
|
|
|
5
|
%
|
||||||
Operating income (loss)
|
$
|
(27
|
)
|
|
$
|
4,639
|
|
|
$
|
(4,666
|
)
|
|
(101
|
)%
|
|
$
|
839
|
|
|
$
|
6,181
|
|
|
$
|
(5,342
|
)
|
|
(86
|
)%
|
|
Quarters Ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||||||||||
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
||||||||||||||
Revenue
|
$
|
18,592
|
|
|
$
|
26,005
|
|
|
$
|
(7,413
|
)
|
|
(29
|
)%
|
|
$
|
39,087
|
|
|
$
|
51,780
|
|
|
$
|
(12,693
|
)
|
|
(25
|
)%
|
Cost of revenue
|
11,170
|
|
|
14,875
|
|
|
(3,705
|
)
|
|
(25
|
)%
|
|
22,002
|
|
|
30,353
|
|
|
(8,351
|
)
|
|
(28
|
)%
|
||||||
Gross profit
|
7,422
|
|
|
11,130
|
|
|
(3,708
|
)
|
|
(33
|
)%
|
|
17,085
|
|
|
21,427
|
|
|
(4,342
|
)
|
|
(20
|
)%
|
||||||
Gross margin
|
40
|
%
|
|
43
|
%
|
|
|
|
|
|
44
|
%
|
|
41
|
%
|
|
|
|
|
||||||||||
Operating expenses
|
8,412
|
|
|
13,851
|
|
|
(5,439
|
)
|
|
(39
|
)%
|
|
17,523
|
|
|
28,655
|
|
|
(11,132
|
)
|
|
(39
|
)%
|
||||||
Operating income (loss)
|
$
|
(990
|
)
|
|
$
|
(2,721
|
)
|
|
$
|
1,731
|
|
|
64
|
%
|
|
$
|
(438
|
)
|
|
$
|
(7,228
|
)
|
|
$
|
6,790
|
|
|
94
|
%
|
|
Quarters Ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||||||||||
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
||||||||||||||
Revenue
|
$
|
12,875
|
|
|
$
|
17,363
|
|
|
$
|
(4,488
|
)
|
|
(26
|
)%
|
|
$
|
26,790
|
|
|
$
|
36,471
|
|
|
$
|
(9,681
|
)
|
|
(27
|
)%
|
Cost of revenue
|
3,381
|
|
|
5,630
|
|
|
(2,249
|
)
|
|
(40
|
)%
|
|
7,181
|
|
|
12,343
|
|
|
(5,162
|
)
|
|
(42
|
)%
|
||||||
Gross profit
|
9,494
|
|
|
11,733
|
|
|
(2,239
|
)
|
|
(19
|
)%
|
|
19,609
|
|
|
24,128
|
|
|
(4,519
|
)
|
|
(19
|
)%
|
||||||
Gross margin
|
74
|
%
|
|
68
|
%
|
|
|
|
|
|
73
|
%
|
|
66
|
%
|
|
|
|
|
||||||||||
Operating expenses
|
11,755
|
|
|
13,801
|
|
|
(2,046
|
)
|
|
(15
|
)%
|
|
23,607
|
|
|
27,939
|
|
|
(4,332
|
)
|
|
(16
|
)%
|
||||||
Operating income (loss)
|
$
|
(2,261
|
)
|
|
$
|
(2,068
|
)
|
|
$
|
(193
|
)
|
|
(9
|
)%
|
|
$
|
(3,998
|
)
|
|
$
|
(3,811
|
)
|
|
$
|
(187
|
)
|
|
(5
|
)%
|
|
Quarters Ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||||||||||
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
||||||||||||||
Cost of revenue
|
$
|
559
|
|
|
$
|
730
|
|
|
$
|
(171
|
)
|
|
(23
|
)%
|
|
$
|
1,122
|
|
|
$
|
1,402
|
|
|
$
|
(280
|
)
|
|
(20
|
)%
|
Sale of patent and other technology assets, net of costs
|
—
|
|
|
117,933
|
|
|
(117,933
|
)
|
|
(100
|
)%
|
|
—
|
|
|
116,353
|
|
|
(116,353
|
)
|
|
(100
|
)%
|
||||||
Operating expenses
|
12,667
|
|
|
12,885
|
|
|
(218
|
)
|
|
(2
|
)%
|
|
23,211
|
|
|
24,467
|
|
|
(1,256
|
)
|
|
(5
|
)%
|
||||||
Operating income (loss)
|
$
|
(13,226
|
)
|
|
$
|
104,318
|
|
|
$
|
(117,544
|
)
|
|
(113
|
)%
|
|
$
|
(24,333
|
)
|
|
$
|
90,484
|
|
|
$
|
(114,817
|
)
|
|
(127
|
)%
|
|
Quarters Ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||||||||||
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
||||||||||||||
Research and development
|
$
|
14,993
|
|
|
$
|
16,028
|
|
|
$
|
(1,035
|
)
|
|
(6
|
)%
|
|
$
|
30,244
|
|
|
$
|
33,846
|
|
|
$
|
(3,602
|
)
|
|
(11
|
)%
|
Sales and marketing
|
19,269
|
|
|
22,694
|
|
|
(3,425
|
)
|
|
(15
|
)%
|
|
40,403
|
|
|
46,490
|
|
|
(6,087
|
)
|
|
(13
|
)%
|
||||||
General and administrative
|
8,691
|
|
|
13,068
|
|
|
(4,377
|
)
|
|
(33
|
)%
|
|
18,637
|
|
|
26,344
|
|
|
(7,707
|
)
|
|
(29
|
)%
|
||||||
Restructuring and other charges
|
816
|
|
|
1,539
|
|
|
(723
|
)
|
|
(47
|
)%
|
|
2,198
|
|
|
3,148
|
|
|
(950
|
)
|
|
(30
|
)%
|
||||||
Lease exit and related charges
|
3,066
|
|
|
—
|
|
|
3,066
|
|
|
100
|
%
|
|
3,066
|
|
|
—
|
|
|
3,066
|
|
|
100
|
%
|
||||||
Total consolidated operating expenses
|
$
|
46,835
|
|
|
$
|
53,329
|
|
|
$
|
(6,494
|
)
|
|
(12
|
)%
|
|
$
|
94,548
|
|
|
$
|
109,828
|
|
|
$
|
(15,280
|
)
|
|
(14
|
)%
|
|
Quarters Ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||||||||||
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
||||||||||||||
Interest income, net
|
$
|
179
|
|
|
$
|
225
|
|
|
$
|
(46
|
)
|
|
(20
|
)%
|
|
$
|
826
|
|
|
$
|
869
|
|
|
$
|
(43
|
)
|
|
(5
|
)%
|
Gain (loss) on sale of equity investments, net
|
—
|
|
|
3,078
|
|
|
(3,078
|
)
|
|
(100
|
)%
|
|
—
|
|
|
3,078
|
|
|
(3,078
|
)
|
|
(100
|
)%
|
||||||
Equity in net loss of Rhapsody
|
(1,347
|
)
|
|
(2,114
|
)
|
|
767
|
|
|
36
|
%
|
|
(3,580
|
)
|
|
(2,482
|
)
|
|
(1,098
|
)
|
|
(44
|
)%
|
||||||
Other income (expense), net
|
(137
|
)
|
|
(49
|
)
|
|
(88
|
)
|
|
(180
|
)%
|
