UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended March 31, 2003 | |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from _______________________ to __________________________ |
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Commission file number: 001-15473 |
OPENTV CORP.
(Exact name of registrant as specified in its charter)
| British Virgin Islands |
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98-0212376 |
| (Jurisdiction of incorporation) |
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(I.R.S. Employer Identification No.) |
275 Sacramento
Street
San Francisco, California 94111
(415) 962-5000
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive
offices)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
| Yes x |
No o |
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of April 30, 2003, the registrant had outstanding (not including 54,247 Class A ordinary shares held in treasury as of that date):
41,605,203 Class A ordinary shares, no par value; and
30,631,746 Class B ordinary shares, no par value
TABLE OF CONTENTS
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Page |
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| PART I. |
2 | |
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| Item 1. |
2 | |
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Condensed Consolidated Balance Sheets at March 31, 2003 and December 31, 2002 |
2 |
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Condensed Consolidated Statements of Operations for the three months ended March 31, 2003 and 2002 |
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Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2003 and 2002 |
4 |
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5 | |
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| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14 |
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| Item 3. |
19 | |
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| Item 4. |
21 | |
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| PART II. |
21 | |
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| Item 1. |
21 | |
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| Item 2. |
21 | |
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| Item 3. |
21 | |
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| Item 4. |
21 | |
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| Item 5. |
21 | |
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| Item 6. |
22 | |
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i
OPENTV CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
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March 31, |
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December 31, |
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(Unaudited) |
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| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
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$ |
42,574 |
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$ |
38,568 |
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| Short-term marketable debt securities |
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14,402 |
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26,940 |
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| Accounts receivable, net of allowance for doubtful accounts of $1,456 and $1,966 at March 31, 2003 and December 31, 2002, respectively |
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13,692 |
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10,672 |
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| Prepaid expenses and other current assets |
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3,862 |
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4,304 |
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| Total current assets |
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74,530 |
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80,484 |
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| Long-term marketable debt securities |
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17,033 |
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22,199 |
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| Property and equipment, net |
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12,896 |
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15,020 |
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| Goodwill, net |
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44,957 |
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45,416 |
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| Intangible assets, net |
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24,614 |
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28,354 |
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| Other assets |
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5,231 |
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5,863 |
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| Total assets |
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$ |
179,261 |
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$ |
197,336 |
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| LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY |
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| Current liabilities: |
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| Accounts payable |
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$ |
3,187 |
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$ |
5,252 |
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| Accrued liabilities |
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25,036 |
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22,845 |
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| Accrued restructuring |
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15,519 |
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14,615 |
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| Due to Liberty Broadband |
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1,156 |
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1,156 |
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| Current portion of deferred revenue |
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6,498 |
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6,340 |
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| Total current liabilities |
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51,396 |
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50,208 |
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| Deferred revenue, less current portion |
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5,281 |
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4,886 |
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| Total liabilities |
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56,677 |
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55,094 |
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| Minority interest |
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1,198 |
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1,246 |
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| Shareholders' equity: |
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| Class A ordinary shares, no par value, 500,000,000 shares authorized; 41,780,852 and 41,587,033 shares issued and outstanding, including treasury shares, in 2003 and 2002, respectively |
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2,143,272 |
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2,143,124 |
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| Class B ordinary shares, no par value, 200,000,000 shares authorized; 30,631,746 shares issued and outstanding |
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35,953 |
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35,953 |
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| Additional paid-in capital |
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461,724 |
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461,263 |
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| Treasury shares at cost, 54,247 and 50,629 shares in 2003 and 2002, respectively |
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(16 |
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(16 |
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| Deferred share-based compensation |
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(162 |
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(221 |
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| Accumulated other comprehensive income |
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281 |
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494 |
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| Accumulated deficit |
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(2,519,666 |
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(2,499,601 |
) |
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| Total shareholders' equity |
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121,386 |
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140,996 |
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| Total liabilities, minority interest and shareholders' equity |
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$ |
179,261 |
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$ |
197,336 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
OPENTV CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
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Quarter Ended March 31, |
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2003 |
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2002 |
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| Revenues: |
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| Royalties |
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$ |
6,126 |
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$ |
8,309 |
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| Services, support and other |
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5,324 |
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6,215 |
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| Channel fees |
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2,858 |
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2,658 |
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| License fees |
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1,038 |
