OPENTV CORP. 
By
"2007 marked an important year for OpenTV as we refocused our business
strategy on our core middleware and advanced advertising businesses and took
steps to move the company closer to achieving sustainable profitability. We
streamlined our business, disposing of unprofitable operations and
consolidating business units to effect a more efficient and nimble operating
structure," commented OpenTV's Chief Operating Officer and Acting Chief
Executive Officer,
OpenTV completed the sale of its PlayJam unit in
Key Operating Measures of Continuing Operations
USD Three Three Twelve Twelve
Millions months months months months
ended ended ended ended
December December December December
31, 2007 31, 2006 Change 31, 2007 31, 2006 Change
Revenues $38.2m $25.1m 52 % $110.0m $95.2m 16 %
Adjusted
EBITDA,
before
unusual
items $12.1m $1.0m $11.1 $8.3m $5.0m $3.3m
Cash, Cash
Equivalents
and
Marketable
Debt
Securities $81.8m $64.9m 26 %
Full-Year 2007 Results
For the year ended
Net loss for the year ended
Cash flows from operations were
As of
As of
Fourth Quarter 2007 Results
For the quarter ended
Net income for the fourth quarter of 2007 was
Segment Information
Revenues
-- For the full year 2007, Middleware Solutions revenues increased by
24% to $97.6 million. In the fourth quarter of 2007, Middleware
Solutions revenues were $35.0 million compared to $21.3 million for the
same period in the prior year.
-- For the full year 2007, revenues from the Advertising product line
increased 17% to $11.5 million. Revenues for the overall Advertising
segment, however, were down $4 million to $12.3 million, primarily
reflecting the discontinuation of the NASCAR and betting and gaming
product lines in December 2006. In the fourth quarter of 2007, revenues
from the Advertising Solutions Segment were $3.2 million compared to
$3.8 million for the same period in the prior year.
Contribution Margin
-- For the full year 2007, Middleware Solutions contribution margin
increased by $4.3 million to $32.0 million. For the fourth quarter,
Middleware Solutions contribution margin increased by $9.5 million to
$16.4 million.
-- For the full year 2007, Advertising Solutions contribution margin
improved by $1.0 million to a loss of $0.3 million. For the fourth
quarter, Advertising Solutions contribution margin improved by
$1.2 million to $0.6 million.
For 2007, total contribution margin from our operating segments improved
to
Adjusted EBITDA before unusual items and contribution margin are non-GAAP financial measures. Reconciliations of the differences between these non-GAAP financial measures and net loss, which is the most directly comparable GAAP financial measure, are included at the end of this press release. Additional information regarding the derivation of Adjusted EBITDA and contribution margin and a statement of the relevance to management of this information and its possible usefulness to investors is also included at the end of this release and on the investor relations page of our Web site.
Conference Call Details
OpenTV will conduct a conference call to discuss the Company's fourth
quarter and full year financial results. The details of the call are as
follows:
Date and Time: Thursday, February 21, 2008 at 5 p.m. ET /
2 p.m. PT
Dial-in Number US: 866-578-5784
Dial-in Number International: 617-213-8056
Pass Code: 32797203
Participants: Ben Bennett, Chief Operating Officer and
Acting Chief Executive Officer
Shum Mukherjee, Chief Financial Officer
Mark Beariault, General Counsel
To access a live Web cast of the conference call, please go to the Investor Relations section of the OpenTV Web site at http://www.opentv.com.
The conference call replay will be available from
Replay Number US: 888-286-8010
Replay Number International: 617-801-6888
Pass Code: 23008120
About Segment Information
Because our business segments reflect the manner in which management reviews our business, they necessarily involve judgments that management believes are reasonable in light of the circumstances under which they are made. These judgments may change over time or may be modified to reflect new facts or circumstances. Segments may also be changed or modified from time to time to reflect technologies and applications that are newly created or that have changed, or other business conditions that evolve, each of which may result in management reassessing specific segments, the elements included therein and the methodologies used to assess segment performance.
Non-GAAP Financial Measures
"EBITDA" is an acronym for earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA, as used in this release, removes from EBITDA the effects of amortization of intangible assets, share-based compensation expense, other income and expense, and minority interest. "Adjusted EBITDA before unusual items" removes from Adjusted EBITDA the effects of contract amendments that mitigated potential loss positions and restructuring costs.
