OPENTV CORP. 
By
"For the first quarter, OpenTV reported solid revenue and net income,
putting us on track to meet our objectives for the full year. Results were
driven by strong revenue growth in our Middleware Solutions segment as we
continued to execute key customer launches and projects worldwide," said Chief
Executive Officer,
Key Operating Measures of Continuing Operations
USD Millions Three months ended Three months ended Change
March 31, 2008 March 31, 2007
Revenues $33.8m $25.1m 35%
Adjusted EBITDA,
before unusual items $7.6m $0.4m $7.2m
Cash, Cash Equivalents
and Marketable Debt
Securities $96.0m $71.2m 35%
First Quarter 2008 Results
For the quarter ended
Net income for the first quarter of 2008 was
As of
As of
Segment Information
Revenues
-- In the first quarter of 2008, revenues from the Middleware Solutions
segment were $30.1 million, compared to $21.8 million for the same
period in the prior year.
-- In the first quarter of 2008, revenues from the Advertising Solutions
segment were $3.7 million, compared to $3.3 million for the same
period in the prior year.
Contribution Margin
-- In the first quarter of 2008, Middleware Solutions contribution margin
increased by $7.1 million to $13.7 million, compared to $6.6 million
for the same period in the prior year.
-- In the first quarter of 2008, Advertising Solutions contribution
margin improved by $1.3 million to $0.7 million, compared to a loss of
$0.6 million for the same period in the prior year.
For the first quarter of 2008, total contribution margin from the
Company's operating segments increased 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 income (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 first quarter financial results. The details of the call are as follows:
Date and Time: Tuesday, May 6, 2008,
at 5:00pm ET / 2:00pm PT
Dial-in number US: 800.638.4817
Dial-in number International: 617.614.3943
Pass Code: 17138502
Participants: Ben Bennett, 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: 90348358
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, profit (loss) from operations, net income (loss), cash flow and other
measures of financial performance prepared in accordance with accounting
principles generally accepted in
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 United States Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in political, economic, business, competitive, market and regulatory factors. In particular, factors that could cause our actual results to differ include risks related to: delays in the development or introduction of new versions of our products; technical difficulties with networks or operating systems; our ability to manage our resources effectively; changes in technologies that affect the television industry; and the protection of our proprietary information. These and other risks are more fully described in our periodic reports and registration statements filed with the Securities and Exchange Commission and can be obtained online at the Commission's web site at http://www.sec.gov. Readers should consider the information contained in this release together with other publicly available information about our company for a more informed overview of our company. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
About OpenTV
OpenTV is one of the world's leading providers of solutions for the delivery of advanced digital television services. The company's software has been integrated in more than 106 million digital devices around the world, and enables enhanced program guides, video-on-demand, personal video recording, 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
(In thousands, except share amounts)
March 31, December 31,
2008 2007 *
ASSETS
Current assets:
Cash and cash equivalents $82,946 $58,599
Short-term marketable debt securities 11,203 20,404
Accounts receivable, net of allowance
for doubtful accounts of $808 and
$565 at March 31, 2008 and December 31,
2007, respectively 31,261 16,655
Prepaid expenses and other current assets 3,694 5,465
Total current assets 129,104 101,123
Long-term marketable debt securities 1,880 2,811
Property and equipment, net 6,432 6,554
Goodwill 95,084 95,082
Intangible assets, net 11,564 12,589
Other assets 1,976 1,896
Total assets $246,040 $220,055
LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,227 $2,687
Accrued liabilities 20,244 17,360
Accrued restructuring 309 883
Deferred revenue 18,040 14,992
Total current liabilities 39,820 35,922
Accrued liabilities, net of current portion 2,580 2,764
Accrued restructuring, net of current portion 1,278 1,297
Deferred revenue, net of current portion 9,676 9,142
Total liabilities 53,354 49,125
Commitments and contingencies
Minority interest 443 451
Shareholders' equity:
Preference shares, no par value,
500,000,000 shares authorized; none
issued and outstanding - -
Class A ordinary shares, no par value,
500,000,000 shares authorized;
109,628,148 and 109,657,613 shares
issued and outstanding at March 31,
2008 and December 31, 2007,
respectively 2,234,614 2,234,614
Class B ordinary shares, no par value,
200,000,000 shares authorized;
30,206,154 shares issued and
outstanding at March 31, 2008 and
December 31, 2007 35,953 35,953
Additional paid-in capital 515,912 500,162
Accumulated other comprehensive loss (442) (141)
Accumulated deficit (2,593,794) (2,600,109)
Total shareholders' equity 192,243 170,479
Total liabilities, minority interest
and shareholders' equity $246,040 $220,055