|
(28
|
)
|
|
1,426
|
|
|
(1,454
|
)
|
|
(102
|
)%
|
||||||
Total other income (expense), net
|
$
|
(1,305
|
)
|
|
$
|
1,140
|
|
|
$
|
(2,445
|
)
|
|
(214
|
)%
|
|
$
|
(2,782
|
)
|
|
$
|
2,891
|
|
|
$
|
(5,673
|
)
|
|
(196
|
)%
|
|
Quarters Ended June 30,
|
|
Six months ended June 30,
|
||||||||||||||||||||||||||
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
||||||||||||||
United States
|
$
|
21,463
|
|
|
$
|
28,614
|
|
|
$
|
(7,151
|
)
|
|
(25
|
)%
|
|
$
|
49,486
|
|
|
$
|
60,428
|
|
|
$
|
(10,942
|
)
|
|
(18
|
)%
|
Europe
|
9,272
|
|
|
14,339
|
|
|
(5,067
|
)
|
|
(35
|
)%
|
|
20,528
|
|
|
30,551
|
|
|
(10,023
|
)
|
|
(33
|
)%
|
||||||
Rest of world
|
19,115
|
|
|
22,573
|
|
|
(3,458
|
)
|
|
(15
|
)%
|
|
36,629
|
|
|
41,511
|
|
|
(4,882
|
)
|
|
(12
|
)%
|
||||||
Total net revenue
|
$
|
49,850
|
|
|
$
|
65,526
|
|
|
$
|
(15,676
|
)
|
|
(24
|
)%
|
|
$
|
106,643
|
|
|
$
|
132,490
|
|
|
$
|
(25,847
|
)
|
|
(20
|
)%
|
|
June 30,
2013
|
|
December 31,
2012
|
||||
Working capital
|
$
|
201,669
|
|
|
$
|
237,646
|
|
Cash, cash equivalents, and short-term investments
|
236,746
|
|
|
271,414
|
|
||
Restricted cash equivalents and investments
|
10,000
|
|
|
10,000
|
|
|
Six Months Ended
June 30, |
||||||
|
2013
|
|
2012
|
||||
Cash provided by (used in) operating activities
|
$
|
(12,885
|
)
|
|
$
|
(17,441
|
)
|
Cash provided by (used in) investing activities
|
(18,608
|
)
|
|
110,857
|
|
||
Cash provided by (used in) financing activities
|
(1,236
|
)
|
|
337
|
|
•
|
Revenue recognition;
|
•
|
Estimating music publishing rights and music royalty accruals;
|
•
|
Estimating recoverability of deferred costs;
|
•
|
Estimating allowances for doubtful accounts and sales returns;
|
•
|
Estimating lease exit and related charges;
|
•
|
Valuation of equity method investments;
|
•
|
Valuation of long-lived assets;
|
•
|
Valuation of goodwill;
|
•
|
Stock-based compensation; and
|
•
|
Accounting for income taxes.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
•
|
reduced prices or margins,
|
•
|
loss of current and potential customers, or partners and potential partners who provide content we distribute to our customers,
|
•
|
changes to our products, services, technologies, licenses or business practices or strategies,
|
•
|
lengthened sales cycles,
|
•
|
industry-wide changes in content distribution to customers or in trends in consumer consumption of digital media products and services,
|
•
|
pressure to prematurely release products or product enhancements, or
|
•
|
degradation in our stature or reputation in the market.
|
•
|
impairments of long-lived assets,
|
•
|
integrating and operating newly acquired businesses and assets, and
|
•
|
the general difficulty in forecasting our operating results and metrics, which could result in actual results that differ significantly from expected results.
|
•
|
difficulties and expenses in assimilating the operations, products, technology, information systems, and/or personnel of the acquired company;
|
•
|
retaining key management or employees of the acquired company;
|
•
|
entrance into unfamiliar markets, industry segments, or types of businesses;
|
•
|
operating, managing and integrating acquired businesses in remote locations or in countries in which we have little or no prior experience;
|
•
|
diversion of management time and other resources from existing operations;
|
•
|
impairment of relationships with employees, affiliates, advertisers or content providers of our business or acquired business; and
|
•
|
assumption of known and unknown liabilities of the acquired company, including intellectual property claims.
|
•
|
elect or defeat the election of our directors;
|
•
|
amend or prevent amendment of our articles of incorporation or bylaws;
|
•
|
effect or prevent a merger, sale of assets or other corporate transaction; and
|
•
|
control the outcome of any other matter submitted to the shareholders for vote.
|
•
|
adopt a plan of merger;
|
•
|
authorize the sale, lease, exchange or mortgage of assets representing more than 50% of the book value of our assets prior to the transaction or on which our long-term business strategy is substantially dependent;
|
•
|
authorize our voluntary dissolution; or
|
•
|
take any action that has the effect of any of the above.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Default Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
|
REALNETWORKS, INC.
