Opentv (OPTV) 8-K Opentv Reports 2004 Third Quarter Financial Results

Exhibit 99.1

For Immediate Release

OPENTV REPORTS 2004 THIRD QUARTER FINANCIAL RESULTS

OpenTV sees continued improvement on liquidity measures, with
“Adjusted EBITDA (Loss) Before Unusual Items” narrowed to a $3.6 million loss

San Francisco, Calif., November 4, 2004– OpenTV (NASDAQ: OPTV), one of the world’s leading interactive television companies, today announced its financial results for the quarter ended September 30, 2004.

For the quarter ended September 30, 2004, OpenTV’s revenue decreased by 3% to $16.6 million compared to $17.1 million for the quarter ended September 30, 2003. OpenTV’s loss from operations for the quarter ended September 30, 2004 decreased by 49% to $6.1 million, compared to a loss from operations of $12.0 million in the third quarter of 2003. OpenTV’s net loss for the quarter ended September 30, 2004 decreased by 60% to $4.8 million, or $0.04 per share, compared to a net loss of $11.9 million, or $0.10 per share, for the quarter ended September 30, 2003.

Revenue for the third quarter was adversely affected by the delivery of a royalty report from a significant customer after quarter end. As a result of this timing difference, OpenTV expects to recognize, in the fourth quarter, approximately $1.6 million in revenue reflected in that late report.

Adjusted EBITDA (loss), before unusual items, provides another measure of liquidity to GAAP financial measures. Adjusted EBITDA (loss), before unusual items, was a loss of $3.6 million for the quarter ended September 30, 2004, compared to a loss of $5.5 million for the quarter ended September 30, 2003, an improvement of 35%.

Adjusted EBITDA, before unusual items, is a non-GAAP financial measure. As required by applicable regulations, OpenTV has provided a quantitative reconciliation of the differences between the non-GAAP financial measure used with the most directly comparable GAAP financial measure. This reconciliation is provided below. In addition, OpenTV has provided additional information regarding the non-GAAP financial measure below, including a statement of the reason why OpenTV’s management believes that presentation of the non-GAAP measure provides useful information to investors.

The following table provides reconciliations of Adjusted EBITDA before unusual items to net loss for 2004 and 2003:

									Nine months			Nine months
($ in millions)	Q3 2004			Q3 2003			Variance		2004			2003			Variance
Adjusted EBITDA before unusual items		($3.6	)		($5.5	)	$	1.9		($12.0	)		($17.4	)	$	5.4
Nascar amendment		—			—					4.6			—
BSkyB contract amendment		—			—					—			1.2
Restructuring costs		0.6			($0.2	)				1.1			(7.1	)
Adjusted EBITDA		(3.0	)		(5.7	)				(6.3	)		(23.3	)
Depreciation and amortization		(1.5	)		(2.1	)				(4.8	)		(5.6	)
Amortization of intangible assets		(1.6	)		(4.0	)				(6.9	)		(11.5	)
Amortization of share-based compensation		0.0			(0.1	)				0.0			(0.3	)
Loss from operations		(6.1	)		(11.9	)				(18.0	)		(40.7	)
Interest and other income		0.8			0.3					1.1			0.2
Minority interest		0.0			0.0					0.1			0.2
Income tax benefit (expense)		0.5			(0.3	)				1.1			(0.9	)
Net Loss		($4.8	)		($11.9	)	$	7.1		($15.7	)		($41.2	)	$	25.5

As of September 30, 2004, OpenTV had cash, cash equivalents and marketable debt securities totaling $51.9 million compared to $57.0 million as of June 30, 2004. The principal use of cash during the quarter was to fund operations.

“We continue to see strong growth in our middleware business, driven largely by accelerated digital rollouts that we have seen from network operators around the world,” said OpenTV Chairman and Chief Executive Officer, James Chiddix. “Our ongoing focus on containing costs, allocating resources appropriately and leveraging our premier position in middleware, helped us to reduce to our operating expenses in the quarter, as well as our operating loss. While we continue to assess and evaluate opportunities in the applications market, the global footprint that we have built on our middleware, including our deal this last quarter with UnitedGlobalCom, Europe’s largest cable operator, continues to enhance the underlying platform upon which we expect to build our business as interactivity takes off.”

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, other income, 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. OpenTV believes Adjusted EBITDA before unusual items to be relevant and useful information for an investor because it is one of the measures used by OpenTV’s management to measure the financial performance of its business. OpenTV believes that certain non-GAAP measures, when presented in conjunction with comparable GAAP measures, may be useful in that they provide the reader with some of the same information used by OpenTV’s management in assessing its business. Adjusted EBITDA before unusual items is a non-GAAP performance measure, and does not take into account substantial costs of doing business, such as income taxes and interest. While OpenTV’s management may consider Adjusted EBITDA before unusual items to be an important measure of comparative operating performance, it 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 presented in the financial statements included in this press release. Additionally, OpenTV’s calculation of Adjusted EBITDA before unusual items may be different from the calculation used by other companies and, therefore, comparability may be affected.

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” or “Adjusted EBITDA,” 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.

Conference call details

OpenTV will conduct a conference call to discuss the Company’s third quarter 2004 financial results. The details of the call are as follows:

Date and time: Thursday, November 4, 2004 at 2:00 PM PST

Dial-in number:	913-981-5591 (Pass Code: 963096)
Playback number:	719-457-0820 (Pass Code: 963096)

The conference call playback will be available through Thursday, November 18, 2004 until 11:59 PM PST. The call playback will be available on the Investor Relations section of the OpenTV website at http://www.opentv.com

About OpenTV

OpenTV Corp. (NASDAQ-NMS: OPTV) is one of the world’s leading interactive television companies developing platform middleware and software applications for cable and satellite networks. Deployed in over 43 million digital set-top-boxes in 96 countries, the company’s software enables a wide array of functionality, including enhanced television, interactive shopping, interactive and addressable advertising, games and gaming, personal video recording, and a variety of consumer care and communication applications. OpenTV is headquartered in San Francisco, California with regional offices in the United States, Europe and Asia/Pacific. For more information, please visit www.opentv.com.