* The condensed consolidated balance sheet at December 31, 2007 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 March 31,
2008 2007
Revenues:
Royalties and licenses $22,221 $17,861
Services and other 11,584 7,208
Total revenues 33,805 25,069
Cost of revenues:
Royalties and licenses 1,423 1,767
Services and other 10,073 9,243
Total cost of revenues 11,496 11,010
Gross profit 22,309 14,059
Operating expenses:
Research and development 9,292 8,573
Sales and marketing 2,353 2,896
General and administrative 6,371 5,426
Amortization of intangible assets 185 510
Total operating expenses 18,201 17,405
Profit (loss) from operations 4,108 (3,346)
Interest income 716 501
Other income 1,846 72
Minority interest 8 9
Income (loss) before income taxes 6,678 (2,764)
Income tax expense 363 261
Net income (loss) from continuing
operations 6,315 (3,025)
Discontinued operations:
Net loss from discontinued operations - (119)
Net income (loss) $6,315 $(3,144)
Net income (loss) per share from
continuing operations, basic $0.05 $(0.02)
Net income (loss) per share from
discontinued operations, basic - -
Net income (loss) per share, basic $0.05 $(0.02)
Net income (loss) per share from
continuing operations, diluted $0.04 $(0.02)
Net income (loss) per share from
discontinued operations, diluted - -
Net income (loss) per share, diluted $0.04 $(0.02)
Shares used in per share calculation,
basic 139,789,266 138,505,301
Shares used in per share calculation,
diluted 140,494,112 138,505,301
OPENTV CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended March 31,
2008 2007
Cash flows from operating activities:
Net income (loss) $6,315 $(3,144)
Less: Loss from discontinued operations - (119)
Net income (loss) from continuing operations 6,315 (3,025)
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciation and amortization of
property and equipment 1,034 919
Amortization of intangible assets 1,025 1,701
Share-based compensation 1,409 1,105
Non-cash employee compensation 6 26
Provision for doubtful accounts 243 100
Minority interest (8) (9)
Changes in operating assets and liabilities:
Accounts receivable (14,849) (416)
Prepaid expenses and other current assets 32 471
Other assets (80) 93
Accounts payable (1,460) (1,518)
Accrued liabilities 2,700 (3,516)
Accrued restructuring (593) (199)
Deferred revenue 3,582 5,792
Net cash provided by (used in) operating
activities of continuing operations (644) 1,524
Net cash provided by operating
activities of discontinued operations - 325
Total net cash provided by (used in)
operating activities (644) 1,849
Cash flows from investing activities:
Purchase of property and equipment (850) (884)
Proceeds from sale of cost investment 1,739 -
Proceeds from sale of marketable debt
securities 11,359 4,288
Purchase of marketable debt
securities (1,330) (12,681)
Net cash provided by (used in)
investing activities of continuing
operations 10,918 (9,277)
Net cash used in investing activities
of discontinued operations - (20)
Total net cash provided by (used in)
investing activities 10,918 (9,297)
Cash flows from financing activities:
Capital contribution 14,333 5,395
Proceeds from issuance of ordinary shares - 199
Net cash provided by financing
activities of continuing operations 14,333 5,594
Effect of exchange rate changes on cash and
cash equivalents of continuing operations (260) 33
Effect of exchange rate changes on cash and
cash equivalents of discontinued operations - (32)
Total effect of exchange rate changes on
cash and cash equivalents (260) 1
Net increase (decrease) in cash and cash
equivalents of continuing operations 24,347 (2,126)
Net increase in cash and cash equivalents of
discontinued operations - 273
Net increase (decrease) in cash and cash
equivalents 24,347 (1,853)
Cash and cash equivalents, beginning of
period, of continuing operations 58,599 48,309
Cash and cash equivalents, beginning of
period, of discontinued operations - 307
Cash and cash equivalents, beginning
of period 58,599 48,616
Cash and cash equivalents, end of period,
of continuing operations 82,946 46,183
Cash and cash equivalents, end of period,
of discontinued operations - 580
Cash and cash equivalents, end of period $82,946 $46,763
Supplemental disclosure of cash flow
information:
Cash paid for income taxes $(567) $(393)
Non-cash investing and financing activities:
Conversion of exchangeable shares $2 $17
OPENTV CORP.
UNAUDITED SEGMENT INFORMATION AND RECONCILIATION OF
CONTRIBUTION MARGIN AND ADJUSTED EBITDA TO NET INCOME (LOSS)
(In thousands)
Three Months Ended March 31,
2008 2007
Revenues:
Middleware solutions
Royalties and licenses $20,533 $16,551
Services and other 9,530 5,232
Subtotal - Middleware solutions 30,063 21,783
Advertising solutions
Royalties and licenses 1,688 1,310
Services and other 2,054 1,976
Subtotal - Advertising solutions 3,742 3,286
Total revenues $33,805 $25,069
Contribution margin (loss):
Middleware solutions $13,668 $6,581
Advertising solutions 686 (545)
Total contribution margin 14,354 6,036
Unallocated corporate support (6,772) (5,631)
Adjusted EBITDA 7,582 405
Depreciation and amortization (1,034) (919)
Amortization of intangible assets (1,025) (1,701)
Share-based and non-cash compensation (1,415) (1,131)
Interest income 716 501
Other income 1,846 72
Minority interest 8 9
Income (loss) before income taxes 6,678 (2,764)
Income tax expense 363 261
Net income (loss) from continuing
operations 6,315 (3,025)
Discontinued operations:
Net loss from discontinued operations - (119)
Net income (loss) $6,315 $(3,144)
SOURCE OpenTV Corp.
