OpenTV Corp. (NASDAQ:OPTV), a leading software and technology
provider of advanced digital television solutions, today announced
financial results for its fourth quarter and full year ended
December 31, 2009.
Key Operating Measures
USD Millions
ThreemonthsendedDecember31,
2009
ThreemonthsendedDecember31,
2008
Change
Twelve
monthsendedDecember 31,2009
Twelve
monthsendedDecember 31,2008
Change Revenues $31.2m $28.9m 8.0% $120m
$116.5m 3.0%
Net Income $0.7m $2.3m $(1.6)m $6.2m $9.6m
$(3.4)m
Adjusted EBITDA, before unusual items $4.4m $3.9m
$0.5m $16.9m $17.6m $(0.7)m
Cash, Cash Equivalents and
Marketable Debt Securities $118.5m $102.8m 15.3% $118.5m
$102.8m 15.3%
Full-Year 2009 Results
For the year ended December 31, 2009, revenues were $120.0
million, an increase of 3.0% compared to $116.5 million in 2008.
Royalties and licenses revenues increased 8.9% to $84.0 million.
Services and other revenues decreased 8.6% to $36.0 million.
Adjusted EBITDA, before unusual items, decreased to $16.9 million
in 2009, compared to $17.6 million in 2008.
Net income for the year ended December 31, 2009 was $6.2
million, or $0.05 per share, compared to $9.6 million, or $0.07 per
share, in 2008.
Cash flows from operations were $20.3 million in 2009, compared
to $14.2 million in 2008.
As of December 31, 2009, the company recorded a balance of
$39.8 million in deferred revenue, compared to
$33.2 million as of December 31, 2008.
As of December 31, 2009, the company had cash, cash equivalents
and short and long-term marketable debt securities totaling $118.5
million, compared to $102.8 million as of December 31, 2008.
Fourth Quarter 2009 Results
For the quarter ended December 31, 2009, revenues were $31.2
million, compared to revenues of $28.9 million in the fourth
quarter of 2008. Royalties and licenses revenues were $22.2
million, compared to $20.2 million in the fourth quarter of 2008.
Services and other revenues were $9.0 million in the fourth
quarter of 2009, compared to $8.7 million in the prior year period.
Adjusted EBITDA, before unusual items, was $4.4 million, compared
to $3.9 million in fourth quarter of 2008.
Net income in the fourth quarter of 2009 was $0.7 million, or
$0.01 per diluted share, compared to net income of $2.3 million, or
$0.02 per diluted share, in the fourth quarter of 2008.
Segment Information
Revenues
- For the full year 2009, revenues
from the Middleware Solutions segment increased by 5.7% to $109.1
million from $103.2 million in 2008. In the fourth quarter of 2009,
revenues from the Middleware Solutions segment were $28.5 million,
compared to $25.7 million for the same period in the prior
year.
- For the full year 2009, revenues
from the Advertising Solutions segment decreased 18.0% to $10.9
million from $13.3 million in 2008. In the fourth quarter of 2009,
revenues from the Advertising Solutions segment were $2.7 million,
compared to $3.3 million for the same period in the prior
year.
Contribution Margin
- For the full year 2009,
Middleware Solutions contribution margin was $41.8 million,
compared to $40.8 million for 2008. In the fourth quarter of 2009,
Middleware Solutions contribution margin was $10.8 million,
compared to $9.8 million for the same period in the prior
year.
- For the full year 2009,
Advertising Solutions contribution margin was breakeven, compared
to $1.0 million for 2008. In the fourth quarter of 2009,
Advertising Solutions contribution margin was $(0.1) million,
compared to $0.2 million for the same period in the prior
year.
For 2009, total contribution margin from our operating segments
was $41.8 million, which is consistent with the total contribution
margin for 2008. Unallocated corporate overhead in 2009 was $25.0
million, compared to $24.1 million in 2008. For the fourth quarter
of 2009, total contribution margin from the company’s operating
segments was $10.7 million, compared to $10.0 million for the same
period in the prior year. Unallocated corporate overhead was $6.3
million in the fourth quarter of 2009, compared to $6.1 million for
the same period in 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 income, 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.