|
||
|
|
|
|
|
By:
|
|
/s/ Tim M. Wan
|
|
|
|
Tim M. Wan
|
|
Title:
|
|
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
|
Exhibit
Number
|
Description
|
|
|
10.1
|
Amendment dated May 2, 2013, to Lease originally dated January 21, 1998, between SRI-WR Elliott Avenue LLC, as landlord, and RealNetworks, Inc., as tenant
|
|
|
10.2
|
Office Building Lease dated May 2, 2013 between 1501 First Avenue South Limited Partnership, as landlord, and RealNetworks, Inc., as tenant
|
|
|
10.3*
|
Promotion Letter dated August 24, 2012 between RealNetworks, Inc. and Michael Parham
|
|
|
31.1
|
Certification of Robert Glaser, Chairman and interim Chief Executive Officer of RealNetworks, Inc., Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
31.2
|
Certification of Tim M. Wan, Chief Financial Officer and Treasurer of RealNetworks, Inc., Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
32.1
|
Certification of Robert Glaser, Chairman and interim Chief Executive Officer of RealNetworks, Inc., Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
32.2
|
Certification of Tim M. Wan, Chief Financial Officer and Treasurer of RealNetworks, Inc., Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
101.INS**
|
XBRL Instance Document
|
|
|
101.SCH**
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL**
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.LAB**
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE**
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
101.DEF**
|
XBRL Taxonomy Extension Definition Linkbase Document
|
LANDLORD:
|
TENANT:
|
|
|
SRI-WR ELLIOTT AVENUE LLC, a Delaware limited liability company
|
REALNETWORKS, INC.,
a Washington corporation
|
|
|
By:
/s/ Walter E. Ingram
Name:
Walter E. Ingram
Title:
Executive Vice President & CFO
|
By:
/s/ Rob Glaser
Name:
Rob Glaser
Title:
Interim CEO
By:
/s/ Tim Wan
Name:
Tim Wan
Title:
CFO
|
|
|
|
|
1.
|
LEASE OF PREMISES....................................................................................1
|
2.
|
DEFINITIONS..................................................................................................1
|
3.
|
EXHIBITS AND ADDENDUMS.....................................................................3
|
4.
|
DELIVERY OF POSSESSION.........................................................................4
|
5.
|
RENT.................................................................................................................5
|
6.
|
INTEREST AND LATE CHARGES................................................................9
|
7.
|
LETTER OF CREDIT.....................................................................................10
|
8.
|
TENANT’S USE OF THE PREMISES..........................................................10
|
9.
|
SERVICES AND UTILITIES.........................................................................11
|
10.
|
CONDITION OF THE PREMISES................................................................12
|
11.
|
CONSTRUCTION, REPAIRS AND MAINTENANCE................................13
|
12.
|
ALTERATIONS AND ADDITIONS..............................................................14
|
13.
|
TENANT IMPROVEMENTS; TENANT’S PROPERTY..............................15
|
14.
|
RULES AND REGULATIONS......................................................................15
|
15.
|
CERTAIN RIGHTS RESERVED BY LANDLORD......................................16
|
16.
|
ASSIGNMENT AND SUBLETTING............................................................16
|
17.
|
HOLDING OVER...........................................................................................18
|
18.
|
SURRENDER OF PREMISES.......................................................................18
|
19.
|
DESTRUCTION OR DAMAGE....................................................................19
|
20.
|
EMINENT DOMAIN......................................................................................19
|
21.
|
INDEMNIFICATION......................................................................................20
|
22.
|
INSURANCE..................................................................................................21
|
23.
|
WAIVER OF SUBROGATION......................................................................23
|
24.
|
SUBORDINATION AND ATTORNMENT....................................................23
|
25.
|
TENANT ESTOPPEL CERTIFICATES.........................................................23
|
26.
|
TRANSFER OF LANDLORD’S INTEREST................................................24
|
27.
|
DEFAULT........................................................................................................24
|
28.
|
BROKERAGE FEES......................................................................................27
|
29.
|
NOTICES........................................................................................................27
|
30.
|
GOVERNMENT ENERGY OR UTILITY CONTROLS...............................27
|
31.
|
QUIET ENJOYMENT.....................................................................................27
|
32.
|
OBSERVANCE OF LAW................................................................................28
|
33.
|
FORCE MAJEURE.........................................................................................28
|
34.
|
CURING TENANT’S DEFAULTS.................................................................28
|
35.
|
SIGNAGE........................................................................................................29
|
36.
|
HAZARDOUS WASTE..................................................................................29
|
37.
|
EMPLOYER INFORMATION FORM -- IMMIGRANT INVESTOR PROGRAM.....................................................................................................31
|
38.
|
OPTION TO TERMINATE.............................................................................31
|
39.
|
OPTION TO RENEW.....................................................................................31
|
40.
|
EXCLUSIVE OPTION TO LEASE ENTIRE THIRD FLOOR.....................32
|
41.
|
RIGHT OF FIRST REFUSAL FOR THIRD FLOOR....................................33
|
42.
|
PARKING AND KING STREET SHUTTLE.................................................34
|
43.
|
MISCELLANEOUS........................................................................................34
|
MONTHLY BASE RENT SCHEDULE
|
|
||
Period after the Commencement Date
|
$ Rate/RSF/year
|
Base Rent per month
|
|
Months 1 – 4
|
$0
|
$0.00
|
|
Months 5 –12
|
$26.00
|
$185,631.33
|
|
Months 13 – 24
|
$27.00
|
$192,771.00
|
|
Months 25 – 36
|
$28.00
|
$199,910.67
|
|
Month 37
|
$0
|
$0.00
|
|
Months 38 – 48
|
$29.00
|
$207,050.33
|
|
Months 49 – 51
|
$0
|
$0.00
|
|
Months 52 – 60
|
$30.00
|
$214,190.00
|
|
Months 61 – 63
|
$0
|
$0.00
|
|
Months 64 – 72
|
$31.00
|
$221,329.67
|
|
Months 73
|
$0
|
$0.00
|
|
Months 74 – 84
|
$32.00
|
$228,469.33
|
|
Month 85
|
$0
|
$0.00
|
|
Months 86 – 96
|
$33.00
|
$235,609.00
|
|
Month 97
|
$0
|
$0.00
|
|
Months 98 – 108
|
$34.00
|
$242,748.67
|
|
Month 109
|
$0
|
$0.00
|
|
Months 110 – 120
|
$35.00
|
$249,888.33
|
|
Month 121
|
$0
|
$0.00
|
|
Months 122 – 132
|
$36.00
|
$257,028.00
|
|
|
|
|
|
|
|
LANDLORD
1501 First Avenue South Limited Partnership,
a Washington limited partnership
By: American Life, Inc.
