OpenTV Reports Fourth Quarter and Full Year 2007 Results
OpenTV Reports Fourth Quarter and Full Year 2007 Results
SAN FRANCISCO, Feb. 21 /PRNewswire-FirstCall/ -- OpenTV (NASDAQ:OPTV) , a leading provider of solutions for the delivery of advanced digital television and advanced advertising solutions, today announced financial results for its fourth quarter and year ended December 31, 2007.
"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, Ben Bennett. "The deployment of more than 100 million OpenTV-enabled digital devices clearly demonstrates OpenTV's leadership position. As we move into 2008, we are committed to further growing our business by expanding our distribution channels, remaining focused on the provision of end-to-end turnkey solutions, and continuing to penetrate rapidly growing digital television markets worldwide. In addition, we look to broaden the range of capabilities and technologies supported by our middleware as well as our advanced advertising solutions, in order to continue capitalizing on the growing industry interest in these products."
OpenTV completed the sale of its PlayJam unit in December 2007. All historic PlayJam-related revenues and costs have been reclassified as a discontinued operation. With the closure of this sale and the company's prior exit from its NASCAR and betting and gaming product lines, OpenTV has also reorganized its financial reporting to reflect two primary reporting segments: Middleware Solutions and Advertising Solutions. The product lines that were previously part of the Applications and BettingCorp segments now form the basis of the Advertising Solutions segment.
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 December 31, 2007, revenues were $110.0 million, 16% higher than revenues of $95.2 million in 2006, reflecting gains in the middleware and advertising product lines that were partially offset by declines in the NASCAR, Participate and betting and gaming product lines. Royalties and licenses for 2007 increased 12% to $73.7 million. Services and other revenues for 2007 increased 24% to $36.2 million. Adjusted EBITDA, before unusual items, improved to $8.3 million for 2007, compared to $5.0 million in 2006.
Net loss for the year ended December 31, 2007 was $5.2 million, or $(0.04) per share, compared to a net loss of $10.8 million, or $(0.08) per share, in 2006.
Cash flows from operations were $16.6 million for 2007, an improvement of $13.6 million over 2006.
As of December 31, 2007, the company had deferred revenue of $24.1 million compared with $25.6 million at the end of 2006.
As of December 31, 2007, OpenTV had cash, cash equivalents and short and long-term marketable debt securities totaling $81.8 million compared to $64.9 million as of December 31, 2006.
Fourth Quarter 2007 Results
For the quarter ended December 31, 2007, revenues were $38.2 million, an increase of 52% over revenues of $25.1 million for the fourth quarter of 2006, primarily driven by the recognition of $10.5 million of previously deferred revenue from UPC Broadband, a division of Liberty Global. Adjusted EBITDA, before unusual items, improved to $12.1 million for the quarter ended December 31, 2007, compared to $1.0 million for the fourth quarter of 2006.
Net income for the fourth quarter of 2007 was $11.0 million, or $0.08 per share, compared to a net loss of $3.4 million, or $(0.02) per share, for the fourth quarter of 2006.
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 $31.7 million, compared to $26.3 million in 2006. Unallocated corporate overhead was $23.4 million in 2007, $2.1 million more than unallocated corporate overhead of $21.3 million in 2006. For the fourth quarter, total contribution margin improved to $17.0 million in 2007, compared to $6.4 million for the same period in the prior year. Unallocated corporate overhead decreased by $0.5 million for the fourth quarter of 2007 compared to the prior year
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 February 21, 2008 at 7:00pm ET / 4:00pm PT through March 6, 2008 at 11:59pm ET / 8:59pm PT.
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 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: 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 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)
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, for
OpenTV; or Press, Christine Oury of OpenTV, +1-415-962-5433, coury@opentv.com;
or Lisa Ruiz-Rogers of Manning Selvage and Lee, +1-323-866-6059,
lisa.rogers@mslpr.com, for OpenTV
Web site: http://www.opentv.com/
Profile: International Entertainment
posted by EntertainmentNews @ 1:47 PM
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