Company Reports Solid Fourth Quarter Results
Declares First Quarter Cash Dividend of $0.18 per Share
Announces Plan To Explore All Alternatives To Maximize Shareholder
Value
Company Website:
http://www.tivo.com
SAN JOSE, Calif. -- (Business Wire)
TiVo Corporation (NASDAQ:TIVO) today reported financial results for the
fourth quarter and for the full year ended December 31, 2017.
“I am pleased to report that we delivered strong performance in Q4
across a number of financial and business fronts. We have strong
operating cash flows and once again declared a quarterly cash dividend.
We also made substantial progress towards our financial integration
goals and are now targeting achieving $110 million in post-TiVo
Solutions acquisition annual run-rate synergies as we continue to
integrate the legacy TiVo organization and operations. In the quarter,
we delivered TiVo Experience 4 by integrating numerous company offerings
into one product that displays the advantages of our content discovery
experience and software and services. Further, we continued to
strengthen our IP licensing business by renewing Altice’s US Pay TV
license and expanding our licensing relationship with Google to include
YouTube TV,” said Enrique Rodriguez, President and CEO of TiVo.
Rodriguez added, “I expect 2018 to be a transformational year for TiVo,
a year where we will hone our focus on execution that drives growth. We
need to determine the optimal path to maximize our value proposition, so
we can best deliver shareholder value. I am very confident in our
ability to succeed because we have an outstanding team to execute our
next phase of growth.”
FISCAL 2017 FOURTH QUARTER FINANCIAL HIGHLIGHTS
|
| |
| |
Quarterly Financial Information | |
(In thousands)
| | |
| | Three Months Ended December 31, | |
|
| | 2017 |
| 2016 | | % Change |
GAAP Financial Information | | | | | | |
Total Revenues, net
| |
$
|
214,236
| | |
$
|
252,343
| | |
(15.1
|
)%
|
Legacy TiVo Solutions IP Licenses
| |
(25,847
|
)
| |
(23,380
|
)
| |
10.6
|
%
|
Hardware
| |
(7,694
|
)
| |
(13,867
|
)
| |
(44.5
|
)%
|
Other Products
| |
(689
|
)
| |
(2,012
|
)
| |
(65.8
|
)%
|
Total Revenue excluding revenue from Legacy TiVo Solutions IP
Licenses, Hardware and Other Products
| |
$
|
180,006
|
| |
$
|
213,084
|
| |
(15.5
|
)%
|
| | | | | |
|
Total Revenues, net includes $19.6 million of catch up revenue in Q4
2017 compared to $40.3 million of catch-up revenue in Q4 2016 which
was primarily attributable to the Samsung license executed in Q4
2016.
|
| | | | | |
|
Operating income
| |
$
|
2,944
| | |
$
|
19,901
| | | |
(Loss) income from continuing operations before income taxes
| |
$
|
(5,656
|
)
| |
$
|
23,010
| | | |
Income from continuing operations, net of tax
| |
$
|
18,439
| | |
$
|
9,870
| | | |
| | | | | |
|
Income from continuing operations, net of tax, in Q4 2017 includes a
non-cash benefit of $26.6 million from the Tax Act of 2017.
|
| | | | | |
|
GAAP Diluted weighted average shares outstanding
| |
122,362
| | |
119,298
| | | |
| | | | | |
|
Non-GAAP Financial Information | | | | | | |
Adjusted EBITDA
| |
$
|
74,567
| | |
$
|
104,887
| | | |
Non-GAAP Pre-tax Income
| |
$
|
60,309
| | |
$
|
90,793
| | | |
| | | | | |
|
Non-GAAP Diluted Weighted Average Shares Outstanding
| |
122,362
| | |
119,298
| | | |
| | | | | |
|
Cash Taxes
| |
$
|
1,318
| | |
$
|
8,740
| | | |
| | | | | | | | | |
|
Adjusted EBITDA, Non-GAAP Pre-tax Income, Non-GAAP Diluted Weighted
Average Shares Outstanding and Cash Taxes are defined below in the
section entitled “Non-GAAP Financial Information.” Reconciliations
between GAAP and Non-GAAP amounts are provided in the tables below. In
accordance with the SEC’s interpretations on the use of non-GAAP
financial measures, TiVo does not report net income or EPS on a non-GAAP
basis. However, TiVo does provide the financial metrics, including
Non-GAAP Pre-tax Income, Non-GAAP Diluted Weighted Average Shares
Outstanding and Cash Taxes, that TiVo had used to calculate these
financial measures on a non-GAAP basis.
TIVO BUSINESS AND OPERATING HIGHLIGHTS
Product:
-
Approximately 22 million subscriber households around the world use
TiVo's advanced television experiences.
-
TiVo integrated the two legacy companies’ offerings into one product
that displays the advantages of our content discovery experience and
software and services, and our new TiVo Experience 4 was released in
Q4 to the retail market. TiVo Experience 4 is the first integrated UX
for TiVo, and it seamlessly combines OTT and linear TV into a rich
video discovery experience.
-
TiVo has already secured a key win for its Next-Gen Platform with
Service Electric Cablevision Inc.
-
Altice USA agreed to deploy advanced search and discovery features
powered by TiVo’s new Personalized Content Discovery platform to
enable personalized recommendations on its newest, cloud-based
connectivity platform, Altice One.
-
Com Hem, one of Sweden's leading suppliers of television, high-speed
broadband and fixed-telephony, has also selected TiVo’s Personalized
Content Discovery platform to power their Pay TV and app-based OTT
services.