"Contribution margin," as used in this release, is defined by the company as segment revenues less related direct or indirect allocable costs, including headcount and headcount-related overhead costs, consulting and subcontractor costs, travel, marketing and network infrastructure and bandwidth costs. Contribution margin excludes unallocated corporate support, interest, taxes, depreciation and amortization, amortization of intangible assets, share-based compensation, impairment of goodwill, impairment of intangibles, other income, minority interest, restructuring provisions, and unusual items such as contract amendments that mitigated potential loss positions. These exclusions reflect costs not considered directly allocable to individual business segments and result in a definition of contribution margin that does not take into account the substantial cost of doing business.
Management believes that "Adjusted EBITDA before unusual items" and
"contribution margin" are relevant and useful measures, when considered in
conjunction with the comparable GAAP measures, for use by investors in
evaluating the operational performance of the company. They are some of the
principal measures used by OpenTV's management to assess the financial
performance of its business. OpenTV's management believes that both Adjusted
EBITDA before unusual items and contribution margin provide meaningful
information because each measure represents a transparent view of OpenTV's
recurring operating performance and allows management to readily view
operating trends, perform analytical comparisons and benchmarking between
segments and identify strategies to improve operating performance. While
OpenTV's management may consider Adjusted EBITDA before unusual items and
contribution margin to be important measures of comparative operating
performance, they should be considered in addition to, but not as a substitute
for, loss from operations, net loss, cash flow and other measures of financial
performance prepared in accordance with accounting principles generally
accepted in the
While OpenTV believes that the presentation of non-GAAP financial measures contained in this press release complies with the rules and guidance of the SEC, it can give no assurance that it will be able to provide the same or comparable measures in future press releases or announcements. OpenTV may, in the future, present non-GAAP financial measures other than "Adjusted EBITDA before unusual items," "Adjusted EBITDA" and "contribution margin" that it believes may be useful to investors. Any such determinations will be made with the intention of providing the most useful information to investors and will reflect the information used by OpenTV's management in assessing its business, which may change from time to time.
Cautionary Language Regarding Forward-Looking Information
This press release contains certain "forward-looking statements" within
the meaning of the
About OpenTV
OpenTV is one of the world's leading providers of solutions for the delivery of digital and interactive television. The company's software has been integrated in more than 100 million digital set-top boxes and digital televisions around the world, and enables enhanced program guides, video-on-demand, personal video recording, enhanced television, interactive shopping, interactive and addressable advertising, games and a variety of consumer care and communication applications. For more information, please visit http://www.opentv.com.
OPENTV CORP.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2007 2006 *
(In thousands, except share amounts)
ASSETS
Current assets:
Cash and cash equivalents $58,599 $48,309
Short-term marketable debt
securities 20,404 8,681
Accounts receivable, net of
allowance for doubtful accounts
of $565 and $348 at December 31, 2007
and 2006, respectively 16,655 18,684
Prepaid expenses and other
current assets 5,465 5,478
Current assets of discontinued
operations - 2,504
Total current assets 101,123 83,656
Long-term marketable debt securities 2,811 7,928
Property and equipment, net 6,554 7,102
Goodwill 95,082 95,019
Intangible assets, net 12,589 18,477
Other assets 1,896 4,636
Non-current assets of discontinued
operations - 3,946
Total assets $220,055 $220,764
LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,687 $3,879
Accrued liabilities 17,360 15,816
Accrued restructuring 883 416
Deferred revenue 14,992 12,614
Current liabilities of
discontinued operations - 1,660
Total current liabilities 35,922 34,385
Accrued liabilities, net of current portion 2,764 3,121
Accrued restructuring, net of current portion 1,297 1,954
Deferred revenue, net of current portion 9,142 12,987
Total liabilities 49,125 52,447
Commitments and contingencies
Minority interest 451 486
Shareholders' equity:
Class A ordinary shares, no par
value, 500,000,000 shares
authorized; 109,657,613 and
107,906,960 shares issued and
outstanding, including treasury
shares, at December 31, 2007 and
2006, respectively 2,234,614 2,235,495
Class B ordinary shares, no par
value, 200,000,000 shares
authorized; 30,206,154 and 30,631,746
shares issued and outstanding
at December 31, 2007 and
2006, respectively 35,953 35,953
Additional paid-in capital 500,162 491,630
Treasury shares at cost, zero
and 76,327 shares at December
31, 2007 and 2006, respectively - (38)
Accumulated other comprehensive loss (141) (261)
Accumulated deficit (2,600,109) (2,594,948)
Total shareholders' equity 170,479 167,831
Total liabilities, minority interest
and shareholders' equity $220,055 $220,764
* The condensed consolidated balance sheet at December 31, 2006 has been
derived from the company's audited consolidated financial statements at
that date.