Its: Managing General Partner
By:
/s/ Greg Steinhauer
Greg Steinhauer, Chief Operating Officer
|
TENANT
Realnetworks, Inc.
a Washington corporation
By:
/s/ Rob Glaser
Name:
Rob Glaser
Its:_________________________________
By:
/s/ Tim Wan
Name:
Tim Wan
Its:_________________________________
|
|
|
|
|
|
|
1.
|
New construction will include walls, doors, flooring, casework, lighting, ceiling and other finishes as shown on the test fit plan options.
|
2.
|
Test fit notes apply to Test Fit drawings dated 4/9/2013
|
3.
|
No work at stairwells (except new card readers), elec. closet, or janitor’s closet.
|
4.
|
Intentionally deleted.
|
5.
|
Provide building standard window coverings and at all perimeter windows.
|
6.
|
Provide fire extinguishers, sprinklers (quick response heads) with audible alarms, ceiling mount smoke and heat detectors, ceiling mount strobes and edge lit LED exit signs per code.
|
7.
|
Provide access panels in GWB ceilings as necessary.
|
8.
|
Provide all listed appliances.
|
9.
|
Allow for backing in offices, conference rooms, and work rooms for tenant supplied items.
|
10.
|
Consultants are to be design-build, under GC control for Electrical, HVAC, Plumbing, Fire Alarm, and Fire Protection.
|
11.
|
Provide interconnecting stairs between floors 4 & 5 and 5 & 6 as noted in plans. Stairs to be pre-cast concrete tread/risers on steel structure with glass/steel railing system.
|
12.
|
New restrooms on the 5
th
floor with 2 toilets and 2 lavatories each. Finishes and fixtures to match existing core restrooms. Costs to be covered by RealNetworks.
|
13.
|
New operable walls at one conference room each on floors 4 and 5 and one in the multi-purpose room on floor 4. Costs for the operable wall, structure, and GWB framing to be covered by RealNetworks.
|
14.
|
The fire rating at the opening for the stair will be handled by a draft curtain and additional sprinklers on all floors vs. fire rated walls and roll down fire shutters on the 4
th
floor.
|
15.
|
A platform is required at the bottom of the stairs for ADA / code. An integrated bench is being added that will be covered by RealNetworks.
|
16.
|
A set of double doors has been added on the 6
th
floor from the Board Room to the deck. We assume the building Architect will handle this addition. The costs for these new doors will be covered by RealNetworks.
|
17.
|
Glass doors and sidelites have been added at the reception area on floor 6. The costs for these doors will be covered by RealNetworks.
|
1.
|
Include x-raying and core drilling where required at floor power locations.
|
2.
|
Cleaning: include general construction cleaning and final cleaning.
|
1.
|
Install backing in walls for casework, wall mounted equipment, handrails and ADA grab bars.
|
2.
|
Provide floor to ceiling fire treated plywood at walls at IDF Closets and at MDF Room.
|
1.
|
All casework to be constructed to AWI Custom standards. Substrates to be 100% recycled and UF (urea formaldehyde) free (Skyblend or equal.)
|
2.
|
Cabinet pulls: Standard 4” pulls at Storage and Shipping & Receiving cabinets. Hafele Anodized Aluminum Extruded Handles 126.27.904 (or equivalent) elsewhere.
|
3.
|
All solid surface countertops to be p-lam but conference rooms, boardroom, coffee areas and main kitchen area on the 6
th
floor will be CaesarStone or equal.
|
4.
|
Wall base at throughout at new construction to be 2.5”h rubber base. 2.5” h wood base (painted) at areas where noted.
|
1.
|
All doors to be solid core, rift cut white oak, stained or other Real Network specification.
|
2.
|
Wood frames to be medium bronze anodized aluminum.
|
3.
|
Door types and locations:
|
Door Type:
|
Frame:
|
Hardware:
|
Locations:
|
Single hinged door
3’-0”w. x 8’-0” Solid Core
|
aluminum
|
Mortised lever w /Lockset, typ (surface mtd. pulls at closets)
|
Utility , Storage, MDF, IDF, Restroom, Security, File Rooms
|
Single hinged door w/ sidelite
3’-0”w. x 8’-0”; Solid core door ; full width, full height sidelite: 3/8”” tempered glass in frame; Butt joint glass at wide sidelites, 10% of glass to have 3M translucent film. See plan for sidelites.
|
aluminum
|
Mortised lever w/Lockset, typ.
