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Section 1: 8-K (8-K)

Document
false0001675820 0001675820 2020-02-18 2020-02-18


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 8-K
  
CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
 
February 18, 2020
Date of Report (Date of earliest event reported)

TiVo Corporation
(Exact name of registrant as specified in its charter)
Delaware
 
001-37870
61-1793262
(State or other jurisdiction of
incorporation or organization)
 
(Commission File No.)
(I.R.S. Employer
Identification No.)
2160 Gold Street
,
San Jose
,
California
95002
(Address of principal executive offices, including zip code)
(408) 519-9100
(Registrant’s telephone number, including area code)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, par value $0.001 per share
 
TIVO
 
The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 






ITEM 2.02    Results of Operations and Financial Condition.
    
On February 18, 2020, the Company issued a press release reporting its financial results for the period ended December 31, 2019. A copy of the press release is furnished as Exhibit 99.1 to this report.

The press release is furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), or subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

ITEM 9.01    Financial Statements and Exhibits.
 
       The following exhibits are provided with this report on Form 8-K:
Exhibit
Number
 
99.1
104
Cover Page Interactive Data File (embedded within Inline XBRL document)







SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
TiVo Corporation
(Registrant)
 
 
 
Date:
By:
/s/ Pamela Sergeeff
February 18, 2020
 
Pamela Sergeeff
 
 
Executive Vice President & General Counsel



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


EXHIBIT 99.1
 
402858566_image0a15.jpg
TiVo Corporation
2160 Gold Street
San Jose, CA 95002



TIVO CORPORATION REPORTS FOURTH QUARTER 2019 FINANCIAL RESULTS

Overachieved on Revenue and Adjusted EBIDTA Estimates for 2019
Successfully Unveiled TiVo Stream 4K
Xperi and TiVo Make Progress on the Combination
 
SAN JOSE, Calif. - (BUSINESS WIRE) - February 18, 2020 - TiVo Corporation (NASDAQ: TIVO), the company that brings entertainment together, today reported financial results for its fourth quarter ended December 31, 2019.

“The Company continues to execute and reported strong solid financial results in the quarter, delivering revenue and Adjusted EBITDA above the top end of our expectations," said Dave Shull, President and Chief Executive Officer. “The Company continues to drive initiatives that will deliver long-term profitable growth. In our IP business, we added a multi-year patent license agreement with a significant social media customer. We unveiled TiVo Stream 4K, a unique product for the streaming wars, to a phenomenal set of press reviews at CES in January, receiving multiple “best of show” awards. In addition, we are making progress toward completing our combination with Xperi and are excited about the prospects for the combined company.”

TiVo Fourth Quarter 2019 Financial Highlights:

In December, Xperi Corporation and TiVo announced a definitive agreement to combine in an all-stock transaction; creating a leader in consumer entertainment experiences - both audio and video, and a world-class leader in IP licensing.
For 2019, revenue of $668.1 million, was above the top end of our previously-provided estimates range.
The Company made progress with our profitability initiatives. Q4 GAAP loss from operations was $209.5 million (income from operations of $7.6 million excluding goodwill impairment). As a result of our focused execution on cost savings, our Q4 Adjusted EBITDA was $61.2 million, an increase of 45% from Q4 2018.

TiVo Fourth Quarter 2019 Business and Recent Operating Highlights:

Product Business

In January, we announced the upcoming release of our new product - TiVo Stream 4K: a streaming solution with a launch price of $49.99 that allows consumers to discover and watch what they want, from a single platform.
TiVo announced a collection of new content partners for its video network, TiVo+™. An additional 23 new channels will join the current lineup of 26 free streaming channels currently available, bringing the total to 49.
The Company continues to expand its Android TVTM-based IPTV version of TiVo User Experience 4. The Company now has nine operators who will deploy this solution, up from seven last quarter.

Intellectual Property Licensing Business

Added a multi-year patent license agreement with a significant social media customer. This is TiVo’s second major licensee in this emerging space within the last few quarters. This reaffirms the Company’s position that, while the video market will be disrupted by these online social and video platforms, TiVo’s portfolio remains highly relevant.  
We made progress in Q4 with our renewals. First, we completed a long-term extension with Roku for their streaming platform; providing another proof point of our portfolio’s relevance in the new video consumption landscape. Second, we completed an early extension with Panasonic for their CE business. Lastly, we also renewed a license agreement with a leading Korean broadcasting solution company, extending our coverage of the local Korean service provider market.
In addition, we made progress in our OTT licensing program last quarter and also entered into a long-term license with a major U.S.-based OTT service this quarter.






