SAN FRANCISCO, Nov. 7 /PRNewswire-FirstCall/ -- OpenTV (NASDAQ:OPTV), a leading provider of solutions for the delivery of advanced digital television and cross platform interactive services, today announced financial results for its third quarter ended September 30, 2007.
OpenTV's Chief Operating Officer and Acting Chief Executive Officer Ben Bennett commented, "While our revenue performance was soft in the third quarter, we are pleased with the progress achieved recently on several key initiatives, including: -- Our third network operator win in India, Reliance Communications, to
which we will deliver an end-to-end solution in collaboration with our
partner Nagravision;
-- Renewals of key license agreements with UPC and EchoStar, two of our
important network operator customers;
-- A signed letter of intent to sell our PlayJam games business, as part
of our ongoing effort to focus on our core business. This deal is
subject to negotiation of definitive agreements and customary closing
conditions, but we expect to be able to close the transaction before
year-end; and
-- The filing of a proposed consent judgment that would, if approved by
the court, settle our longstanding litigation against Liberate
Technologies."
As a result of the pending PlayJam transaction, the Company has classified PlayJam as a discontinued operation and has adjusted its presentation of financial results for the third quarter of 2007 and other periods to exclude the effects of PlayJam.
Key Operating Measures of Continuing Operations
USD Millions Three months ended Three months ended Change
September 30, 2007 September 30, 2006
Revenues $23.7m $25.0m (5)%
Adjusted EBITDA, before
unusual items $(3.3)m $2.0m $(5.3)m
Cash, Cash Equivalents and
Marketable Debt Securities $71.3m $67.7m 5 %
Third Quarter 2007 Results
For the quarter ended September 30, 2007, revenues were $23.7 million, a decrease of 5% compared to $25.0 million for the third quarter of 2006. Royalties and license revenues decreased 6% to $16.2 million, compared to the third quarter of 2006. Services and other revenues decreased 3% to $7.5 million, compared to the third quarter of 2006. Adjusted EBITDA, before unusual items, was $(3.3) million for the quarter ended September 30, 2007, compared to $2.0 million for the third quarter of 2006.
Net loss for the third quarter of 2007 was $8.2 million, or $(0.06) per share, compared to a net loss of $1.8 million, or $(0.01) per share, in the third quarter of 2006.
As of September 30, 2007, the Company had $34.5 million in deferred revenue, compared to $25.6 million at the end of 2006.
As of September 30, 2007, the Company had cash, cash equivalents and short and long-term marketable debt securities totaling $71.3 million, compared to $64.9 million at December 31, 2006.
Segment Information (quarter over prior-year quarter comparison) Revenues
-- Middleware and Integrated Technologies revenues increased by 6% to
$20.5 million, compared to $19.4 million. -- Applications revenues increased by 3% to $3.0 million, compared to $2.9
million
-- BettingCorp revenues decreased by 93% to $0.2 million, compared to $2.7
million. Contribution Margin
-- Middleware and Integrated Technologies contribution margin decreased by
$2.1 million to $4.8 million, compared to $6.9 million. -- Applications contribution margin improved by $1.0 million to $0.5
million, compared to a loss of $0.5 million. -- BettingCorp contribution margin decreased by $2.0 million to a loss of
$0.8 million, compared to $1.2 million. For the third quarter of 2007, total contribution margin from the Company's operating segments decreased to $4.5 million, compared to $7.6 million in the third quarter of 2006. Unallocated corporate overhead was $7.7 million in the third quarter of 2007, compared to $5.6 million in the third quarter of 2006.
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 third quarter financial results. The details of the call are as follows: Date and Time: Wednesday, November 7, 2007 at
5:00 p.m. ET / 2:00 p.m. PT
Dial-in Number US: 866-770-7146
Dial-in Number International: 617-213-8068
Pass Code: 93193581
To access a live webcast 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 Wednesday, November 7, 2007 at 7:00 p.m. ET / 4:00 p.m. PT through Wednesday, November 21 until 11:59 p.m. ET / 8:59 p.m. PT.
Replay Number US: 888-286-8010
Replay Number International: 617-801-6888
Pass Code: 55608885
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 United States that are presented in the financial statements included in this press release. Additionally, OpenTV's calculation of Adjusted EBITDA before unusual items and contribution margin may be different from the calculation used by other companies and, therefore, comparability may be affected. OpenTV reconciles Adjusted EBITDA before unusual items and each reported segment's contribution margin to its consolidated net loss as presented in the accompanying financial statements, because OpenTV believes consolidated net loss is the most directly comparable financial measure presented in accordance with GAAP.
