OpenTV Reports First Quarter 2008 Results

OpenTV Reports First Quarter 2008 Results

SAN FRANCISCO, May 6 /PRNewswire-FirstCall/ -- OpenTV Corp. (NASDAQ:OPTV) , a leading provider of solutions for the delivery of advanced television and advanced advertising services, today announced financial results for its first quarter ended March 31, 2008.

"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, Ben Bennett. "Moving forward, we continue to pursue new middleware opportunities in emerging markets as well as expand relationships with existing customers in more mature markets. We have also made further progress with our advanced advertising business and remain on track for the general availability of our EclipsePlus product later this month. Finally, we believe the strategic initiatives implemented during 2007 will continue to drive further improvements in execution and performance."

   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 March 31, 2008, revenues were $33.8 million, an increase of 35% over revenues of $25.1 million for the first quarter of 2007. Royalties and licenses revenues increased 24% to $22.2 million. Services and other revenues increased 61% to $11.6 million. Adjusted EBITDA, before unusual items, was $7.6 million for the quarter ended March 31, 2008, compared to $0.4 million for the first quarter of 2007.

Net income for the first quarter of 2008 was $6.3 million, or $0.05 per share, compared to a net loss of $3.1 million, or $(0.02) per share, for the first quarter of 2007.

As of March 31, 2008, the Company recorded a balance of $27.7 million in deferred revenue, compared to $24.1 million at the end of 2007.

As of March 31, 2008, the Company had cash, cash equivalents and short and long-term marketable debt securities totaling $96.0 million, compared to $81.8 million as of December 31, 2007.

   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 $14.4 million, compared to $6.0 million in the first quarter of 2007. Unallocated corporate overhead was $6.8 million in the first quarter of 2008, $1.2 million higher than unallocated corporate overhead of $5.6 million in the first quarter of 2007.

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 May 6, 2008 at 7:00pm ET / 4:00pm PT through May 20, 2008 at 11:59pm ET / 8:59pm PT.

   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 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 income (loss) as presented in the accompanying financial statements, because OpenTV believes consolidated net income (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 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)  

First Call Analyst:
FCMN Contact:

Source: OpenTV Corp.

CONTACT: Investors, Denise Roche, roche@braincomm.com, or Brad Edwards,
edwards@braincomm.com, both of Brainerd Communicators for OpenTV Corp.,
+1-212-986-6667; or Press, Christine Oury of OpenTV, +1-415-962-5433,
coury@opentv.com

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

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Profile: International Entertainment