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1,745 |
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| Total revenues (inclusive of $3,610 and $2,899 of related party revenues) |
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15,346 |
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18,927 |
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| Operating expenses: |
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| Cost of revenues(1) |
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11,547 |
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10,054 |
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| Research and development(2) |
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5,419 |
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9,714 |
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| Sales and marketing(3) |
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4,908 |
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9,242 |
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| General and administrative(4) |
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4,437 |
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4,650 |
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| Restructuring costs |
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6,927 |
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9,620 |
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| Amortization of intangible assets |
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2,400 |
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3,819 |
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| Total operating expenses |
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35,638 |
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47,099 |
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| Loss from operations |
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(20,292 |
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(28,172 |
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| Interest income |
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459 |
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1,397 |
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| Other income (expense), net |
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(19 |
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17 |
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| Impairment of equity investments |
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— |
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(5,500 |
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| Share of losses of equity investee |
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— |
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(5,549 |
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| Minority interest |
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48 |
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147 |
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| Loss before income taxes and cumulative effect of accounting change |
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(19,804 |
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(37,660 |
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| Income tax expense |
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(261 |
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(319 |
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| Loss before cumulative effect of accounting change |
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(20,065 |
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(37,979 |
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| Cumulative effect of accounting change, net of tax |
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— |
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(129,852 |
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| Net loss |
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$ |
(20,065 |
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$ |
(167,831 |
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| Net loss per share, basic and diluted: |
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| Before cumulative effect of accounting change |
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$ |
(0.28 |
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$ |
(0.53 |
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| Cumulative effect of accounting change, net of tax |
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— |
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(1.83 |
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$ |
(0.28 |
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$ |
(2.36 |
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| Shares used in per share calculation, basic and diluted |
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72,275,480 |
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71,253,916 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
OPENTV CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
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Quarter Ended March 31, |
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2003 |
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2002 |
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| Cash flows used in operating activities: |
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| Net loss |
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$ |
(20,065 |
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$ |
(167,831 |
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| Adjustments to reconcile net loss to net cash used in operating activities: |
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| Cumulative effect of accounting change, net of tax |
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— |
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129,852 |
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| Depreciation and amortization of property and equipment |
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1,968 |
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2,336 |
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| Amortization of intangible assets |
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3,807 |
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5,091 |
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| Amortization of share-based compensation |
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94 |
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1,165 |
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| Non-cash employee compensation |
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188 |
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188 |
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| Provision for doubtful accounts |
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105 |
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107 |
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| Non-cash restructuring costs |
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494 |
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1,969 |
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| Impairment of equity investments |
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— |
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5,500 |
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| Share of losses of equity investee |
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— |
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5,549 |
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| Minority interest |
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(48 |
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(147 |
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| Changes in operating assets and liabilities: |
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| Accounts receivable |
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(3,125 |
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2,324 |
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| Due from MIH Limited entities |
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— |
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2,535 |
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| Prepaid expenses and other current assets |
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442 |
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(821 |
) |
| Accounts payable |
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(1,927 |
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(538 |
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| Accrued liabilities |
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2,132 |
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(1,655 |
) |
| Accrued restructuring |
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904 |
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5,662 |
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| Deferred revenue |
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553 |
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611 |
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| Other assets |
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1,021 |
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|
562 |
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| Net cash used in operating activities |
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(13,457 |
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(7,541 |
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| Cash flows provided from investing activities: |
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| Purchase of property and equipment |
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(396 |
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(3,340 |
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| Proceeds from sale of marketable debt securities |
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25,335 |
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40,276 |
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| Purchase of marketable debt securities |
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(7,800 |
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(27,628 |
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| Private equity investments |
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— |
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