Locksets at Labs, Test Rooms and Offices
|
Multi-Purpose, Conference, Board, Focus, Phone, Office, Lab, and
Test Rooms |
Pair hinged door w/ sidelites - Frameless
3’-0”w. x 8’-0”; frameless tempered glass pivot doors with ½” tempered glass relites; Provide electric hardware or maglock, key card access. Motion sensor request to exit device and associate push button override.
|
Stainless steel, SS channel at sidelites
|
Pulls: 30” brushed stainless steel each side ( Rockwood or equal) Provide elec. Strike, key card access.
|
Elevator lobby to reception
|
Operable Garage Door
12’ wide aluminum interior commercial grade roll up door. Door to be insulated panels with glass panel inserts.
|
Aluminum and insulated glass panels
|
|
Café / Multi Purpose
|
Specialty Acoustical Door
STC-50 minimum. Specialty acoustical sidelite.
|
Steel
|
|
Audio Production Suite
|
1.
|
All hardware to be ADA compliant, finish to match building standard.
|
2.
|
Provide wall / floor stops at all doors.
|
3.
|
Provide kick plates at storage, utility rooms, MDF room, IDF rooms and stair doors.
|
4.
|
Provide card readers at MDF room, IDF rooms, doors off reception lobby and Security Room. Provide card reader access in exit stairwells at each floor. Provide electrified hardware at card reader locations.
|
1.
|
Partitions at private office locations and conference/boardroom locations have full cavity sound batt insulation (R-11, typ. / R-19 @ 6” stud walls or greater). Real will consider revising this requirement where appropriate.
|
2.
|
Provide 5/8” drywall (GWB) ceilings/soffits as described in section 09 5000 ceilings. Provide bracing to structure. Provide access panels as required.
|
3.
|
Provide 5/8” water resistant drywall at any “wet walls”.
|
4.
|
Drywall finish to be level 4 finish, typ.
|
5.
|
Wall Types: All walls to have acoustic sealant at floor and top tracks, typ. Stud size and spacing to be appropriate for wall heights. 25ga is fixed.
|
a.
|
Interior Partition (typ., U.O.N. – see below)
|
6.
|
2 ½” metal studs, 25 gauge, 24” on center, from slab to underside of suspended ceiling (or structure at open to structure areas). One layer 5/8” gypsum board on each side, taped and sanded smooth. Provide seismic bracing as required. Real will consider revising this requirement where appropriate.
|
A.
|
Acoustical Partition: (typical Small Conference rooms, Focus and Phone Rooms, Offices, Mother’s room, Game room, standard testing rooms, labs) 3 5/8” metal studs, 25 gauge, 24” on center, from slab to 6” above grid one side, one side to structure or adjacent drywall ceiling. Two layer 5/8” gypsum board on one side, and one layer on the other, taped and sanded smooth. Provide seismic bracing as required. Provide acoustical insulation full height of partition. No back to back outlets.
|
B.
|
Full Height Acoustic Partition:(Conference rooms, Boardroom (except at double stud wall locations), Multi-Purpose Room (except at double stud wall locations), Café Kitchen (except at double stud wall locations), Mercury Lab, DVD Test Room, IT bench labs, GIO built labs, Security room, Private testing room, Copy / Coffee (when adjacent to offices, open offices, conference, focus, or phone rooms)
|
C.
|
1-HR Fire Rated Partition:
(
MDF, IDF Rooms)
|
D.
|
Specialty Acoustical Isolation Partition
|
1.
|
Assume suspended grid and ACT at enclosed offices, storage and conference rooms, except as noted below. New suspended grid, with new ceiling tiles – Armstrong Ultima, 2x2 with tegular edge. 9/16” fineline ceiling grid.
If building standard differs, provide building standard product for review and approval.
|
2.
|
At Open To Structure (OTS) areas, no paint is to be provided. Clean existing concrete.
|
3.
|
Ceiling type by Location:
|
Location
|
Ceiling type
|
Elevator Lobby
|
New GWB ceiling (200sf) and OTS
|
Reception
|
New GWB ceiling (300sf) and OTS
|
|
|
Open Office
|
Open to structure with 50% acoustical clouds
|
Offices
|
New suspended grid and ACT
|
Board Room
|
New GWB ceiling border with ACT cloud over conference room table
|
Conference Rooms / closed team / phone / focus
|
New suspended grid and ACT
|
Open team / multi-purpose rooms
|
Open to structure with 50% acoustical clouds. 6” axiom trim at edges.
|
Copy/Mail/Receiving
|
New suspended grid and ACT
|
Storage/Files / Utility rooms
|
New suspended grid and ACT
|
Café/Break area
|
Open to structure with 50% acoustical clouds
|
Testing rooms
|
New suspended grid and ACT
|
Server / IDF Room
|
OTS
|
Misc Labs
|
New suspended grid and ACT
|
IT bench labs / GIO built lab
|
New suspended grid and ACT
|
Game Room
|
Open to structure with 50% acoustical clouds
|
Mother’s room
|
New suspended grid and ACT
|
Security Room
|
New suspended grid and ACT
|
1.
|
Typical flooring to be carpet tile with attached cushion backing, U.O.N. Concrete at circulation, reception and cafe areas as noted.
|
2.
|
Wall base: Base to be 100% rubber 2.5” high straight base, Johnsonite or equal. Allow for six total base colors to match painted walls.
|
3.
|
Floor Transitions: Rubber. Float floor at carpet or resilient flooring for flush transitions.
|
4.
|
Flooring type by Location: (note: freight, mark-up & installation NOT included in allowances)
|
Multi-purpose room
|
Carpet tile with attached cushion, rubber base
|
Carpet: ($25/sy installed )
|
Mother’s Room
|
Carpet tile with attached cushion, rubber base
|
Carpet: ($25/sy installed )
|
Testing room
|
Carpet tile with attached cushion, rubber base
|
Carpet: ($25/sy installed )
|
IDF Rooms
(1) each floor
|
ESD tile floor, grounded
|
|
MDF Room
|
ESD tile floor, grounded
|
Install with conductive adhesive and copper grounding strips. Connect copper strips to building ground bar or structural steel
|
IT Bench lab / GIO Build Lab
|
ESD tile floor, grounded
|
|
Misc Labs
|
Carpet tile with attached cushion, rubber base
|
Carpet: ($25/sy installed )
|
Game Room
|
Carpet tile with attached cushion, rubber base
|
Carpet: ($25/sy installed )
|
Security Room
|
Carpet tile with attached cushion, rubber base
|
Carpet: ($25/sy installed )
|
1.
|
Paint to be latex, low to no-VOC. Allow for 6 colors - (2) basic light color, (3) accents and (1) dark accent.
|
2.
|
Paint finish: eggshell finish typical. (Primer with 2 coats of paint)
|
3.
|
Flat finish at ceiling.
|
4.
|
Refer to Room Specific Notes for additional information
|
1.