-
Samsung expanded its use of TiVo’s Metadata to include our Sports
package, powering sports discovery in the European market on their
Smart TVs.
IP Licensing:
-
Altice USA extended its Rovi IP agreement and broadened that license
to include the legacy TiVo patents; both portfolios will be used as
part of its next-generation cloud-based platform.
-
Google expanded its multi-year patent license agreement to expressly
cover Google’s YouTube TV, further validating our ability to license
the developing virtual Service Provider market on similar rates as
Service Providers.
-
Renewed international licenses for Asia with Sharp Corporation and
Alticast Corporation.
EXPLORING ALL ALTERNATIVES TO MAXIMIZE VALUE FOR SHAREHOLDERS
TiVo’s stock price is at a level that the Company and its Board do not
believe reflects the true value of the business given the Company has a
strong foundation, with leading technologies, and solid cash flow from
its long-term IP license agreements and guide deployments. As such, TiVo
has begun a process of evaluating a wide range of strategic alternatives
to realize long-term shareholder value. These options range from
transformative acquisitions that would accelerate our growth, to
combining our business with other leading players, to becoming a private
company. The Company engaged LionTree Advisors to assist the Board and
management in their evaluation of alternatives.
UPCOMING REVENUE RECOGNITION CHANGE
Effective January 1, 2018, the Company is required to adopt Accounting
Standards Update No. 2014-09, Revenue from Contracts with Customers,
which supersedes the previous revenue recognition requirements. As a
result of adopting the new standard, we expect we will recognize
approximately $30 million less in revenue in 2018, than we would under
the previous requirements. The impact is primarily related to the legacy
TiVo Time Warp intellectual property licenses, which expire in mid-2018,
for which we now expect to recognize approximately $20 million in 2018,
as opposed to the $45.5 million we had previously expected.
IMPACT OF THE TAX CUTS AND JOBS ACT
The Tax Cuts and Jobs Act enacted on December 22, 2017 ("Tax Act of
2017") provided a non-cash benefit of $26.6 million for the three and
twelve months ended December 31, 2017 primarily related to the
revaluation of deferred tax liabilities on indefinite-lived intangible
assets due to the reduced income tax rate. Going forward, the impact of
the Tax Act of 2017, including the new alternative minimum taxes on
foreign earnings, is not expected to materially impact our Cash Taxes
due to our large remaining federal net operating losses.
CAPITAL ALLOCATION
On February 22, 2018, TiVo’s Board of Directors declared a cash dividend
of $0.18 per common share, to be paid on March 21, 2018 to all
stockholders of record as of the close of business on March 7, 2018.
TiVo’s Board believes it can reward its stockholders with a meaningful
dividend, while maintaining ample capacity for the Company to invest in
the business, pursue long-term growth aspirations, and consider
additional capital allocation alternatives. Based on our recent stock
price, this equates to an annualized dividend yield in excess of 5%.
BUSINESS OUTLOOK
TiVo will not be providing financial estimates for fiscal 2018 at this
time. As mentioned above, the company is conducting an in-depth review
of its businesses, cost structure and options to maximize shareholder
value. Once this process is complete, we anticipate providing our 2018
expectations.
CONFERENCE CALL INFORMATION
TiVo management will host a conference call today, February 27, 2018, at
2:00 p.m. PT/5:00 p.m. ET to discuss the financial and operational
results. Investors and analysts interested in participating in the
conference are welcome to call (866) 621-1214 (or international
+1-706-643-4013) and reference conference ID 4068257. The conference
call may also be accessed via live webcast in the Investor Relations
section of TiVo’s website at http://www.tivo.com/.
A replay of the audio webcast will be available on TiVo’s website
shortly after the live call ends, and we currently plan for it to remain
on TiVo’s website until the next quarterly earnings call. Additionally,
a telephonic replay of the call may be accessible shortly after the live
call ends through March 6, 2018 by dialing (855) 859-2056 (or
international +1-404-537-3406) and entering conference ID 4068257.
NON-GAAP FINANCIAL INFORMATION
TiVo Corporation provides Non-GAAP information to assist investors in
assessing its operations in the way that its management evaluates those
operations. Non-GAAP Pre-Tax Income, Non-GAAP Cost of Licensing,
Services and Software Revenues, Non-GAAP Cost of Hardware Revenues,
Non-GAAP Research and Development Expenses, Non-GAAP Selling, General
and Administrative Expenses, Non-GAAP Depreciation, Non-GAAP Total OpEx,
Non-GAAP Total COGS and OpEx, Adjusted EBITDA and Non-GAAP Interest
Expense are supplemental measures of the Company's performance that are
not required by, and are not determined in accordance with, GAAP.
Non-GAAP financial information is not a substitute for any financial
measure determined in accordance with GAAP.
Non-GAAP Pre-tax Income is defined as GAAP income (loss) from continuing
operations before income taxes, as adjusted for the effects of items
such as amortization of intangible assets, equity-based compensation,
accretion of contingent consideration, amortization or write-off of note
issuance costs and discounts on convertible debt and mark-to-market
adjustments for interest rate swaps; as well as items which impact
comparability that are required to be recorded under GAAP, but that the
Company believes are not indicative of its core operating results such
as restructuring and asset impairment charges, transaction, transition
and integration costs, retention earn-outs payable to former
shareholders of acquired businesses, earn-out settlements, CEO
transition cash costs, remeasurement of contingent consideration, TiVo
acquisition litigation, expenses in connection with the extinguishment
or modification of debt, gain on settlement of acquired receivable,
additional depreciation resulting from facility rationalization actions,
other-than temporary impairment losses on strategic investments, gains
on the sale of strategic investments, changes in franchise tax reserves
and contested proxy election costs.