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: failure to obtain court approval of the proposed consent judgment with Liberate Technologies, inability to reach final agreement to sell our PlayJam business or failure to satisfy closing conditions, 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 Open TV 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 96 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
(In thousands, except share amounts) September 30, December 31,
2007 2006 *
ASSETS
Current assets:
Cash and cash equivalents $46,167 $48,309
Short-term marketable debt securities 22,159 8,681
Accounts receivable, net of allowance
for doubtful accounts of $713 and $348
at September 30, 2007 and December 31,
2006, respectively 20,722 18,684
Prepaid expenses and other current
assets 6,008 5,477
Current assets of discontinued
operations 2,095 2,505
Total current assets 97,151 83,656 Long-term marketable debt securities 2,966 7,928
Property and equipment, net 6,566 7,016
Goodwill 95,061 95,019
Intangible assets, net 13,614 18,477
Other assets 4,584 4,827
Non-current assets of discontinued operations 85 3,841
Total assets $220,027 $220,764 LIABILITIES, MINORITY INTEREST AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,245 $3,879
Accrued liabilities 16,775 15,816
Accrued restructuring 709 416
Deferred revenue 25,784 12,614
Current liabilities of
discontinued operations 1,349 1,660
Total current liabilities 46,862 34,385 Accrued liabilities, net of current portion 2,703 3,121
Accrued restructuring, net of current portion 1,054 1,954
Deferred revenue, net of current portion 8,720 12,987
Total liabilities 59,339 52,447 Commitments and contingencies Minority interest 460 486 Shareholders' equity:
Class A ordinary shares, no par value,
500,000,000 shares authorized;
109,656,188 and 107,906,960 shares
issued and outstanding, including
treasury shares, at September 30, 2007
and December 31, 2006, respectively 2,235,905 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 September 30, 2007
and December 31, 2006, respectively 35,953 35,953
Additional paid-in capital 499,608 491,630
Treasury shares at cost, 76,327 shares (38) (38)
Accumulated other comprehensive loss (83) (261)
Accumulated deficit (2,611,117) (2,594,948)
Total shareholders' equity 160,228 167,831
Total liabilities, minority interest and
shareholders' equity $220,027 $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 Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Revenues:
Royalties and licenses $16,188 $17,327 $48,115 $48,441
Services and other 7,486 7,644 23,630 21,678
Total revenues 23,674 24,971 71,745 70,119
Cost of revenues:
Royalties and licenses 1,390 2,010 5,091 5,697
Services and other 9,884 8,221 29,084 23,222
Total cost of
revenues 11,274 10,231 34,175 28,919
Gross profit 12,400 14,740 37,570 41,200
Operating expenses:
Research and development 8,704 7,883 25,011 23,124
Sales and marketing 2,801 3,151 8,690 8,977
General and
administrative 6,629 4,562 16,750 13,952
Restructuring and
impairment costs - - (28) 20
Amortization of
intangible assets 412 515 1,432 1,574
Total operating
expenses 18,546 16,111 51,855 47,647
Loss from operations (6,146) (1,371) (14,285) (6,447)
Interest income 1,161 825 2,407 2,270
Other income /
(expenses) 715 37 665 (161)
Minority interest 9 9 26 28
Loss before income
taxes (4,261) (500) (11,187) (4,310)
Income tax expense 486 1,098 1,325 2,195
Net loss from
continuing
operations (4,747) (1,598) (12,512) (6,505)
Discontinued
operations:
Income / (loss) from
discontinue d
operations, net of
tax 238 (185) (5) (897)
Impairment of assets
of discontinue d
operations, net of
tax (3,652) - (3,652) -
Net loss from
discontinued
operations (3,414) (185) (3,657) (897)
Net loss $(8,161) $(1,783) $(16,169) $(7,402) Net loss per share from
continuing operations,
basic and diluted $(0.03) $(0.01) $(0.09) $(0.04)
Net loss per share from
discontinued operations,
basic and diluted (0.03) - (0.03) (0.01)
Net loss per share, basic
and diluted $(0.06) $(0.01) $(0.12) $(0.05) Shares used in per
share calculation,
basic and diluted 139,052,035 137,648,870 138,734,827 137,005,835
OPENTV CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) Nine Months Ended September 30,
2007 2006
Cash flows from operating activities:
Net loss $(16,169) $(7,402)
Less: Loss from discontinued operations (3,657) (897)
Net loss from continuing operations (12,512) (6,505)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization of
property and equipment 2,844 2,220
Amortization of intangible
assets 4,863 5,280
Share-based compensation 2,741 2,772
Non-cash employee compensation 82 95
Provision for doubtful accounts 456 24