OPENTV CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
Three Months Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
Revenues:
Royalties and
licenses $25,620 $17,446 $73,735 $65,886
Services and other 12,612 7,645 36,242 29,324
Total revenues 38,232 25,091 109,977 95,210
Cost of revenues:
Royalties and
licenses 24 2,091 5,115 7,788
Services and other 13,825 10,019 42,944 33,208
Total cost of
revenues 13,849 12,110 48,059 40,996
Gross profit 24,383 12,981 61,918 54,214
Operating expenses:
Research and
development 7,669 7,563 32,718 30,687
Sales and
marketing 2,147 2,880 10,829 11,857
General and
administrative 4,813 4,089 21,563 18,041
Restructuring and
impairment costs 295 1,304 267 1,324
Amortization of
intangible assets 186 508 1,618 2,082
Impairment of
goodwill - 747 - 747
Total operating
expenses 15,110 17,091 66,995 64,738
Gain / (loss) from
operations 9,273 (4,110) (5,077) (10,524)
Interest income 789 746 3,195 3,016
Other income 2,124 568 2,788 407
Minority interest 9 9 36 37
Profit / (loss)
before income
taxes 12,195 (2,787) 942 (7,064)
Income tax expense /
(benefit) (77) 701 1,248 2,896
Net profit /
(loss) from
continuing
operations 12,272 (3,488) (306) (9,960)
Discontinued operations:
Gain / (loss)
from
discontinued
operations,
net of tax (1,153) 72 (1,091) (858)
Impairment
of assets of
discontinued
operations,
net of tax (112) - (3,764) -
Net profit /
(loss) from
discontinued
operations (1,265) 72 (4,855) (858)
Net profit / (loss) $11,007 $(3,416) $(5,161) $(10,818)
Net income / (loss)
per share from continuing
operations, basic and
diluted $0.09 $(0.02) $- $(0.07)
Net loss per share
from discontinued
operations, basic and
diluted (0.01) - (0.04) (0.01)
Net income / (loss)
per share, basic and
diluted $0.08 $(0.02) $(0.04) $(0.08)
Shares used in per
share calculation,
basic 139,845,242 137,951,811 139,012,431 137,242,329
Shares used in per
share calculation,
diluted 140,575,305 137,951,811 139,012,431 137,242,329
OPENTV CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
2007 2006
Cash flows from operating activities:
Net loss $(5,161) $(10,818)
Less: Loss from discontinued operations (4,855) (858)
Net loss from continuing operations (306) (9,960)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization of
property and equipment 3,819 3,059
Amortization of intangible assets 5,888 6,981
Share-based compensation 3,267 3,274
Non-cash employee compensation 88 121
Provision for doubtful accounts 700 82
Write-off of accounts receivable (483) -
Impairment costs - 747
Gain on sale of cost investment (1,739) -
Loss on disposal of fixed assets 346 24
Minority interest (35) (37)
Changes in operating assets and liabilities:
Accounts receivable 1,812 (5,299)
Prepaid expenses and other
current assets 1,752 (1,115)
Other assets 2,737 (1,909)
Accounts payable (1,192) 811
Accrued liabilities 1,187 2,844
Accrued restructuring (190) 439
Deferred revenue (1,467) 3,017
Net cash provided by
operating activities of
continuing operations 16,184 3,079
Net cash provided by (used
in) operating activities of
discontinued operations 403 (106)
Total net cash provided by
operating activities 16,587 2,973
Cash flows from investing activities:
Purchase of property and equipment (3,398) (4,642)
Proceeds from disposal of property
and equipment 27 -
Proceeds from sale of marketable debt
securities 17,646 12,448
Purchase of marketable debt securities (24,235) (11,777)
Net cash used in investing
activities of continuing
operations (9,960) (3,971)
Net cash used in investing