Non-GAAP Cost of Licensing, Services and Software Revenues is defined as
GAAP Cost of licensing, services and software revenues, excluding
depreciation and amortization of intangible assets, excluding
equity-based compensation and transaction, transition and integration
expenses. Included in transaction, transition and integration costs in
the fourth quarter of 2016 was $10.0 million in expenses for additional
guaranteed license payments related to the Company’s over-the-top
licensing partnership with Intellectual Ventures. These payments were
expensed in the fourth quarter of 2016 as the payments were triggered by
the execution of a patent license agreement during the quarter and are
not expected to be recoverable from the net direct revenue resulting
from the patent license agreement and the related TiVo product
partnership. This expense was included in transaction, transition and
integration costs as the patent license agreement was entered into as
part of continuing, and broadening, the product relationship with TiVo.
Non-GAAP Cost of Hardware Revenues is defined as GAAP Cost of hardware
revenues, excluding depreciation and amortization of intangible assets,
excluding transition and integration expenses.
Non-GAAP Research and Development Expenses is defined as GAAP research
and development expenses excluding equity-based compensation, transition
and integration expenses and retention earn-outs payable to former
shareholders of acquired businesses.
Non-GAAP Selling, General and Administrative Expenses is defined as GAAP
selling, general and administrative expenses excluding equity-based
compensation, transaction, transition and integration expenses,
retention earn-outs payable to former shareholders of acquired
businesses, earn-out settlements, CEO transition cash costs,
remeasurement of contingent consideration, gain on settlement of
acquired receivable, changes in franchise tax reserves and contested
proxy election costs.
Non-GAAP Depreciation is defined as GAAP depreciation expenses excluding
the impact of additional depreciation resulting from changes in the
estimated useful lives of assets involved in facility rationalization
actions.
Non-GAAP Total OpEx is defined as the sum of GAAP research and
development and selling, general and administrative expenses,
depreciation and gain on sale of patents excluding equity-based
compensation, transaction, transition and integration expenses,
retention earn-outs payable to former shareholders of acquired
businesses, earnout settlements, CEO transition cash costs,
remeasurement of contingent consideration, gain on settlement of
acquired receivable, additional depreciation resulting from facility
rationalization actions, changes in franchise tax reserves and contested
proxy election costs.
Non-GAAP Total COGS and OpEx is defined as GAAP Total Operating costs
and expenses, excluding amortization of intangible assets, restructuring
and asset impairment charges, equity-based compensation, transaction,
transition and integration expenses, retention earn-outs payable to
former shareholders of acquired businesses, earnout settlements, CEO
transition cash costs, remeasurement of contingent consideration, gain
on settlement of acquired receivable, depreciation, changes in franchise
tax reserves and contested proxy election costs.
Adjusted EBITDA is defined as GAAP operating income excluding
depreciation, amortization of intangible assets, restructuring and asset
impairment charges, equity-based compensation, transaction, transition
and integration costs, retention earn-outs payable to former
shareholders of acquired businesses, earn-out settlements, CEO
transition cash costs, remeasurement of contingent consideration, gain
on settlement of acquired receivable, changes in franchise tax reserves
and contested proxy election costs.
Non-GAAP Interest Expense is defined as GAAP interest expense, excluding
accretion of contingent consideration, amortization or write-off of
issuance costs, discounts on convertible debt and interest on franchise
tax reserves, plus the reclassification of the current period benefit
(cost) of the interest rate swaps from gain (loss) on interest rate
swaps.
Cash Taxes are defined as GAAP current income tax expense excluding
changes in reserves for unrecognized tax benefits.
Non-GAAP Diluted Weighted Average Shares Outstanding is defined as GAAP
diluted weighted average shares outstanding except for periods of a GAAP
loss. In periods of a GAAP loss, GAAP diluted weighted average shares
outstanding are adjusted to include dilutive common share equivalents
outstanding that were excluded from GAAP diluted weighted average shares
outstanding because the Company had a loss and therefore these shares
would have been anti-dilutive.
The Company's management evaluates and makes decisions about its
business operations primarily based on Non-GAAP financial information.
Management uses Non-GAAP financial measures as the basis for
decision-making as they exclude items management does not consider to be
“core costs” or “core proceeds”. For each Non-GAAP financial measure,
the adjustment provides management with information about the Company's
underlying operating performance that enables a more meaningful
comparison to its historical and projected financial performance in
different reporting periods. For example, since the Company does not
acquire businesses on a predictable cycle, management excludes the
amortization of intangible assets, transaction, transition and
integration costs, retention earn-outs payable to former shareholders of
acquired businesses, earnout settlements, CEO transition cast costs,
remeasurement of contingent consideration, TiVo Acquisition litigation,
and gain on settlement of acquired receivables from its Non-GAAP
financial measures in order to make more consistent and meaningful
evaluations of the Company's operating expenses as these items may be
significantly impacted by the timing and magnitude of acquisitions.