Update on Redemption
On February 24, 2010, OpenTV announced that it is redeeming all
of its outstanding Class A ordinary shares, other than any such
shares held by its controlling shareholder, Kudelski SA, and two of
its subsidiaries, for $1.55 per share, without interest and less
applicable withholding taxes. OpenTV intends to complete the
redemption at 5:00 p.m., New York City time, on March 26, 2010. The
company also announced that it intends to effect a voluntary
delisting of its Class A ordinary shares from The NASDAQ Global
Market effective upon completion of the redemption.
OpenTV does not intend to conduct a conference call to discuss
the company’s financial results for the quarter and year ended
December 31, 2009.
Summary of Recent Announcements
The following is a summary of key press releases since the
company’s last earnings release:
- OpenTV announced the launch of a
unique, multi-platform interactive application for the FOXTEL and
AUSTAR networks, two of the company’s longstanding customers in
Australia, that enables enhanced coverage of the Vancouver Olympic
Winter Games. The interactive application allowed the network to
offer their customers a rich and wide array of interactive data and
information to enhance and complement the most extensive coverage
of an Olympic Winter Games ever offered in Australia.
- OpenTV announced its
collaboration with Coverity, a leader in software integrity
solutions, to further complement OpenTV’s middleware testing
environment by offering Coverity Static Analysis software models to
its integration and development customers and partners. These
models will help OpenTV customers and partners enhance the quality
and performance of the integration work they are able to perform
with OpenTV’s middleware in their own development labs, thereby
saving a significant amount of time in the integration phase of an
OpenTV customer launch.
- OpenTV announced that
longstanding customer FOXTEL in Australia launched its next
generation platform in collaboration with OpenTV. Powered by OpenTV
middleware and using OpenTV’s latest interactive TV technology, the
operator’s new platform features an array of new channels and
innovative applications that were developed by FOXTEL and OpenTV
and are now available to FOXTEL’s subscribers.
- OpenTV announced that Bresnan
Communications had deployed OpenTV’s EclipsePlus™ advertising
product to manage its advertising sales operations. Bresnan
Communications is the United States’ thirteenth largest MSO,
serving more than 300,000 customers. OpenTV EclipsePlus will manage
Bresnan’s advertising sales operations across the operator’s
footprint, which serves subscribers in Colorado, Montana, Wyoming
and Utah.
- OpenTV announced the launch of a
beta testing program for its new Software Development Kit, the
OpenTV SDK Development Suite C2.2. This program will provide
developers with access to OpenTV’s new SDK starting in March 2010,
which will allow them to create applications for interactive
television using all the latest functionality of an OpenTV-enabled
set-top box.
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 non-controlling 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, noncontrolling 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 from operations, net income, 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 as presented in the
accompanying financial statements, because OpenTV believes
consolidated net income 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 our ability to complete the
redemption of our Class A ordinary shares and effect the voluntary
delisting of our Class A ordinary shares from The NASDAQ Global
Market due to potential regulatory, litigation or other issues;
delays in the development or introduction of new versions of our
products; technical difficulties with networks or operating
systems; deterioration of worldwide economic conditions and the
potential impact of such conditions on our customer’s purchasing
and investment decisions; our ability to manage our resources
effectively; and the protection of our intellectual property
rights. 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 advanced
digital television solutions dedicated to creating and delivering
compelling viewing experiences to consumers of digital content
worldwide. The company’s software has been integrated in more than
145 million devices around the world, and enables enhanced program
guides, video-on-demand, personal video recording, interactive and
addressable advertising, and a variety of enhanced television
applications. For more information, please visit
www.opentv.com.