Write-off of accounts receivable (91) -
(Gain) loss on disposal of
property and equipment (3) 24
Minority interest (26) (28)
Changes in operating assets and
liabilities:
Accounts receivable (2,403) (2,067)
Prepaid expenses and other
current assets (531) 883
Other assets 243 (1,766)
Accounts payable (1,634) 141
Accrued liabilities 541 3,038
Accrued restructuring (607) (371)
Deferred revenue 8,903 1,720
Net cash provided by
operating activities of
continuing operations 2,866 5,460
Net cash provided by (used
in) operating activities of
discontinued operations 182 (280)
Total net cash provided by
operating activities 3,048 5,180 Cash flows from investing activities:
Purchase of property and equipment (2,325) (2,707)
Proceeds from disposal of property
and equipment 27 -
Proceeds from sale of marketable debt
securities 11,481 10,466
Purchase of marketable debt
securities (19,984) (7,175)
Net cash (used in) provided
by investing activities of
continuing operations (10,801) 584
Net cash used in investing
activities of discontinued
operations (20) (17)
Total net cash (used in)
provided by investing
activities (10,821) 567 Cash flows from financing activities:
Repurchase of employee stock options (167) -
Capital contribution from the
controlling shareholder 5,395 -
Proceeds from issuance of ordinary
shares 269 796
Net cash provided by
financing activities of
continuing operations 5,497 796 Effect of exchange rate changes on
cash and cash equivalents of
continuing operations 296 216
Effect of exchange rate changes on
cash and cash equivalents of
discontinuing operations (214) (315)
Total effect of exchange
rate changes on cash and
cash equivalents 82 (99) Net (decrease) increase in cash and
cash equivalents of continuing
operations (2,142) 7,056
Net decrease in cash and cash
equivalents of discontinued
operations (52) (612)
Net (decrease) increase in cash and
cash equivalents (2,194) 6,444 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 46,167 53,323
Cash and cash equivalents, end of
period, of discontinued operations 255 350
Cash and cash equivalents, end of
period $46,422 $53,673 Supplemental disclosure of cash flow
information:
Cash paid for income taxes $(1,205) $(1,178) Non-cash investing and financing
activities:
Conversion of exchangeable shares $42 $17,576
Value of bonus shares issued to
employees $- $2,658 OPENTV CORP. UNAUDITED SEGMENT INFORMATION AND RECONCILIATION OF
CONTRIBUTION MARGIN AND ADJUSTED EBITDA TO NET LOSS
(In thousands) Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006 Revenues:
Middleware and integrated
technologies
Royalties and licenses $14,864 $15,205 $44,391 $44,615
Services and other 5,592 4,207 17,684 12,990
Subtotal - Middleware and
integrated technologies 20,456 19,412 62,075 57,605
Applications
Royalties and licenses 1,239 868 3,604 2,572
Services and other 1,778 1,995 5,446 5,606
Subtotal - Applications 3,017 2,863 9,050 8,178
BettingCorp
Royalties and licenses 85 1,254 120 1,254
Services and other 116 1,442 500 3,082
Subtotal - BettingCorp 201 2,696 620 4,336
Total Revenues $23,674 $24,971 $71,745 $70,119 Contribution Margin / (Loss):
Middleware and integrated
technologies $4,765 $6,917 $16,039 $21,208
Applications 467 (507) 1,157 (704)
BettingCorp (764) 1,162 (2,458) (552)
Total Contribution Margin 4,468 7,572 14,738 19,952 Unallocated corporate support (7,727) (5,610) (18,521) (16,012)
Adjusted EBITDA before unusual items (3,259) 1,962 (3,783) 3,940 Restructuring and impairment costs - - 28 (20)
Adjusted EBITDA (3,259) 1,962 (3,755) 3,920 Depreciation and amortization (949) (784) (2,844) (2,220)
Amortization of intangible assets (1,461) (1,751) (4,863) (5,280)
Share-based and non-cash compensation (477) (798) (2,823) (2,867)
Interest income 1,161 825 2,407 2,270
Other expenses 715 37 665 (161)
Minority interest 9 9 26 28
Loss before income taxes (4,261) (500) (11,187) (4,310)
Income tax expense 486 1,098 1,325 2,195 Net loss from continuing operations $(4,747) $(1,598) $(12,512) $(6,505)
Discontinued operations:
Income / (loss) from
discontinued operations,
net of tax 238 (185) (5) (897)
Impairment of assets of
discontinued operations,
net of tax (3,652) - (3,652) -
Net loss from discontinued
operations (3,414) (185) (3,657) (897)
Net loss $(8,161) $(1,783) $(16,169) $(7,402)
DATASOURCE: OpenTV, Inc.
CONTACT: Investors, Denise Roche, , or Brad Edwards, , both of Brainerd Communicators, +1-212-986-6667, for OpenTV; or press, Christine Oury of OpenTV, +1-415-962-5433, ; or Lisa Ruiz-Rogers, of Manning, Selvage, and Lee, +1-323-866-6059, , for OpenTV Web site: http://www.opentv.com/
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