Management also excludes the effect of restructuring and asset
impairment charges, expenses in connection with the extinguishment or
modification of debt, gain on the settlement of acquired receivable,
additional depreciation resulting from facility rationalization actions,
other-than-temporary impairment losses on strategic investments, gains
on the sale of strategic investments and changes in franchise tax
reserves. Management excludes the impact of equity-based compensation to
provide meaningful supplemental information that allows investors
greater visibility to the underlying performance of our business
operations, facilitates comparison of our results with other periods,
and may facilitate comparison with the results of other companies in our
industry, as well as to provide the Company’s management with an
important tool for financial and operational decision-making and for
evaluating the Company’s performance over different periods of time. Due
to varying valuation techniques, reliance on subjective assumptions and
the variety of award types and features that may be in use, we believe
that providing Non-GAAP financial measures excluding equity-based
compensation allows investors to make more meaningful comparisons
between our operating results and those of other companies. Management
excludes the accretion of contingent consideration, amortization or
write-off of note issuance costs and discounts on convertible debt and
mark-to-market adjustments for interest rate swaps when management
evaluates the Company's expenses. Management reclassifies the current
period benefit (cost) of the interest rate swaps from gain (loss) on
interest rate swaps to interest expense in order for Non-GAAP Interest
Expense to reflect the effects of the interest rate swaps as these
interest rate swaps were entered into to control the effective interest
rate the Company pays on its debt.
Management uses these Non-GAAP financial measures to help it make
decisions, including decisions that affect operating expenses and
operating margin. Management believes that making Non-GAAP financial
information available to investors, in addition to GAAP financial
information, may facilitate more consistent comparisons between the
Company's performance over time with the performance of other companies
in our industry, which may use similar financial measures to supplement
their GAAP financial information.
Management recognizes that these Non-GAAP financial measures have
limitations as analytical tools, including the fact that management must
exercise judgment in determining which types of items to exclude from
the Non-GAAP financial information. In addition, as other companies,
including companies similar to TiVo Corporation, may calculate their
Non-GAAP financial measures differently than the Company calculates its
Non-GAAP financial measures, these Non-GAAP financial measures may have
limited usefulness to investors when comparing financial performance
among companies. Management believes, however, that providing Non-GAAP
financial information, in addition to GAAP financial information,
facilitates consistent comparison of the Company's financial performance
over time. The Company provides Non-GAAP financial information to the
investment community, not as an alternative, but as an important
supplement to GAAP financial information; to enable investors to
evaluate the Company's core operating performance in the same way that
management does. Reconciliations for each Non-GAAP financial measure to
its most directly comparable GAAP financial measure are provided in the
tables below.
About TiVo Corporation
TiVo (NASDAQ: TIVO) is a global leader in entertainment technology and
audience insights. From the interactive program guide to the DVR, TiVo
delivers innovative products and licensable technologies that
revolutionize how people find content across a changing media landscape.
TiVo enables the world’s leading media and entertainment providers to
deliver the ultimate entertainment experience. Explore the next
generation of entertainment at tivo.com, forward.tivo.com or follow us
on Twitter @tivo or @tivoforbusiness.
Forward Looking Statements
This release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements
relate to, among other things, the Company's future growth and success
and future estimated financial results, including the amount of future
revenues recognized due to the adoption of new accounting standards on
revenue recognition, the expected impact of the Tax Act of 2017, future
dividends, as well as future business strategies and future product
offerings, deployments and technology and intellectual property licenses
with various customers. These forward-looking statements are based on
TiVo’s current expectations, estimates and projections about its
business and industry, management’s beliefs and certain assumptions made
by the company, all of which are subject to change. Forward-looking
statements generally can be identified by the use of forward-looking
terminology such as, “future”, "believe," "expect," "may," "will,"
"intend," "estimate," "continue," or similar expressions or the negative
of those terms or expressions. Such statements involve risks and
uncertainties, which could cause actual results to vary materially from
those expressed in or indicated by the forward-looking statements.
Factors that may cause actual results to differ materially include
delays and higher costs in connection with the integration of TiVo Inc.
(now known as TiVo Solutions Inc.), delays in development, competitive
service offerings and lack of market acceptance, as well as the other
potential factors described under "Risk Factors" included in TiVo’s
Annual Report on Form 10-K for year ended December 31, 2017 and other
documents of TiVo Corporation on file with the Securities and Exchange
Commission (available at www.sec.gov).
TiVo cautions you not to place undue reliance on forward-looking
statements, which reflect an analysis only and speak only as of the date
hereof. TiVo assumes no obligation to update any forward-looking
statements in order to reflect events or circumstances that may arise
after the date of this release, except as required by law.