|
Provide fire extinguishers and semi-recessed cabinets per code
|
2.
|
Provide Forgo cork bulletin boards with aluminum trim at Coffee/Copy and breakout rooms. Assume 3’ h. x 5’ wide for pricing
|
3.
|
Provide building standard perimeter window coverings
|
4.
|
Provide motorized roller shades at largest conference room
|
5.
|
Refer to Room Specific Notes for additional information
|
1.
|
All appliances to be GE Profile / Energy Star rated or equal in stainless steel finish.
|
2.
|
Refer to Room Specific Notes for additional information
|
1.
|
Provide sinks in kitchen and coffee/copy and any powder rooms. All swivel faucets to be ADA compliant.
|
2.
|
Provide water and waste hook up at dishwashers
|
3.
|
Provide cold water line for refrigerators, coffee makers and ice makers.
|
4.
|
Provide filtered water at coffee / cafe.
|
1.
|
To be Bidder Design
|
2.
|
Modify, extend, or reconfigure existing basic shell systems to accommodate layout. Systems to be designed to class A office standards at a minimum, U.O.N.
|
3.
|
Allow for each large / med conference room to be a separate and dedicated zone.
|
4.
|
Provide sound boots on return air grilles at conference rooms, and offices.
|
5.
|
Provide carbon filters on exhaust at kitchen / copy areas.
|
6.
|
Spiral ductwork at open to structure areas.
|
7.
|
Provide zone map.
|
8.
|
Separate zones:
|
a.
|
Zones per code
|
b.
|
Corner offices
|
c.
|
Open office areas 1000 SF
|
d.
|
Closed offices/rooms of similar use—no more than 4 combined
|
e.
|
Executive office
|
f.
|
Conference rooms
|
g.
|
No cross zoning between open and closed areas
|
h.
|
Kitchen/café/games/multi-purpose—separate zones as divided layout
|
i.
|
Interior / exterior zones
|
j.
|
Design to be sensitized to building solar exposures
|
k.
|
Each IDF dedicated 24/7 cooling for 3.5KW per rack with 3 racks per IDF. MDF dedicated 24/7 cooling 3.5KW per rack with 13 racks. Systems on specialty cooling loop system, not main building systems.
|
9.
|
|
1.
|
To be Bidder Design. Maximum of 3 offices or workstations per circuit.
|
2.
|
Electrical connections between stations to be by furniture vendor. Whip to wall connection by GC.
|
3.
|
Modify, extend, or reconfigure existing basic shell systems to accommodate new lighting and wall layouts. Systems to be designed to class A office standards at a minimum, U.O.N.
|
4.
|
Refer to Room Specific Notes for additional information
|
5.
|
Provide 10% spare 120v panel and circuit breakers for future use.
|
6.
|
CAT6 tel/data wiring test/terminated/certified, 7' x 19" racks and associated patch panels all terminated in MDF or IDF as per floor. 4 cables per "drop" location typical. 1 drop per office, 1 drop per work station, 1 drop at reception desk. Conference rooms to include 1 drop at flush floor monument and 2 drops on opposite walls. All other rooms (of various uses) to have 2 drops on opposite walls. All cabling to be completed by Tenant.
|
7.
|
Audio/Visual-- all large conference rooms and Board room each require 10 foot recessed motorized screen with wall switch, 2 inch EMT conduit pathway at floor from center of table to above ceiling, quad receptacle at floor monument, duplex receptacle behind flat panel monitor (monitor by tenant), ceiling mounted projector mount (projector by tenant), duplex receptacle at ceiling, CAT6 cable from center of table to flat panel and to ceiling projector, HDMI cable from center of table to flat panel, VGA cable from center of table to flat panel. All cabling to be completed by Tenant.
|
8.
|
100 workstations will require 1 20 amp dedicated circuit each (tenant and landlord to value engineer if possible) and 4 CAT6 cable drops. Tenant will work to value engineer if feasible. All cabling to be completed by Tenant. Locations to be determined.
|
9.
|
26 5100 Lighting
|
1.
|
Allow for dimming at all fluorescent fixtures.
|
2.
|
Provide daylighting and occupancy sensor controls as required by Seattle Energy Code.
|
3.
|
Each type of fixture in a single room to have their own switch.
|
4.
|
Assume a minimum of .9w/sf
|
Space
|
Lighting type
|
Elevator Lobby
|
6” dia. LED downlights and directional accent lighting
|
Reception
|
6” dia. LED downlights and directional accent lighting behind reception desk and at seating area.
Adjustable fluorescent LED accent lighting at artwork walls
|
Powder Room, Mother’s room
|
Fluorescent downlights
|
Open Office
|
Linear fluorescent pendant direct/ indirect
|
Offices
|
2x4 pendant fluorescent direct/ indirect
|
Sm conference / Focus/ Closed Team/ Phone
|
Fluorescent pendant with linear fluorescent wall washers at (1) wall
|
Conference Rooms – Med/Large / Multi-purpose
|
Linear fluorescent pendant direct / indirect with linear fluorescent wall washers at (1) wall
|
Open Team
|
Dimmable pendant direct / indirect, fluorescent downlights , Linear fluorescent wall washers at walls, one (1) accent pendant per team area
|
Board Room/Executive Office Area
|
Dimmable pendant direct / indirect, LED downlights at conference table and LED wall washers at perimeter
|
Copy/Main / Receiving / Storage / Files
|
2x4 pendant fluorescent direct/ indirect
|
Storage/Utility rooms
|
2x4 recessed direct/ indirect
|
Coffee Bar areas
|
Linear fluorescent under cabinets, recessed fluorescent down lights. Decorative pendant fixtures.
|
Café/Lunch area
|
Pendant fixtures general lighting; fluorescent downlights in GWB soffits; specialty pendants at bar seating; linear fluorescent under cabinet.
|
Testing Rooms
|
2x4 pendant fluorescent direct/ indirect. $150 each.
|
MDF / IDF
|
Strip Lighting.