OPENTV CORP. UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands, except share amounts)
December 31, December 31, 2009
2008 * ASSETS Current assets: Cash and cash
equivalents $ 72,041 $ 93,887 Short-term marketable debt securities
36,561 7,768
Accounts receivable, net of
allowance for doubtful accounts of $1,075 and $1,076 at December
31, 2009 and 2008, respectively
28,639 27,275 Prepaid expenses and other current assets
6,391 4,628 Total current assets 143,632
133,558 Long-term marketable debt securities 9,902 1,178 Property
and equipment, net 8,297 7,974 Goodwill 95,730 95,250 Intangible
assets, net 7,184 8,519 Other assets 2,813
2,471 Total assets $ 267,558 $ 248,950
LIABILITIES AND EQUITY Current liabilities: Accounts payable
$ 3,144 $ 2,287
Accrued liabilities
17,671
17,602
Accrued restructuring 221 238 Deferred revenue 26,462
16,130 Total current liabilities 47,498 36,257
Accrued liabilities, net of current portion 2,568 1,160 Accrued
restructuring, net of current portion 1,060 1,146 Deferred revenue,
net of current portion 13,299 17,092
Total liabilities 64,425 55,655 Commitments and contingencies
OpenTV 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; 107,986,419 and 108,385,176
shares issued and outstanding, including treasury shares, at
December 31, 2009 and 2008, respectively
2,235,353 2,234,687
Class B ordinary shares, no par
value, 200,000,000 shares authorized; 30,206,154 shares issued and
outstanding at December 31, 2009 and December 31, 2008
35,953 35,953 Additional paid-in capital 517,256 515,506 Treasury
shares at cost, zero and 523,647 shares at December 31, 2009 and
December 31, 2008, respectively - (623 ) Accumulated other
comprehensive loss (1,600 ) (2,163 ) Accumulated deficit
(2,584,254 ) (2,590,496 ) Total OpenTV shareholders' equity
202,708 192,864 Noncontrolling interest 425
431 Total equity 203,133 193,295
Total liabilities and equity $ 267,558 $ 248,950
* The condensed consolidated
balance sheet at December 31, 2008 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 December 31, Year Ended December 31,
2009 2008 2009 2008 Revenues:
Royalties and licenses $ 22,167 $ 20,222 $ 84,032 $ 77,133 Services
and other 9,050 8,703 35,980
39,341 Total revenues 31,217 28,925 120,012
116,474 Cost of revenues: Royalties and licenses 1,086 1,033 3,887
4,994 Services and other 10,933 9,874
42,047 39,059 Total cost of revenues
12,019 10,907 45,934
44,053 Gross profit 19,198 18,018 74,078 72,421
Operating expenses: Research and development 10,070 8,631 35,971
34,400 Sales and marketing 1,948 1,867 8,073 9,371 General and
administrative 6,096 5,269 21,655 20,299 Restructuring and
impairment 5 - 154 575 Amortization of intangible assets 50 184 250
734 Impairment of intangible assets - 767
- 767 Total operating expenses
18,169 16,718 66,103
66,146 Profit from operations 1,029 1,300 7,975 6,275
Interest income 181 364 467 2,230 Other income (expense) 55
804 (734 ) 1,581 Profit
before income taxes 1,265 2,468 7,708 10,086 Income tax expense
523 148 1,466 473
Net income 742 2,320 6,242 9,613 Less: Net income
attributable to the noncontrolling interest (1 ) (2 )
(6 ) (20 ) Net income attributable to OpenTV $ 741
$ 2,318 $ 6,236 $ 9,593 Net
income attributable to OpenTV per share, basic $ 0.01 $ 0.02
$ 0.05 $ 0.07 Net income attributable to
OpenTV per share, diluted $ 0.01 $ 0.02 $ 0.04
$ 0.07 Shares used in per share calculation, basic
138,136,184 139,097,785
138,108,085 139,496,297 Shares used in per
share calculation, diluted 138,388,194
139,796,495 138,729,963 140,211,084
OPENTV CORP. UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Year Ended December 31,
2009 2008 Cash flows from operating
activities: Net income $ 6,242 $ 9,613 Less: Net income
attributable to the noncontrolling interest (6 ) (20
) Net income attributable to OpenTV 6,236 9,593 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment 4,419 4,193