|
TIVO CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) |
|
| |
| |
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 |
| 2016 | | 2017 |
| 2016 |
Revenues, net:
| | | | | | | | |
Licensing, services and software
| |
$
|
206,542
| | |
$
|
238,476
| | |
$
|
784,087
| | |
$
|
629,474
| |
Hardware
| |
7,694
|
| |
13,867
|
| |
42,369
|
| |
19,619
|
|
Total Revenues, net
| |
214,236
| | |
252,343
| | |
826,456
| | |
649,093
| |
Costs and expenses:
| | | | | | | | |
Cost of licensing, services and software revenues, excluding
depreciation and amortization of intangible assets
| |
43,314
| | |
61,015
| | |
167,712
| | |
139,666
| |
Cost of hardware revenues, excluding depreciation and amortization
of intangible assets
| |
10,822
| | |
13,984
| | |
46,699
| | |
19,056
| |
Research and development
| |
49,996
| | |
49,060
| | |
194,382
| | |
125,172
| |
Selling, general and administrative
| |
57,903
| | |
58,292
| | |
205,024
| | |
192,755
| |
Depreciation
| |
6,275
| | |
5,517
| | |
22,144
| | |
18,698
| |
Amortization of intangible assets
| |
41,557
| | |
41,902
| | |
166,657
| | |
104,989
| |
Restructuring and asset impairment charges
| |
1,425
|
| |
2,672
|
| |
19,048
|
| |
27,316
|
|
Total costs and expenses
| |
211,292
|
| |
232,442
|
| |
821,666
|
| |
627,652
|
|
Operating income
| |
2,944
| | |
19,901
| | |
4,790
| | |
21,441
| |
Interest expense
| |
(10,929
|
)
| |
(11,270
|
)
| |
(42,756
|
)
| |
(43,681
|
)
|
Interest income and other, net
| |
(904
|
)
| |
1,366
| | |
2,915
| | |
1,688
| |
Income (loss) on interest rate swaps
| |
3,233
| | |
13,013
| | |
1,859
| | |
(3,884
|
)
|
TiVo Acquisition litigation
| |
—
| | |
—
| | |
(14,006
|
)
| |
—
| |
Loss on debt extinguishment
| |
—
| | |
—
| | |
(108
|
)
| |
—
| |
Loss on debt modification
| |
—
|
| |
—
|
| |
(929
|
)
| |
—
|
|
(Loss) income from continuing operations before income taxes
| |
(5,656
|
)
| |
23,010
| | |
(48,235
|
)
| |
(24,436
|
)
|
Income tax (benefit) expense
| |
(24,095
|
)
| |
13,140
|
| |
(10,279
|
)
| |
(61,685
|
)
|
Income (loss) from continuing operations, net of tax
| |
18,439
| | |
9,870
| | |
(37,956
|
)
| |
37,249
| |
Loss from discontinued operations, net of tax
| |
—
|
| |
(71
|
)
| |
—
|
| |
(4,588
|
)
|
Net income (loss)
| |
$
|
18,439
|
| |
$
|
9,799
|
| |
$
|
(37,956
|
)
| |
$
|
32,661
|
|
| | | | | | | |
|
Basic earnings (loss) per share:
| | | | | | | | |
Continuing operations
| |
$
|
0.15
| | |
$
|
0.08
| | |
$
|
(0.32
|
)
| |
$
|
0.40
| |
Discontinued operations
| |
—
|
| |
—
|
| |
—
|
| |
(0.05
|
)
|
Basic earnings (loss) per share:
| |
$
|
0.15
|
| |
$
|
0.08
|
| |
$
|
(0.32
|
)
| |
$
|
0.35
|
|
Weighted average shares used in computing basic per share amounts
| |
121,427
| | |
117,394
| | |
120,355
| | |
93,064
| |
| | | | | | | |
|
Diluted earnings (loss) per share:
| | | | | | | | |
Continuing operations
| |
$
|
0.15
| | |
$
|
0.08
| | |
$
|
(0.32
|
)
| |
$
|
0.40
| |
Discontinued operations
| |
—
|
| |
—
|
| |
—
|
| |
(0.05
|
)
|
Diluted earnings (loss) per share:
| |
$
|
0.15
|
| |
$
|
0.08
|
| |
$
|
(0.32
|
)
| |
$
|
0.35
|
|
Weighted average shares used in computing diluted per share amounts
| |
122,362
| | |
119,298
| | |
120,355
| | |
94,262
| |
| | | | | | | |
|
Dividends declared per share
| |
$
|
0.18
| | |
$
|
—
| | |
$
|
0.72
| | |
$
|
—
| |
| | | | | | | | | | | | | | | |
|
See notes to the Consolidated Financial Statements in our Annual Report
on Form 10-K.
|
TIVO CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) (Unaudited) |
|
| |
| |
| | December 31, 2017 | | December 31, 2016 |
ASSETS | | | | |
Current assets:
| | | | |
Cash and cash equivalents
| |
$
|
128,965
| | |
$
|
192,627
| |
Short-term marketable securities
| |
140,866
| | |
117,084
| |
Accounts receivable, net
| |
180,768
| | |
147,142
| |
Inventory
| |
11,581
| | |
13,186
| |
Prepaid expenses and other current assets
| |
40,719
|
| |
37,400
|
|
Total current assets
| |
502,899
| | |
507,439
| |
Long-term marketable securities
| |
82,711
| | |
128,929
| |
Property and equipment, net
| |
55,244
| | |
48,372
| |
Intangible assets, net
| |
643,924
| | |
806,838
| |
Goodwill
| |
1,813,227
| | |
1,812,118
| |
Other long-term assets
| |
65,673
|
| |
17,147
|
|
Total assets
| |
$
|
3,163,678
|
| |
$
|
3,320,843
|
|
| | | |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | |
Current liabilities:
| | | | |
Accounts payable and accrued expenses
| |
$
|
135,852
| | |
$
|
226,451
| |
Deferred revenue
| |
55,393
| | |
49,145
| |
Current portion of long-term debt
| |
7,000
|
| |
7,000
|
|
Total current liabilities
| |
198,245
| | |
282,596
| |
Taxes payable, less current portion
| |
3,947
| | |
4,893
| |
Deferred revenue, less current portion
| |
58,283
| | |
43,545
| |
Long-term debt, less current portion
| |
976,095
| | |
967,732
| |
Deferred tax liabilities, net
| |
50,356
| | |
77,454
| |
Other long-term liabilities
| |
23,736
|
| |
34,987
|
|
Total liabilities
| |
1,310,662
| | |
1,411,207
| |
Stockholders' equity:
| | | | |
Preferred stock
| |
—
| | |
—
| |
Common stock
| |
123
| | |
121
| |
Treasury stock
| |
(24,740
|
)
| |
(9,646
|
)
|
Additional paid-in capital
| |
3,273,022
| | |
3,280,905
| |
Accumulated other comprehensive loss
| |
(2,738
|
)
| |
(7,049
|
)
|
Accumulated deficit
| |
(1,392,651
|
)
| |
(1,354,695
|
)
|
Total stockholders’ equity
| |
$
|
1,853,016
|
| |
$
|
1,909,636
|
|
Total liabilities and stockholders’ equity
| |
$
|
3,163,678
|
| |
$
|
3,320,843
|
|
| | | | | | | |
|
See notes to the Consolidated Financial Statements in our Annual Report
on Form 10-K.
