SAN FRANCISCO, March 14 /PRNewswire-FirstCall/ -- OpenTV , a leading provider of enabling technologies for advanced digital television services, today announced its financial results for the quarter and year ended December 31, 2005.
"We concluded the year by reporting positive operating cash flow for the full year and positive Adjusted EBITDA, before unusual items, and net income in the fourth quarter -- the first time we have achieved those important financial milestones in our company's history," said OpenTV's Chairman and Chief Executive Officer, James A. Chiddix. "In addition, we achieved full-year revenue growth of 12%, driven by continued strong performance in our middleware segment and improvements in our applications segment. Looking ahead, we are excited about the direction our company is heading. Our recent deal with India's Essel Group further strengthens an already globally-focused business. Our product portfolio and software solutions are world-class and our financial position remains strong. We are confident that we can build on the foundation we've established and think that we are well-positioned to deliver improved performance heading into 2006."
Key Operating Measures
USD Millions Three Three Change Twelve Twelve Change
months months months months
ended ended ended ended
December December December December
31, 2005 31, 2004 31, 2005 31, 2004
Revenues $23.2m $24.1m -4% $86.4m $77.2m 12%
Adjusted EBITDA,
before unusual
items $0.8m $(2.1)m $2.9m $(0.8)m $(14.1)m $13.3m
Cash, Cash
Equivalents and
Marketable Debt
Securities $64.5m $63.0m $1.5m
Full-Year 2005 Results
For the year ended December 31, 2005, revenues were $86.4 million, 12% higher than revenues of $77.2 million in 2004. Royalties and licenses for 2005 increased 13% to $55.1 million. Services and other revenue for 2005 increased 11% to $31.3 million. Adjusted EBITDA, before unusual items, improved to a loss of $0.8 million for 2005, compared to a loss of $14.1 million in 2004. Adjusted EBITDA, before unusual items, is a non-GAAP financial measure. Reconciliations of the differences between this non-GAAP financial measure 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 a statement of the relevance to management of this information and its possible usefulness to investors is also included in this release.
Net loss for the year was $8.5 million, or $0.07 per share, compared to a net loss of $22 million, or $0.18 per share, in 2004.
Cash flow from operations was $2.4 million for 2005, an improvement of $18.5 million from 2004.
As of December 31, 2005, the company had deferred revenue of $23.6 million compared with $17.1 million at the end of 2004.
As of December 31, 2005, OpenTV had cash, cash equivalents and short and long-term marketable debt securities totaling $64.5 million compared to $63.0 million as of December 31, 2004.
Fourth Quarter 2005
For the quarter ended December 31, 2005, revenues were $23.2 million, 4% lower than revenues of $24.1 million for the fourth quarter of 2004. Adjusted EBITDA, before unusual items, improved to a gain of $0.8 million for the quarter ended December 31, 2005, compared to a loss of $2.1 million for the fourth quarter of 2004.
Net income for the fourth quarter of 2005 was $2.9 million, or $0.02 per share, compared to a net loss of $6.3 million, or $0.05 per share, for the fourth quarter of 2004. Net income in the fourth quarter of 2005 included a gain of $3.1 million related to the sale of a cost investment in a private company.
Segment Information
Revenues
-- For the full-year, Middleware and Integrated Technologies revenues
increased by 8% to $68.3 million. In the fourth quarter of 2005,
Middleware and Integrated Technologies revenues were $17.6 million
compared to $20.4 million for the same period in the prior year.
-- For the full year, Applications revenues increased by 17% to 14.1
million. In the fourth quarter of 2005, Applications revenues were
$4.7 million compared to $2.9 million for the same period in the
prior year.
-- For the full year, BettingCorp revenues increased by 100% to $4.0
million. In the fourth quarter of 2005, BettingCorp revenues were
$0.9 million compared to $0.8 million for the same period in the
prior year.
Contribution Margin
-- For the full-year, Middleware and Integrated Technologies
contribution margin increased by $2.5 million to $28.8 million. For
the fourth quarter, Middleware and Integrated Technologies
contribution margin decreased by $1.2 million to $7.4 million.
