OpenTV Reports Second Quarter Results

OpenTV Reports Second Quarter Results

SAN FRANCISCO, Aug. 2 /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 second quarter ended June 30, 2007.

"OpenTV is making good progress in refining its global strategic vision as well as its ability to execute effectively across the organization in support of that vision," said OpenTV's Chief Executive Officer, Alan Guggenheim. We continued our trend of improved operating cash flows this quarter generating $4.8 million in net cash during the first six months of this year and we remain on track with our financial goals for the full year. Our goal is to move expeditiously to generate sustainable growth and profitability as we realize our vision of becoming a leading provider of end-to-end solutions for the delivery of convergent media experiences."

   Key Operating Measures    USD Millions      Three months ended      Three months ended      Change                        June 30, 2007           June 30, 2006   Revenues                 $24.3m                  $23.7m              3%   Adjusted EBITDA,    before unusual    items                  $(1.1)m                   $0.4m            $(1.5)m   Cash, Cash    Equivalents and    Marketable Debt    Securities              $74.1m                  $65.0m             14%      Second Quarter 2007 Results  

For the quarter ended June 30, 2007, revenues were $24.3 million, an increase of 3% over revenues of $23.7 million for the second quarter of 2006. Royalties and license revenues decreased 4% to $14.1 million, compared to the second quarter of 2006. Services and other revenues increased 13% to $10.2 million, compared to the second quarter of 2006. Adjusted EBITDA, before unusual items, was $(1.1) million for the quarter ended June 30, 2007, compared to $0.4 million for the second quarter of 2006.

Net loss for the second quarter of 2007 was $4.9 million, or $(0.04) per share, compared to a net loss of $2.5 million, or $(0.02) per share in the second quarter of 2006.

As of June 30, 2007, the Company had $32.8 million in deferred revenue, compared to $25.6 million at the end of 2006.

As of June 30, 2007, the Company had cash, cash equivalents and short and long-term marketable debt securities totaling $74.1 million, compared to $65.2 million at December 31, 2006.

   Segment Information (quarter over prior-year quarter comparison)   Revenues    -- Middleware and Integrated Technologies revenues increased by 9% to      $20.0 million, compared to $18.3 million.   -- Applications revenues decreased by 11% to $4.2 million, compared to      $4.7 million.   -- BettingCorp revenues decreased by 86% to $0.1 million, compared to      $0.7 million.     Contribution Margin    -- Middleware and Integrated Technologies contribution margin decreased by      $2.1 million to $4.6 million, compared to $6.7 million.   -- Applications contribution margin improved by $0.5 million to      $0.3 million, compared to a loss of $0.2 million.   -- BettingCorp contribution margin improved by $0.1 million to a loss of      $0.8 million, compared to a loss of $0.9 million.    

For the second quarter of 2007, total contribution margin from the Company's operating segments decreased to $4.1 million, compared to $5.6 million in the second quarter of 2006. Unallocated corporate overhead was $5.2 million in the second quarter of 2007, the same as in the second 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 second quarter financial results. The details of the call are as follows:

   Date and Time:     Thursday, August 2, 2007 at 5 p.m. ET / 2 p.m. PT   Dial-in Number US: 866-383-7989   Dial-in Number    International:    617-597-5328   Pass Code:         93027450   Replay Number US:  888-286-8010   Replay Number    International:    617-801-6888   Pass Code:         85919065   

The conference call replay will be available from Thursday, August 2 at 7 p.m. ET / 4 p.m. PT through Thursday, August 9 until 11 p.m. ET / 8 p.m. PT. 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/.

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. In addition to reviewing the company's business segments by revenues, management also reviews and assesses the "contribution margin" of each of these segments, which is a non- GAAP financial measure.