|
IT Bench / GIO build labs
|
2x4 pendant fluorescent direct/ indirect
|
Misc labs
|
2x4 pendant fluorescent direct/ indirect
|
Game Room
|
Dimmable pendant direct / indirect, fluorescent downlights , Linear fluorescent wall washers at walls, one (1) accent pendant per team area
|
Security Room
|
2x4 recessed direct/ indirect, linear fluorescent under cabinet
|
Main Corridor
|
6” dia. Fluorescent LED downlights , Linear Wall Washers, Specialty pendants
|
1.
|
Furniture and workstations
|
2.
|
Plants and plant maintenance
|
3.
|
Office equipment (printers, copiers) and vending machines, coffee machines, etc.
|
4.
|
Interior way-finding and room signage (FOIC)
|
5.
|
Exterior Building signage
|
6.
|
Data & phone cabling, cameras & card readers.
|
1
|
Reception:
Provide minimum one (1) quadraplex, two (2) duplex and five (5) voice /data CAT6 cables; cabling by Tenant. Provide $15,000 allowance for custom reception desk. Allow for 64sf of plywood blocking in walls for support of signage / entry features. Signage by Tenant. Allow for wallcovering at one full wall.
|
2
|
Elevator Lobby:
|
3
|
Boardroom:
Provide (2) core drills at table. Provide min of four (4) duplex and four(4) voice/data CAT6 cables on (2) walls; cabling by Tenant. Provide 4’ x 16’ backpainted glass whiteboard with pen tray and aluminum trim at one wall. Upgraded acoustical partitions. Provide motorized roller shades at exterior window. Provide 200sf of 1” acoustical fabric wrapped wall panels (allow $35/sy for fabric). P-lam front / solid surface top (4) bay trash/recycle casework with pull out drawer type of operation.
|
4
|
Focus / Phone rooms:
Provide min two (2) duplex and one (1) voice /data on wall. Provide 4x8porcelain whiteboard with aluminum trim and pen tray. Provide acoustical wall panels, 50sf per room (assume $35/sy for fabric).
|
5
|
Small Conference Rooms:
Provide min two (2) duplex and one (1) voice /data on wall. Provide (1) core drill at table with power / data and 1 ½” pathway to LCD screen location. Allow for three (2) duplex outlets and three (2) data/voice on walls. Allow for blocking in wall for tenant provided LCD screen and bracket. Provide 4’ x 12’ porcelain whiteboard with aluminum trim and pen tray. Provide acoustical wall panels, 75sf per room (assume $35/sy for fabric).
|
6
|
Conference Rooms (med/large):
Provide (1) core drills at table with power / data (data by tenant) and 1 ½” pathway to LCD screen location. Allow for three (3) duplex outlets and three (3) data/voice on walls. Allow for blocking in wall for tenant provided LCD screen and
|
7
|
Multi-purpose Room:
Provide (4) core drills in room. Provide min of four (4) duplex and four(4) voice/data CAT6 drops on wall. Provide 4’ x 16’ backpainted glass whiteboard with pen tray and aluminum trim at one wall. Provide 200sf of 1” acoustical fabric wrapped wall panels (allow $35/sy for fabric). P-lam front / solid surface top (4) bay trash/recycle casework with pull out drawer type of operation.
Provide (1) double width AV credenza (p-lam front, solid surface top). Provide all pathways from credenza to table, projector and new cabling; cabling by Tenant. Provide and install (1) new motorized recessed projection screen and allow for (1) ceiling-mounted projector (projector furnished by tenant and installed by G.C.).
|
8
|
Misc Labs/Testing Rooms:
Provide (2) core drills in room for power/data/AV. Allow for six (6) quad outlets and (6) data/voice locations on walls (3 dedicated circuits). Allow for blocking in wall for tenant provided LCD screen and bracket. Provide 4’ x 10’ porcelain whiteboard with aluminum trim and pen tray. Provide window film at Private Testing Lab. Provide mini-blinds at interior relites at other labs.
|
9
|
IT Bench Lab / GIO Build Lab:
Provide (2) core drills in room for power/data/AV. Allow for (6) quad outlets (dedicated circuits) and (6) data/voice locations on walls. Allow for blocking in wall for tenant provided LCD screen and bracket. Provide 4’ x 10’ porcelain whiteboard with aluminum trim and pen tray. Provide mini-blinds at interior relites.
|
10
|
Audio Production Suite:
Provide (2) core drills in room for power/data/AV. Allow for (4) quad outlets (dedicated circuits) and (4) data/voice locations on walls. Allow for blocking in wall for tenant provided LCD screen and bracket. Allow for specialty acoustical wall and ceiling treatments ($35/sf) and an acoustical rating of NC-15 inside the room. Separate HVAC zone with acoustically appropriate air delivery and return design.
|
11
|
Coffee / Break:
Plastic laminate closed base cabinet & closed upper cabinet with U/C lighting. Provide sink, trash and recycling drawers and, plumbing designed to facilitate attachment of coffee and hot water system.
Solid surface countertop and tile backsplash. Provide water filter at sink. Allow for 50lf of full height vinyl wallcovering. Provide allowance for(6) pendant fixtures. Allow for (3) dedicated 20a duplex outlets, (1) GFI duplex outlet and (1) duplex outlet on a timer, (2) standard duplex outlets and two voice/data . Allow for blocking in wall for Tenant provided equipment. Provide one (1) new ADA sink/faucet and (2) waterlines with shut off valve at (2) refrigerators, (2) microwaves, and (1) dishwasher. Water line to filtered hot/cold water dispenser. Provide deck hung water heater with drip pan. Assume coffeemaker, water dispenser to be furnished by Tenant. Installation and connections by GC.
|
12
|
Copy:
10lf Plastic laminate closed base cabinet & closed upper cabinet with U/C lighting. Provide trash and recycling drawers. Allow for (2) dedicated 20a duplex outlets, four (4) standard quadraplex outlets and (6) voice data CAT6 drops; cabling by Tenant.
|
13
|
Mail/Receiving:
20lf Plastic laminate closed base cabinet & closed upper cabinet with U/C lighting. Allow for (2) dedicated 20a duplex outlets which will be shared w/ standard receptacles, (4) standard quadraplex outlets and six (6) voice data CAT6 drops.