-- For the full year, Applications contribution margin improved by $2.4
million to a loss of $4.4 million. For the fourth quarter,
Applications contribution margin improved by $1.9 million to a loss
of $0.5 million.
-- For the full year, BettingCorp contribution margin decreased by $0.3
million to a loss of $4.8 million. For the fourth quarter,
BettingCorp contribution margin decreased by $0.1 million to a loss
of $1.3 million.
For 2005, total contribution margin from our operating segments improved to $19.6 million, compared to $15.0 million in 2004. Unallocated corporate overhead was $20.4 million in 2005, $8.7 million less than unallocated corporate overhead of $29.1 million in 2004. For the fourth quarter, total contribution margin improved to $5.6 million, compared to $5.0 million for the same period in the prior year. Unallocated corporate overhead was reduced by $2.3 million for the fourth quarter compared to the prior year period, reflecting improved cost controls.
OpenTV also reported today that it is working with its independent auditors to complete its Annual Report on Form 10-K for the period ended December 31, 2005, which will include the financial information presented in this release. As of today, the Company continues to evaluate its internal control over financial reporting, as required by Section 404 of the Sarbanes- Oxley Act of 2002, and continues to assess the nature of deficiencies identified. Based on the status of that evaluation, and discussions with the company's independent auditors, the company cannot be certain that it will be able to file its Form 10-K on Thursday, March 16, the filing date for accelerated filers. As a result, the company anticipates that it may file an extension notification with the SEC in accordance with Rule 12b-25, which would extend the filing deadline for the Form 10-K until March 31. The company does not believe that the results of this evaluation will have any material effect on the financial information presented in this release.
Conference Call Details
OpenTV will conduct a conference call to discuss the Company's fourth quarter and year-end 2005 financial results. The details of the call are as follows:
Date and Time: Tuesday, March 14, 2006 at 2 p.m. PT
Dial-in Number US: 866-700-7101
Dial-in Number International: 617-213-8837
Pass Code: 56079617
Replay Number US: 888-286-8010
Replay Number International: 617-801-6888
Pass Code: 49436845
The conference call replay will be available from Tuesday, March 14, 2006 at 4 p.m. PT through Tuesday, March 21, 2005, until 4 p.m. PT on the Investor Relations section of the OpenTV website at http://www.opentv.com/.
About Segment Information
Because 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 to reflect technologies and applications that are newly created, or that change over time, or other business conditions that evolve, each of which may result in reassessing specific Segments and the elements included within each of those Segments and the methodologies that management uses to assess its performance.
In addition to reviewing the company's Segments by revenues, management also reviews and assesses the "contribution margin" of each of these Segments, which is not a 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, 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.
The company defines "contribution margin," for these purposes, as segment revenues less related direct or indirectly 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 overhead, 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. Contribution margin does not take into account substantial costs of doing business, such as unallocated corporate overhead costs, income tax and interest. Management believes that segment contribution margin is a helpful measure in evaluating operational performance for our company. Unallocated corporate overhead costs include headcount and headcount-related overhead costs, consulting and subcontractor costs, travel, legal and audit costs not considered directly allocable to individual business segments. While the company may consider "contribution margin" to be an important measure of comparative operating performance, this measure should be considered in addition to, but not as a substitute for, loss from operations, net loss, cash flow used in operating activities and other measures of financial performance prepared in accordance with accounting principles generally accepted in the United States that are otherwise presented in our financial statements. In addition, the company's calculation of "contribution margin" may be different from the calculation used by other companies and, therefore, comparability may be affected.
The company believes Adjusted EBITDA before unusual items and contribution margin, as it relates to Adjusted EBITDA, to be relevant and useful information for an investor because they are some of the principal measures used by OpenTV's management to assess the financial performance of its business. Management believes that certain non-GAAP measures, when presented in conjunction with comparable GAAP measures, may be useful in that they provide an investor with some of the same information used by OpenTV's management in assessing its business. OpenTV's management believes that both Adjusted EBITDA before unusual items and contribution margin are meaningful measures and are superior to other available GAAP measures 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 reportable segment's contribution margin to its consolidated net loss as presented in the accompanying financial exhibits, because OpenTV believes consolidated net loss is the most directly comparable financial measure.