activities of discontinued
operations (553) -
Total net cash used in
investing activities (10,513) (3,971)
Cash flows from financing activities:
Repurchase of employee stock options (167) -
Repurchase of treasury shares (1,305) -
Capital contribution from the
controlling shareholder 5,395 -
Proceeds from issuance of ordinary shares 321 2,454
Net cash provided by
financing activities of
continuing operations 4,244 2,454
Effect of exchange rate changes on
cash and cash equivalents of
continuing operations (178) 480
Effect of exchange rate changes on
cash and cash equivalents of
discontinuing operations (157) (549)
Total effect of exchange
rate changes on cash and
cash equivalents (335) (69)
Net increase in cash and cash
equivalents of continuing operations 10,290 2,042
Net decrease in cash and cash
equivalents of discontinued
operations (307) (655)
Net increase in cash and cash
equivalents 9,983 1,387
Cash and cash equivalents, beginning
of period, of continuing operations 48,309 46,267
Cash and cash equivalents, beginning
of period, of discontinued operations 307 962
Cash and cash equivalents, beginning
of period 48,616 47,229
Cash and cash equivalents, end of
period, of continuing operations 58,599 48,309
Cash and cash equivalents, end of
period, of discontinued operations - 307
Cash and cash equivalents, end of period $58,599 $48,616
Supplemental disclosure of cash flow
information:
Cash paid for income taxes $(1,617) $(1,415)
Non-cash investing and financing activities:
Conversion of exchangeable shares $63 $17,576
Value of bonus shares issued to employees $- $2,658
Retirement of treasury shares $1,343 $-
OPENTV CORP.
UNAUDITED SEGMENT INFORMATION AND RECONCILIATION OF
CONTRIBUTION MARGIN AND ADJUSTED EBITDA TO NET PROFIT / (LOSS)
(In thousands)
Three Months Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
Revenues:
Middleware solutions
Royalties and licenses $24,283 $16,022 $68,673 $60,635
Services and other 10,771 5,246 28,973 18,238
Subtotal - Middleware solutions 35,054 21,268 97,646 78,873
Advertising solutions
Royalties and licenses 1,337 1,424 5,062 5,251
Services and other 1,841 2,399 7,269 11,086
Subtotal - Advertising solutions 3,178 3,823 12,331 16,337
Total revenues $38,232 $25,091 $109,977 $95,210
Contribution Margin / (Loss):
Middleware solutions $16,420 $6,928 $32,042 $27,713
Advertising solutions 611 (548) (374) (1,382)
Total contribution margin 17,031 6,380 31,668 26,331
Unallocated corporate support (4,899) (5,363) (23,416) (21,349)
Adjusted EBITDA before unusual
items 12,132 1,017 8,252 4,982
Restructuring and impairment costs (295) (1,304) (267) (1,324)
Adjusted EBITDA 11,837 (287) 7,985 3,658
Depreciation and amortization (1,013) (871) (3,819) (3,059)
Amortization of intangible assets (1,025) (1,701) (5,888) (6,981)
Share-based and non-cash
compensation (526) (504) (3,355) (3,395)
Interest income 789 746 3,195 3,016
Other income 2,124 568 2,788 407
Minority interest 9 9 36 37
Impairment of goodwill - (747) - (747)
Profit / (loss) before income
taxes 12,195 (2,787) 942 (7,064)
Income tax expense / (benefit) (77) 701 1,248 2,896
Net profit / (loss) from
continuing operations 12,272 (3,488) (306) (9,960)
Discontinued operations:
Gain / (loss) from discontinued
operations, net of tax (1,153) 72 (1,091) (858)
Impairment of assets of
discontinued operations, net of
tax (112) - (3,764) -
Net profit / (loss) from
discontinued operations (1,265) 72 (4,855) (858)
Net profit / (loss) $11,007 $(3,416) $(5,161) $(10,818)
SOURCE OpenTV