OpenTV and the OpenTV logo are trademarks or registered trademarks of OpenTV, Inc. in the United States and other countries. All other trademarks are the property of their respective owners.

# # #

Contacts:
Richard Hornstein
Chief Financial Officer
Tel: 415-962-5484
Investorrelations@opentv.com

OPENTV CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

	September 30,			December 31,
	2004			2003*
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	41,300		$	47,747
Short-term marketable debt securities		3,601			10,577
Accounts receivable, net of allowance for doubtful accounts of $608 at September 30, 2004 and $789 at December 31, 2003		15,567			12,536
Prepaid expenses and other current assets		3,312			4,722
Total current assets		63,780			75,582
Long-term marketable debt securities		7,012			15,172
Property and equipment, net		8,418			11,689
Goodwill		70,466			70,398
Intangible assets, net		26,395			33,336
Other assets		13,361			13,378
Total assets	$	189,432		$	219,555
LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,114		$	5,854
Accrued liabilities		20,274			32,174
Accrued restructuring		1,056			7,789
Due to Liberty Media entities		1,230			630
Current portion of deferred revenue		9,855			9,740
Total current liabilities		38,529			56,187
Deferred revenue, less current portion		3,736			5,310
Total liabilities		42,265			61,497
Commitments and contingencies
Minority interest		881			1,075
Shareholders’ equity:
Class A ordinary shares, no par value, 500,000,000 shares authorized; 91,289,868 and 88,969,550 shares issued and outstanding, including treasury shares, at September 30, 2004 and December 31, 2003, respectively		2,213,450			2,208,370
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		466,251			466,228
Treasury shares at cost, 76,327 shares		(38	)		(38	)
Deferred share-based compensation		(13	)		(36	)
Accumulated other comprehensive income		40			201
Accumulated deficit		(2,569,357	)		(2,553,695	)
Total shareholders’ equity		146,286			156,983
Total liabilities, minority interest and shareholders’ equity	$	189,432		$	219,555

* The consolidated balance sheet at December 31, 2003 has been derived from the Company’s audited consolidated financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

OPENTV CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
Revenues:
Royalties	$	9,264		$	6,758		$	28,882		$	18,677
Services, support and other		3,026			6,693			11,952			17,315
Fees and revenue shares		3,313			2,991			9,944			9,233
License fees		974			631			2,294			2,932
Total revenues		16,577			17,073			53,072			48,157
Operating expenses:
Cost of revenues		8,076			13,511			27,372			36,616
Nascar Amendment		—			—			(4,600	)		—
Research and development		7,243			5,738			21,244			15,221
Sales and marketing		3,516			4,280			11,221			13,436
General and administrative		3,696			4,180			13,883			12,779
Restructuring cost		(575	)		147			(1,092	)		7,074
Amortization of intangible assets		711			1,174			3,108			3,656
Total operating expenses		22,667			29,030			71,136			88,782
Loss from operations		(6,090	)		(11,957	)		(18,064	)		(40,625	)
Interest income		201			439			611			1,331
Other income (expense), net		562			(136	)		536			(1,120	)
Minority interest		64			13			194			113
Loss before income taxes		(5,263	)		(11,641	)		(16,723	)		(40,301	)
Income tax benefit (expense)		500			(277	)		1,061			(918	)
Net loss	$	(4,763	)	$	(11,918	)	$	(15,662	)	$	(41,219	)
Net loss per share, basic and diluted	$	(0.04	)	$	(0.10	)	$	(0.13	)	$	(0.47	)
Shares used in per share calculation, basic and diluted		121,830,392			116,157,971			121,084,985			86,930,601

OPENTV CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Nine Months Ended September 30,
	2004			2003
Cash flows used in operating activities:
Net loss	$	(15,662	)	$	(41,219	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of property and equipment		4,751			5,511
Amortization of intangible assets		6,941			11,499
Amortization of share-based compensation		22			233
Non-cash employee compensation		1,025			570
Provision for doubtful accounts		(353	)		385
Non-cash restructuring costs		—			532
Minority interest		(194	)		(113	)
Changes in operating assets and liabilities:
Accounts receivable		(2,931	)		(2,816	)
Prepaid expenses and other current assets		785			881
Other assets		17			2,537
Accounts payable		268			(1,587	)
Accrued liabilities		(5,365	)		(3,136	)
Nascar amendment		(4,600	)		—
Accrued restructuring		(6,733	)		(9,222	)
Due to Liberty Media entities		600			(428	)
Deferred revenue		(1,459	)		2,756
Net cash used in operating activities		(22,888	)		(33,617	)
Cash flows provided from investing activities:
Purchase of property and equipment		(1,485	)		(2,167	)
Cash used for acquistions, net of cash acquired		—			(10,297	)
Proceeds from sale of marketable debt securities		18,415			98,728
Purchase of marketable debt securities		(3,377	)		(47,336	)
Net cash provided from investing activities		13,553			38,928
Cash flows provided from financing activities:
Proceeds from issuance of ordinary shares		2,953			56
Capital contribution from MIH Limited		—			704
Net cash provided from financing activities		2,953			760
Effect of exchange rate changes on cash and cash equivalents		(65	)		56
Net decrease in cash and cash equivalents		(6,447	)		6,127
Cash and cash equivalents, beginning of period		47,747			38,568
Cash and cash equivalents, end of period	$	41,300		$	44,695