|
TIVO CORPORATION AND SUBSIDIARIES REVENUE DETAILS (In thousands) (Unaudited) |
|
| |
| |
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 |
| 2016 | | 2017 |
| 2016 |
Total Revenues, net
| |
$
|
214,236
| | |
$
|
252,343
| | |
$
|
826,456
| | |
$
|
649,093
| |
Legacy TiVo Solutions IP Licenses
| |
(25,847
|
)
| |
(23,380
|
)
| |
(97,136
|
)
| |
(29,342
|
)
|
Hardware
| |
(7,694
|
)
| |
(13,867
|
)
| |
(42,369
|
)
| |
(19,619
|
)
|
Other Products
| |
(689
|
)
| |
(2,012
|
)
| |
(4,548
|
)
| |
(12,470
|
)
|
Total Revenue excluding revenue from Legacy TiVo Solutions IP
Licenses, Hardware and Other Products
| |
$
|
180,006
|
| |
$
|
213,084
|
| |
$
|
682,403
|
| |
$
|
587,662
|
|
| | | |
|
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
Product Revenues:
| | | | | | | | |
Platform Solutions
| |
$
|
80,606
| | |
$
|
86,031
| | |
$
|
334,004
| | |
$
|
205,395
| |
Software and Services
| |
19,225
| | |
23,948
| | |
84,964
| | |
83,811
| |
Other
| |
689
|
| |
2,012
|
| |
4,548
|
| |
12,470
|
|
Total Product Revenues
| |
100,520
| | |
111,991
| | |
423,516
| | |
301,676
| |
| | | | | | | |
|
Intellectual Property Licensing Revenues:
| | | | | | | | |
US Pay TV Providers
| |
83,608
| | |
87,319
| | |
278,973
| | |
222,346
| |
Consumer Electronics Manufacturers
| |
12,923
| | |
11,789
| | |
51,219
| | |
46,145
| |
New Media, International Pay TV Providers and Other
| |
17,185
|
| |
41,244
|
| |
72,748
|
| |
78,926
|
|
Total Intellectual Property Licensing Revenues
| |
113,716
| | |
140,352
| | |
402,940
| | |
347,417
| |
| |
| |
| |
| |
|
Total Revenues, net
| |
$
|
214,236
|
| |
$
|
252,343
|
| |
$
|
826,456
|
| |
$
|
649,093
|
|
| | | |
|
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
Total Product Revenues
| |
$
|
100,520
| | |
$
|
111,991
| | |
$
|
423,516
| | |
$
|
301,676
| |
Hardware
| |
(7,694
|
)
| |
(13,867
|
)
| |
(42,369
|
)
| |
(19,619
|
)
|
Other Products
| |
(689
|
)
| |
(2,012
|
)
| |
(4,548
|
)
| |
(12,470
|
)
|
Total Product Revenue excluding revenue from Hardware and Other
Products
| |
$
|
92,137
|
| |
$
|
96,112
|
| |
$
|
376,599
|
| |
$
|
269,587
|
|
| | | | | | | |
|
Total Intellectual Property Licensing Revenues
| |
$
|
113,716
| | |
$
|
140,352
| | |
$
|
402,940
| | |
$
|
347,417
| |
Legacy TiVo Solutions IP Licenses
| |
(25,847
|
)
| |
(23,380
|
)
| |
(97,136
|
)
| |
(29,342
|
)
|
Total Intellectual Property Licensing Revenue excluding revenue from
Legacy TiVo Solutions IP Licenses
| |
$
|
87,869
|
| |
$
|
116,972
|
| |
$
|
305,804
|
| |
$
|
318,075
|
|
| | | | | | | | | | | | | | | |
|
TIVO CORPORATION AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION (In thousands) (Unaudited) |
|
| |
| |
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 |
| 2016 | | 2017 |
| 2016 |
GAAP (loss) income before income taxes
| |
$
|
(5,656
|
)
| |
$
|
23,010
| | |
$
|
(48,235
|
)
| |
$
|
(24,436
|
)
|
Amortization of intangible assets
| |
41,557
| | |
41,902
| | |
166,657
| | |
104,989
| |
Restructuring and asset impairment charges
| |
1,425
| | |
2,672
| | |
19,048
| | |
27,316
| |
Equity-based compensation
| |
13,780
| | |
15,639
| | |
52,561
| | |
47,670
| |
Transaction, transition and integration costs
| |
4,663
| | |
19,911
| | |
20,364
| | |
39,950
| |
Earnout amortization and settlement
| |
958
| | |
959
| | |
3,833
| | |
2,467
| |
CEO transition cash costs
| |
4,305
| | |
—
| | |
4,305
| | |
—
| |
Remeasurement of contingent consideration
| |
(1,340
|
)
| |
(1,614
|
)
| |
(1,023
|
)
| |
(1,614
|
)
|
TiVo Acquisition litigation
| |
—
| | |
—
| | |
14,006
| | |
—
| |
Loss on debt extinguishment
| |
—
| | |
—
| | |
108
| | |
—
| |
Loss on debt modification
| |
—
| | |
—
| | |
929
| | |
—
| |
Gain on settlement of acquired receivable