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

The foregoing information 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: market acceptance of interactive television services and applications such as ours; delays in the development or introduction of new applications and versions of our service; 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 over 92 million digital set-top boxes and digital televisions around the world. The software enables enhanced program guides, video-on-demand, personal video recording, enhanced television, interactive shopping, interactive and addressable advertising, games and gaming 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)                                                 June 30,        December 31,                                                  2007             2006 *                  ASSETS   Current assets:      Cash and cash equivalents                 $45,283           $48,616      Short-term marketable debt       securities                                25,673             8,681      Accounts receivable, net of       allowance for doubtful accounts       of $593 and $348 at June 30, 2007       and December 31, 2006,       respectively                              18,551            20,560        Prepaid expenses and other         current assets                           5,985             5,799           Total current assets                  95,492            83,656    Long-term marketable debt securities           3,146             7,928   Property and equipment, net                    6,675             7,231   Goodwill                                      98,687            98,645   Intangible assets, net                        15,075            18,477   Other assets                                   3,889             4,827           Total assets                        $222,964          $220,764     LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY   Current liabilities:      Accounts payable                           $3,210            $4,335      Accrued liabilities                        13,848            17,020      Current portion of accrued       restructuring                                972               416      Current portion of deferred       revenue                                   24,515            12,614           Total current liabilities             42,545            34,385    Long-term liabilities:      Taxes payable                               1,767             1,920      Deferred rent                               1,047             1,201      Accrued restructuring                       1,097             1,954      Deferred revenue                            8,294            12,987           Total long-term liabilities           12,205            18,062            Total liabilities                     54,750            52,447    Commitments and contingencies    Minority interest                                469               486    Shareholders' equity:      Class A ordinary shares, no par       value, 500,000,000 shares       authorized; 108,534,104 and       107,906,960 shares issued       and outstanding, including       treasury shares, at June 30, 2007       and December 31, 2006,       respectively                           2,235,872         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 June 30, 2007 and       December 31, 2006, respectively           35,953            35,953      Additional paid-in capital                499,122           491,630      Treasury shares at cost, 76,327       shares                                       (38)              (38)      Accumulated other comprehensive       loss                                        (208)             (261)      Accumulated deficit                    (2,602,956)       (2,594,948)          Total shareholders' equity            167,745           167,831   Total liabilities, minority interest    and shareholders' equity                   $222,964          $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         Six Months Ended                                  June 30,                  June 30,                             2007         2006         2007         2006   Revenues:      Royalties and       licenses             $14,066      $14,743      $31,927      $31,114      Services and       other                 10,200        8,978       18,745       17,503      Total revenues         24,266       23,721       50,672       48,617   Cost of revenues:      Royalties and       licenses               1,934        1,807        3,701        3,687      Services and       other                 11,063        9,332       21,421       18,251         Total cost of         revenues            12,997       11,139       25,122       21,938    Gross profit              11,269       12,582       25,550       26,679   Operating expenses:      Research and       development            8,000        7,654       16,863       16,017      Sales and       marketing              2,993        3,297        5,889        5,950      General and       administrative         4,777        4,266       10,291        9,614      Restructuring and       impairment costs         (28)          20          (28)          20      Amortization of       intangible assets        510          530        1,020        1,059        Total operating         expenses            16,252       15,767       34,035       32,660    Loss from operations      (4,983)      (3,185)      (8,485)      (5,981)   Interest income              748          898        1,252        1,448   Other expenses              (123)        (201)         (50)        (198)   Minority interest              9           10           17           19     Loss before income      taxes                  (4,349)      (2,478)      (7,266)      (4,712)   Income tax expense           515           14          742          907     Net loss               $(4,864)     $(2,492)     $(8,008)     $(5,619)    Net loss per share,    basic and diluted        $(0.04)      $(0.02)      $(0.06)      $(0.04)    Shares used in per    share calculation,    basic and diluted   138,659,811  137,392,075  138,576,223  136,684,318                                   OPENTV CORP.         