Amortization of intangible assets 1,335 3,303 Share-based
compensation 2,983 2,516 Non-cash employee compensation 2 12
Non-cash restructuring costs 19 - Provision for doubtful accounts
770 511 Impairment costs - 767 Gain on sale of cost investment (120
) (220 ) Loss on disposal of fixed assets 36 5 Loss on investment
in marketable debt securities - 58 Changes in operating assets and
liabilities: Accounts receivable (2,919 ) (11,052 ) Prepaid
expenses and other current assets (1,764 ) (1,087 ) Other assets
(343 ) (547 ) Accounts payable 1,085 (505 ) Accrued liabilities
1,355 (1,682 ) Accrued restructuring (103 ) (796 ) Deferred revenue
7,323 9,088 Net cash provided by
operating activities 20,314 14,157
Cash flows from investing
activities: Purchase of property and equipment (4,705 ) (5,198
) Cash used in acquisition, net of cash acquired - (228 ) Proceeds
from sale of cost investment 120 1,959 Proceeds from disposal of
property and equipment 2 - Proceeds from sale of marketable debt
securities 13,396 20,334 Purchase of marketable debt securities
(51,072 ) (6,380 ) Net cash provided by (used in)
investing activities of continuing operations (42,259 ) 10,487 Net
cash provided by investing activities of discontinued operations
- 225 Net cash provided by (used in)
investing activities (42,259 ) 10,712
Cash flows from financing
activities: Repurchase of restricted shares (495 ) (532 )
Repurchase of treasury shares (228 ) (1,307 ) Capital contribution
from the former controlling shareholder - 14,333 Proceeds from
issuance of ordinary shares 217 17 Net
cash provided by (used in) financing activities (506 ) 12,511
Effect of exchange rate changes on cash and cash equivalents
605 (2,092 ) Net increase (decrease) in cash and cash
equivalents (21,846 ) 35,288 Cash and cash equivalents, beginning
of period 93,887 58,599 Cash and cash
equivalents, end of period $ 72,041 $ 93,887
Supplemental disclosure of cash flow information: Cash paid
for income taxes $ (940 ) $ (1,528 )
Non-cash investing
and financing activities: Conversion of exchangeable shares $
300 $ 2 Retirement of treasury shares $ 623 $
912
OPENTV CORP. UNAUDITED SEGMENT
INFORMATION AND RECONCILIATION OF CONTRIBUTION MARGIN AND
ADJUSTED EBITDA TO NET INCOME (In thousands)
Three Months Ended
December 31, Year Ended December 31, 2009
2008 2009 2008 Revenues: Middleware solutions
Royalties and licenses $ 21,495 $ 18,822 $ 81,451 $ 71,166 Services
and other 6,974 6,842 27,695
32,030 Subtotal - Middleware solutions 28,469
25,664 109,146 103,196 Advertising solutions Royalties and licenses
672 1,400 2,581 5,967 Services and other 2,076
1,861 8,285 7,311 Subtotal -
Advertising solutions 2,748 3,261
10,866 13,278 Total revenues $ 31,217
$ 28,925 $ 120,012 $ 116,474
Contribution margin (loss): Middleware solutions $ 10,818 $
9,847 $ 41,803 $ 40,779 Advertising solutions (134 )
158 21 960 Total contribution
margin 10,684 10,005 41,824 41,739 Unallocated corporate support
(6,333 ) (6,095 ) (24,957 ) (24,098 )
Adjusted EBITDA before unusual items 4,351 3,910 16,867 17,641
Restructuring and impairment (5 ) -
(154 ) (575 ) Adjusted EBITDA 4,346 3,910 16,713 17,066
Depreciation and amortization (1,100 ) (1,073 ) (4,420 ) (4,193 )
Amortization of intangible assets (322 ) (455 ) (1,335 ) (3,303 )
Share-based and non-cash compensation (1,895 ) (315 ) (2,983 )
(2,528 ) Interest income 181 364 467 2,230 Other income (expense)
55 804 (734 ) 1,581 Impairment of intangible assets -
(767 ) - (767 ) Profit before income
taxes 1,265 2,468 7,708 10,086 Income tax expense 523
148 1,466 473 Net income
742 2,320 6,242 9,613 Less: Net income attributable to the
noncontrolling interest (1 ) (2 ) (6 )
(20 ) Net income attributable to OpenTV $ 741 $ 2,318
$ 6,236 $ 9,593
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