| |
—
| | |
—
| | |
(2,537
|
)
| |
—
| |
Accelerated depreciation
| |
639
| | |
—
| | |
1,491
| | |
—
| |
Other-than-temporary impairment of strategic investment
| |
1,210
| | |
—
| | |
1,210
| | |
—
| |
Gain on sale of strategic investments
| |
—
| | |
—
| | |
(3,143
|
)
| |
—
| |
Change in franchise tax reserve
| |
—
| | |
—
| | |
—
| | |
154
| |
Accretion of contingent consideration
| |
123
| | |
273
| | |
634
| | |
340
| |
Amortization of note issuance costs
| |
548
| | |
509
| | |
2,136
| | |
1,977
| |
Amortization of convertible note discount
| |
3,217
| | |
3,070
| | |
12,645
| | |
12,070
| |
Mark-to-market loss (income) related to interest rate swaps and caps
| |
(5,120
|
)
| |
(15,538
|
)
| |
(10,215
|
)
| |
(5,836
|
)
|
Interest on franchise tax reserve
| |
—
|
| |
—
|
| |
—
|
| |
280
|
|
Non-GAAP Pre-tax Income
| |
$
|
60,309
|
| |
$
|
90,793
|
| |
$
|
234,774
|
| |
$
|
205,327
|
|
| | | |
|
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
GAAP Diluted weighted average shares outstanding
| |
122,362
| | |
119,298
| | |
120,355
| | |
94,262
| |
Dilutive effect of equity-based compensation awards
| |
—
|
| |
—
|
| |
1,039
|
| |
—
|
|
Non-GAAP Diluted Weighted Average Shares Outstanding
| |
122,362
|
| |
119,298
|
| |
121,394
|
| |
94,262
|
|
| | | |
|
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
GAAP Cost of licensing, services and software revenues, excluding
depreciation and amortization of intangible assets
| |
$
|
43,314
| | |
$
|
61,015
| | |
$
|
167,712
| | |
$
|
139,666
| |
Equity-based compensation
| |
(1,244
|
)
| |
(1,005
|
)
| |
(4,504
|
)
| |
(3,819
|
)
|
Transaction, transition and integration costs
| |
(163
|
)
| |
(10,216
|
)
| |
(530
|
)
| |
(10,352
|
)
|
Non-GAAP Cost of Licensing, Services and Software Revenues
| |
$
|
41,907
|
| |
$
|
49,794
|
| |
$
|
162,678
|
| |
$
|
125,495
|
|
| | | |
|
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
GAAP Cost of hardware revenues, excluding depreciation and
amortization of intangible assets
| |
$
|
10,822
| | |
$
|
13,984
| | |
$
|
46,699
| | |
$
|
19,056
| |
Transaction, transition and integration costs
| |
—
|
| |
—
|
| |
(1,021
|
)
| |
—
|
|
Non-GAAP Cost of Hardware Revenues
| |
$
|
10,822
|
| |
$
|
13,984
|
| |
$
|
45,678
|
| |
$
|
19,056
|
|
| | | |
|
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
GAAP Research and development expenses
| |
$
|
49,996
| | |
$
|
49,060
| | |
$
|
194,382
| | |
$
|
125,172
| |
Equity-based compensation
| |
(3,912
|
)
| |
(4,784
|
)
| |
(16,771
|
)
| |
(10,970
|
)
|
Transaction, transition and integration costs
| |
(1,029
|
)
| |
(2,274
|
)
| |
(4,474
|
)
| |
(3,782
|
)
|
Earnout amortization and settlement
| |
(184
|
)
| |
(184
|
)
| |
(736
|
)
| |
(245
|
)
|
Non-GAAP Research and Development Expenses
| |
$
|
44,871
|
| |
$
|
41,818
|
| |
$
|
172,401
|
| |
$
|
110,175
|
|
| | | |
|
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
GAAP Selling, general and administrative expenses
| |
$
|
57,903
| | |
$
|
58,292
| | |
$
|
205,024
| | |
$
|
192,755
| |
Equity-based compensation
| |
(8,624
|
)
| |
(9,850
|
)
| |
(31,286
|
)
| |
(32,881
|
)
|
Transaction, transition and integration costs
| |
(3,471
|
)
| |
(7,421
|
)
| |
(14,339
|
)
| |
(25,816
|
)
|
Earnout amortization and settlement
| |
(774
|
)
| |
(775
|
)
| |
(3,097
|
)
| |
(2,222
|
)
|
CEO transition cash costs
| |
(4,305
|
)
| |
—
| | |
(4,305
|
)
| |
—
| |
Remeasurement of contingent consideration
| |
1,340
| | |
1,614
| | |
1,023
| | |
1,614
| |
Gain on settlement of acquired receivable
| |
—
| | |
—
| | |
2,537
| | |
—
| |
Change in franchise tax reserve
| |
—
|
| |
—
|
| |
—
|
| |
(154
|
)
|
Non-GAAP Selling, General and Administrative Expenses
| |