While OpenTV believes that the presentation regarding non-GAAP financial measures 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, determine to present non-GAAP financial measures other than "Adjusted EBITDA before unusual items," "Adjusted EBITDA" or "contribution margin," together with comparable GAAP measures, 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 OpenTV
OpenTV is one of the world's leading providers of technologies and services enabling the delivery of digital and interactive television. The company's software has been deployed in over 63 million digital set-top-boxes through 36 network operators in 96 countries. The software enables enhanced television, interactive shopping, interactive and addressable advertising, games and gaming, personal video recording, and a variety of consumer care and communication applications. For more information, please visit http://www.opentv.com/.
OPENTV CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
December 31, December 31,
2005 2004
ASSETS
Current assets:
Cash and cash equivalents $47,229 $35,660
Short-term marketable debt
securities 9,030 1,986
Accounts receivable, net of
allowance for doubtful accounts
of $305 and $559 at December 31,
2005 and 2004, respectively 16,873 17,797
Prepaid expenses and other
current assets 4,794 3,073
Total current assets 77,926 58,516
Long-term marketable debt securities 8,213 25,374
Property and equipment, net 5,863 6,858
Goodwill 80,124 70,466
Intangible assets, net 27,150 25,108
Other assets 3,776 6,089
Total assets $203,052 $192,411
LIABILITIES, MINORITY INTEREST AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $4,361 $3,870
Accrued liabilities 18,568 22,363
Accrued restructuring 1,931 1,394
Due to Liberty Media 182 388
Current portion of deferred
revenue 14,349 10,520
Total current liabilities 39,391 38,535
Long-term liabilities:
Deferred rent 1,404 1,553
Deferred revenue 9,222 6,563
Total long-term liabilities 10,626 8,116
Total liabilities 50,017 46,651
Commitments and contingencies
Minority interest 523 585
Shareholders' equity:
Class A ordinary shares, no par
value, 500,000,000 shares authorized;
98,105,119 and 91,552,293 shares issued
and outstanding, including treasury
shares, at December 31, 2005 and 2004,
respectively 2,230,398 2,213,951
Class B ordinary shares, no par
value, 200,000,000 shares
authorized; 30,631,746 shares issued
and outstanding 35,953 35,953
Additional paid-in capital 470,596 470,453
Treasury shares at cost, 76,327
shares (38) (38)
Deferred share-based compensation (2) (10)
Accumulated other comprehensive income (265) 523
Accumulated deficit (2,584,130) (2,575,657)
Total shareholders' equity 152,512 145,175
Total liabilities, minority interest
and shareholders' equity $203,052 $192,411
OPENTV CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
Three Months Ended
December 31, Year Ended December 31,
2005 2004 2005 2004
(Unaudited)
Revenues:
Royalties and
licenses $14,876 $17,681 $55,083 $48,857
Services and other 8,336 6,416 31,310 28,312
23,212 24,097 86,393 77,169
Operating expenses:
Cost of revenues 8,994 11,892 33,815 39,264
NASCAR amendment -- -- -- (4,600)
Research and
development 9,274 8,509 33,903 29,753
Sales and
marketing 2,090 3,882 11,448 15,103
General and
administrative 4,138 3,993 15,904 17,876
Restructuring and
impairment costs -- 1,985 2,545 893
Amortization of
intangible assets 522 398 1,738 3,506
Total operating
expenses 25,018 30,659 99,353 101,795
Loss from operations (1,806) (6,562) (12,960) (24,626)
Interest income 515 247 1,678 858
Other income /
(expense), net 3,526 (37) 3,823 499
Minority interest 9 296 62 490
Loss before