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                               (In thousands)                                                     Six Months Ended June 30,                                                     2007              2006   Cash flows from operating activities:   Net loss                                       $(8,008)          $(5,619)   Adjustments to reconcile net loss to    net cash provided by operating    activities:      Depreciation and amortization of       property and equipment                       1,972             1,539      Amortization of intangible       assets                                       3,402             3,529      Share-based compensation                      2,287             2,052      Non-cash employee compensation                   76                42      Provision for doubtful accounts                 245               (18)      Loss on disposal of fixed assets                  2                10      Minority interest                               (17)              (19)      Changes in operating assets and       liabilities:           Accounts receivable                      1,764              (573)           Prepaid expenses and other            current assets                           (186)            1,594           Other assets                               938            (1,387)           Accounts payable                        (1,125)           (1,297)           Accrued liabilities, taxes            payable and deferred rent              (3,479)              494           Accrued restructuring                     (301)             (232)           Deferred revenue                         7,208             1,520           Net cash provided by            operating activities                    4,778             1,635    Cash flows from investing activities:   Purchase of property and equipment              (1,391)           (1,668)   Proceeds from sale of marketable debt    securities                                      6,995             6,800   Purchase of marketable debt    securities                                    (19,186)           (6,555)           Net cash used in investing            activities                            (13,582)           (1,423)    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                                            236               772           Net cash provided by            financing activities                    5,464               772    Effect of exchange rate changes on    cash and cash equivalents                           7              (214)    Net increase (decrease) in cash and    cash equivalents                               (3,333)              770    Cash and cash equivalents, beginning    of period                                      48,616            47,229    Cash and cash equivalents, end of    period                                        $45,283           $47,999     Supplemental disclosure of cash flow    information:   Cash paid for income taxes                     $(1,004)            $(340)    Non-cash investing and financing    activities:   Conversion of exchangeable shares                  $42           $17,491   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     Six Months Ended                                            June 30,            June 30,                                     2007         2006      2007        2006    Revenue:   Middleware and integrated    technologies      Royalties and licenses       $12,976      $13,829    $29,527   $29,410      Services and other             6,953        4,532     12,076     8,783         Subtotal - Middleware and          integrated technologies   19,929       18,361     41,603    38,193   Applications      Royalties and licenses         1,055          914      2,365     1,704      Services and other             3,148        3,783      6,284     7,080         Subtotal - Applications     4,203        4,697      8,649     8,784   BettingCorp      Royalties and licenses            35          -           35       -      Services and other                99          663        385     1,640         Subtotal - BettingCorp        134          663        420     1,640   Total Revenue                   $24,266      $23,721    $50,672   $48,617    Contribution Margin:   Middleware and integrated    technologies                    $4,570       $6,633    $11,274   $14,291   Applications                        350         (176)       438      (969)   BettingCorp                        (827)        (905)    (1,694)   (1,714)    Total Contribution Margin         4,093        5,552     10,018    11,608    Unallocated corporate support    (5,179)      (5,167)   (10,794)  (10,407)    Adjusted EBITDA before unusual    items                           (1,086)         385       (776)    1,201    Restructuring and impairment    costs                               28          (20)        28       (20)    Adjusted EBITDA                  (1,058)         365       (748)    1,181    Depreciation and amortization    (1,002)        (790)    (1,972)   (1,539)   Amortization of intangible    assets                          (1,701)      (1,764)    (3,402)   (3,529)   Share-based and non-cash    compensation                    (1,222)        (996)    (2,363)   (2,094)   Interest income                     748          898      1,252     1,448   Other expenses                     (123)        (201)       (50)     (198)   Minority interest                     9           10         17        19    Loss before income taxes         (4,349)      (2,478)    (7,266)   (4,712)   Income tax expense                  515           14        742       907    Net loss                        $(4,864)     $(2,492)   $(8,008)  $(5,619)  

First Call Analyst:
FCMN Contact:

Source: OpenTV

CONTACT: Investor, Denise Roche, roche@braincomm.com, or Brad Edwards,
edwards@braincomm.com, both of Brainerd Communicators, +1-212-986-6667; or
Press, Lisa Ruiz-Rogers of Manning, Selvage, and Lee, +1-323-866-6059,
lisa.rogers@mslpr.com, all for OpenTV

Web site: http://www.opentv.com/

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Profile: International Entertainment