|
14
|
Kitchen Area/ Café:
Plastic laminate closed base cabinet & closed upper cabinet with U/C lighting. Solid surface countertop and tile backsplash and freestanding bar height island. Allow for 60lf of full height vinyl wallcovering. Provide (2) new ADA sinks with disposals, and four (4) waterlines with shut-off valves. (2) full size refrigerators, (4) microwaves, (1) icemaker and (2) ADA dishwashers. Provide pull out drawer trash and recycling base cabinets. Provide power/comm. for flat screen display by Tenant. Provide (10) dedicated 20a duplex outlets (equipment feeds will be dedicated, Tenant will value engineer if feasible), (2) GFI duplex outlets, (2) duplex outlets on timers, (6) standard duplex outlets and (4) voice/data CAT6 drops; cabling by Tenant. Allow for 32 sf of plywood wall blocking for Tenant provided equipment. Water line to filtered hot/cold water dispenser. Provide deck hung water heater with drip pan. Assume coffeemaker, water dispenser to be furnished by Tenant. Installation and connections by GC. Allow power for 4 vending machines and 2 cold cases.
|
15
|
Storage / file room:
file storage, no casework. Provide min of two (2) duplex and one (1) voice/data CAT6 drop; cabling by Tenant.
|
16
|
Offices:
Provide coat hook at door. One wall with accent paint. Provide 4 x 8 standard white board. Provide a min of (1) quad outlet and (1) duplex and (2) data/voice CAT6 drops; cabling by Tenant. Electric switchable privacy glass system at sidelite for one office (CEO).
|
17
|
IDF Room:
Assume (1) per floor (except at floor with MDF) Allow for mechanical attachment of Tenant’s server racks. Assume (3) racks by tenant. Allow for one full wall FR plywood panel mounted to the wall for tenant’s phone system. Allow for 15 lf of suspended cable tray. Furnish and installed by contractor. Allow for (2) 6” PVC conduit sleeves for tenant’s low voltage cabling. Allow for (3) dedicated 20 amp duplex outlets, (3) 30 amp twist locks, and (3) voice/data CAT6 drops; cabling by Tenant. Allow for dedicated 24/7 cooling.
|
18
|
MDF Room:
Assume (1) (location TBD) Allow for mechanical attachment of Tenant’s server racks. Assume (12) racks by tenant. Allow for two full walls FR plywood panels mounted to the wall for tenant’s phone system. Allow for 30 lf of suspended cable tray. Furnish and installed by contractor. Allow for (4) 6” PVC conduit sleeves for tenant’s low voltage cabling and two (2) floor core sleeves for connection to tenant IDF rooms. Allow for (12) 30 amp twist lock outlets, (4) dedicated 20 amp duplex outlets, (3) standard duplex outlets and two (2) voice/data CAT6 drops; cabling by Tenant. Allow for dedicated 24/7 cooling.
|
19
|
Open Office/ Workstations:
By others. Power whips between furniture panels by furniture vendor. Provide power at wall (where one is adjacent to workstations panel) or flush floor poke-through, one location per 4 stations max. Poke-throughs to be designated to be as efficient as possible. A cubicle section of 8 will receive one poke-through w/ multiple circuits. Allow for (15) 4 x 8 standard whiteboards. Wall to whip connection by GC.
|
20
|
Powder Room
: Match existing building restrooms.
|
21
|
Mother’s Room
: Allow for three (3) duplex outlets and one (1) data/voice outlet. One lavatory and vanity. One under counter fridge.
|
22
|
Open Team
: Provide plastic laminate bar height island (where shown on the plan), Allow for new 3’ x full height x ½” thick laminated tempered glass panels with white diffused laminate. Glass panels set in surface mounted floor and head aluminum channels. Plan on three (3) panels per teaming area. Allow for three (3) standard duplex outlets and two (2) voice /data. Allow for blocking in the wall for support of Tenant provided equipment. . Provide one (1) core drill per teaming area; use wall chase where practical to do so.
|
23
|
Game Room
: Provide power/comm/AV/ data for owner provided screen and gaming console. Allow for four (2) data, three (3) duplex outlets. One wall to be painted with accent paint. Provide (1) core drill at table with power / data (data by tenant) and 1 ½” pathway to LCD screen location. Allow for blocking in wall for tenant provided LCD screen and bracket.
|
24
|
Security Room
: Provide coat hook at door. Provide a min of four (4) dedicated duplex and four (4) data/voice.
|
•
|
For the period
Jan 1- August 31
, your annual target for the 2012 plan year was
20%
of your then current base salary, so 8/12
th
of a full year's target is
$29,533.00
.
|
•
|
For the period
Sept 1- Dec 31
, your annual target for the 2012 plan year will be
45%
of your new salary, so 4/12
th
of a full year's target is
$39,000.00
for a 2012 blended target of $68,533.00.
|
1.
|
I have reviewed this report on Form 10-Q of RealNetworks, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
August 8, 2013
|
||
|
|||
/s/ Robert Glaser
|
|||
Robert Glaser
|
|||
Title:
|
Chairman and interim Chief Executive Officer
|
||
|
(Principal Executive Officer)
|
1.
|
I have reviewed this report on Form 10-Q of RealNetworks, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
August 8, 2013
|
||
|
|||
/s/ Tim M. Wan
|
|||
Tim M. Wan
|
|||
Title:
|
Chief Financial Officer and Treasurer
|
||
|
(Principal Financial and Accounting Officer)
|
Date:
|
August 8, 2013
|
||
|
|
||
By:
|
/s/ Robert Glaser
|
||
|
Name:
|
Robert Glaser
|
|
|
Title:
|
Chairman and interim Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
Date:
|
August 8, 2013
|
||
|
|
||
By:
|
/s/ Tim M. Wan
|
||
|
Name:
|
Tim M. Wan
|
|
|
Title:
|
Chief Financial Officer and Treasurer
|
|
|
|
|
(Principal Financial and Accounting Officer)
|