income taxes 2,244 (6,056) (7,397) (22,779)
Income tax benefit /
(expense) 660 (244) (1,076) 817
Net loss $2,904 $(6,300) $(8,473) $(21,962)
Net profit / (loss)
per share, basic and
diluted: $0.02 $(0.05) $(0.07) $(0.18)
Shares used in per
share calculation,
basic 128,659,079 121,980,908 124,812,584 121,308,965
Shares used in per
share calculation,
diluted 137,508,887 121,980,908 124,812,584 121,308,965
OPENTV CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
2005 2004
Cash flows provided from / (used in)
operating activities:
Net loss $(8,473) $(21,962)
Adjustments to reconcile net loss to
net cash provided from / (used in)
operating activities:
Depreciation and amortization of
property and equipment 3,843 5,941
Amortization of intangible
assets 5,758 8,228
Amortization of share-based
compensation 8 26
Non-cash employee compensation 151 1,089
(Reduction in) / provision for
doubtful accounts (142) (187)
Non-cash impairment costs 602 1,020
Gain on sale of cost investment (3,126) --
Minority interest (62) (490)
Changes in operating assets and
liabilities:
Accounts receivable 1,066 (5,327)
Prepaid expenses and other
current assets (1,147) 1,024
Other assets (1,938) 7,289
Accounts payable 491 (1,948)
Accrued liabilities and
deferred rent (1,037) (6,273)
Accrued restructuring 537 (6,395)
Due to Liberty Media (206) (242)
Deferred revenue 6,038 2,033
Net cash provided from /
(used in) operating
activities 2,363 (16,174)
Cash flows provided from investing
activities:
Purchase of property and equipment (3,075) (2,070)
Cash provided from / (used in)
acquisitions, net of cash acquired (4,199) 4,078
Proceeds from sale of cost investment 7,126 --
Proceeds from sale of marketable debt
securities 40,155 22,541
Purchase of marketable debt
securities (30,035) (24,267)
Private equity investments (300) --
Net cash provided from
investing activities 9,672 282
Cash flows provided from financing
activities:
Proceeds from issuance of ordinary
shares 183 3,464
Net cash provided from
financing activities 183 3,464
Effect of exchange rate changes on
cash and cash equivalents (649) 341
Net increase / (decrease) in cash and
cash equivalents 11,569 (12,087)
Cash and cash equivalents, beginning
of year 35,660 47,747
Cash and cash equivalents, end of
year $47,229 $35,660
Supplemental disclosure of cash flow
information:
Cash received / (paid) for income
taxes $(1,088) $(451)
Non-cash investing and financing
activities
Value of bonus shares issued to
employees $3,180 $1,731
Value of shares issued in connection
with acquisition of CAM Systems $13,050 $--
OPENTV CORP.
SEGMENT INFORMATION
(In millions)
Three Months Ended Year Ended
December 31, December 31,
2005 2004 2005 2004
(Unaudited)
Revenues:
Middleware and Integrated
Technologies $17.6 $20.4 $68.3 $63.1
Applications 4.7 2.9 14.1 12.1
BettingCorp 0.9 0.8 4.0 2.0
Total Revenue 23.2 24.1 86.4 77.2
Contribution Margin:
Middleware and Integrated
Technologies 7.4 8.6 28.8 26.3
Applications (0.5) (2.4) (4.4) (6.8)
BettingCorp (1.3) (1.2) (4.8) (4.5)
Total Contribution Margin 5.6 5.0 19.6 15.0
Unallocated corporate overhead (4.8) (7.1) (20.4) (29.1)
Adjusted EBITDA before unusual items 0.8 (2.1) (0.8) (14.1)
NASCAR amendment -- -- -- 4.6
Restructuring costs -- (2.0) (2.6) (0.9)
Adjusted EBITDA 0.8 (4.1) (3.4) (10.4)
Depreciation and amortization (0.8) (1.1) (3.8) (5.9)
Amortization of intangible assets (1.8) (1.3) (5.8) (8.2)
Interest income 0.5 0.2 1.7 0.8
Other income / (expense) 3.5 -- 3.8 0.5
Minority interest -- 0.2 0.1 0.5
Loss before income taxes 2.2 (6.1) (7.4) (22.7)
Income tax benefit / (expense) 0.7 (0.2) (1.1) 0.8
Net gain / (loss) $2.9 $(6.3) $(8.5) $(21.9)