$
|
42,069
|
| |
$
|
41,860
|
| |
$
|
155,557
|
| |
$
|
133,296
|
|
| | | |
|
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
GAAP Depreciation
| |
$
|
6,275
| | |
$
|
5,517
| | |
$
|
22,144
| | |
$
|
18,698
| |
Accelerated depreciation
| |
(639
|
)
| |
—
|
| |
(1,491
|
)
| |
—
|
|
Non-GAAP Depreciation
| |
$
|
5,636
|
| |
$
|
5,517
|
| |
$
|
20,653
|
| |
$
|
18,698
|
|
| | | |
|
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
GAAP Total operating costs and expenses
| |
$
|
211,292
| | |
$
|
232,442
| | |
$
|
821,666
| | |
$
|
627,652
| |
Depreciation
| |
(6,275
|
)
| |
(5,517
|
)
| |
(22,144
|
)
| |
(18,698
|
)
|
Amortization of intangible assets
| |
(41,557
|
)
| |
(41,902
|
)
| |
(166,657
|
)
| |
(104,989
|
)
|
Restructuring and asset impairment charges
| |
(1,425
|
)
| |
(2,672
|
)
| |
(19,048
|
)
| |
(27,316
|
)
|
Equity-based compensation
| |
(13,780
|
)
| |
(15,639
|
)
| |
(52,561
|
)
| |
(47,670
|
)
|
Transaction, transition and integration costs
| |
(4,663
|
)
| |
(19,911
|
)
| |
(20,364
|
)
| |
(39,950
|
)
|
Earnout amortization and settlement
| |
(958
|
)
| |
(959
|
)
| |
(3,833
|
)
| |
(2,467
|
)
|
CEO transition cash costs
| |
(4,305
|
)
| |
—
| | |
(4,305
|
)
| |
—
| |
Remeasurement of contingent consideration
| |
1,340
| | |
1,614
| | |
1,023
| | |
1,614
| |
Gain on settlement of acquired receivable
| |
—
| | |
—
| | |
2,537
| | |
—
| |
Change in franchise tax reserve
| |
—
|
| |
—
|
| |
—
|
| |
(154
|
)
|
Non-GAAP Total COGS and OpEx
| |
$
|
139,669
|
| |
$
|
147,456
|
| |
$
|
536,314
|
| |
$
|
388,022
|
|
| | | |
|
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
GAAP Operating income
| |
$
|
2,944
| | |
$
|
19,901
| | |
$
|
4,790
| | |
$
|
21,441
| |
Depreciation
| |
6,275
| | |
5,517
| | |
22,144
| | |
18,698
| |
Amortization of intangible assets
| |
41,557
| | |
41,902
| | |
166,657
| | |
104,989
| |
Restructuring and asset impairment charges
| |
1,425
| | |
2,672
| | |
19,048
| | |
27,316
| |
Equity-based compensation
| |
13,780
| | |
15,639
| | |
52,561
| | |
47,670
| |
Transaction, transition and integration costs
| |
4,663
| | |
19,911
| | |
20,364
| | |
39,950
| |
Earnout amortization and settlement
| |
958
| | |
959
| | |
3,833
| | |
2,467
| |
CEO transition cash costs
| |
4,305
| | |
—
| | |
4,305
| | |
—
| |
Remeasurement of contingent consideration
| |
(1,340
|
)
| |
(1,614
|
)
| |
(1,023
|
)
| |
(1,614
|
)
|
Gain on settlement of acquired receivable
| |
—
| | |
—
| | |
(2,537
|
)
| |
—
| |
Change in franchise tax reserve
| |
—
|
| |
—
|
| |
—
|
| |
154
|
|
Adjusted EBITDA
| |
$
|
74,567
|
| |
$
|
104,887
|
| |
$
|
290,142
|
| |
$
|
261,071
|
|
| | | |
|
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
GAAP Interest expense
| |
$
|
(10,929
|
)
| |
$
|
(11,270
|
)
| |
$
|
(42,756
|
)
| |
$
|
(43,681
|
)
|
Accretion of contingent consideration
| |
123
| | |
273
| | |
634
| | |
340
| |
Amortization of note issuance costs
| |
548
| | |
509
| | |
2,136
| | |
1,977
| |
Amortization of convertible note discount
| |
3,217
| | |
3,070
| | |
12,645
| | |
12,070
| |
Reclassify current period cost of interest rate swaps
| |
(1,886
|
)
| |
(2,525
|
)
| |
(8,356
|
)
| |
(9,720
|
)
|
Interest on franchise tax reserve
| |
—
|
| |
—
|
| |
—
|
| |
280
|
|
Non-GAAP Interest Expense
| |
$
|
(8,927
|
)
| |
$
|
(9,943
|
)
| |
$
|
(35,697
|
)
| |
$
|
(38,734
|
)
|
| | | | | | | | | | | | | | | |
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20180227006518/en/
Contacts:
Investor Relations
TiVo
Corporation
Debi Palmer, +1-818-295-6651
debi.palmer@TiVo.com
or
Press
Relations
TiVo Corporation
Lerin O'Neill,
+1-408-562-8455
lerin.oneill@TiVo.com
Source: TiVo Corporation
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