2020 Full Year Outlook:

The Company provided its 2020 full-year outlook, which does not include the impact of the Company’s previously announced combination with Xperi Corporation1:
 
Current Expectations
 
Low
 
High
Total revenue, net
$650 million
 
$690 million
GAAP (loss) income before income taxes
$(18) million
 
$4 million
Adjusted EBITDA
$230 million
 
$260 million
Non-GAAP Pre-tax Income
$150 million
 
$180 million
Cash Taxes
$26 million
 
$27 million
 
 
 
 
GAAP Diluted Weighted Average Shares Outstanding
 
 
128 million
Non-GAAP Diluted Weighted Average Shares Outstanding
 
 
129 million

1 
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.

Capital Resources:

On November 22, 2019, the Company entered into a new $715.0 million Term Loan Facility and secured a $60.0 million Asset-Backed Revolving Loan Credit Facility. The Company repaid $621.9 million of outstanding borrowings under Term Loan Facility B with the proceeds from the new Term Loan Facility, which matures in 2024. These transactions provide the capital needed to make future investments in strategic initiatives to drive long-term growth.


##







Fourth Quarter 2019 Summary Financial Results:
Quarterly Financial Information
(In thousands)
 
 
 
Three Months Ended December 31,
 
 
 
2019
 
2018
 
% Change
GAAP Consolidated Results
 
 
 
 
 
Product Revenue
$
91,683

 
$
96,479

 
(5
)%
IP Licensing Revenue
83,515

 
71,980

 
16
 %
Total Revenues, net
$
175,198

 
$
168,459

 
4
 %
 
 
 
 
 
 
GAAP Total operating costs and expenses
$
384,726

 
$
441,943

 
(13
)%
Total OpEx Excluding Goodwill Impairment
$
167,618

 
$
172,943

 
(3
)%
 
 
 
 
 
 
Operating loss
$
(209,528
)
 
$
(273,484
)
 
(23
)%
Loss from continuing operations before income taxes
$
(219,917
)
 
$
(287,442
)
 
(23
)%
Loss from continuing operations, net of tax
$
(218,080
)
 
$
(288,189
)
 
(24
)%
 
 
 
 
 
 
GAAP Diluted weighted average shares outstanding
126,444

 
123,802

 
 
 
(In thousands)
 
 
 
Three Months Ended December 31,
 
 
 
2019
 
2018
 
% Change
Non-GAAP Consolidated Results
 
 
 
 
 
Non-GAAP Total COGS and OpEx
$
114,019

 
$
126,318

 
(10
)%
Adjusted EBITDA
$
61,179

 
$
42,141

 
45
 %
Non-GAAP Pre-tax Income
$
47,162

 
$
30,151

 
56
 %
Cash Taxes
$
5,446

 
$
3,519

 
55
 %
 
 
 
 
 
 
Non-GAAP Diluted Weighted Average Shares Outstanding
127,448

 
124,338

 
 

Product revenues were down $4.8 million or 5% year-over-year, driven by a decrease in consumer revenue due to an increase in the amortization period for product lifetime subscriptions and lower hardware sales. Also contributing to the decline was lower Platform Solutions revenue from pay TV customers. Offsetting these decreases was a $3.2 million increase in Software and Services revenue driven by new TV Viewership Data deals.
IP Licensing revenues increased by $11.5 million, or 16% year-over-year, driven by new deals signed in our New Media, International Pay TV and other vertical and a $4.0 million benefit from a large US Pay TV operator revising its historical reporting.
Non-GAAP Total COGS and OpEx decreased by $12.3 million, or 10% year-over-year as a result of our focused execution on cost savings.
During the quarter, the Company recorded a $217.1 million non-cash Goodwill impairment charge driven by the elimination of an assumed control premium from the fair value estimates following execution of the Xperi Merger Agreement.






Segment Results and Operating Highlights - Product:
 
(In thousands)
 
 
 
Three Months Ended December 31,
 
 
 
2019
 
2018
 
% Change
Platform Solutions
$
68,590

 
$
74,519

 
(8
)%
Software and Services
21,528

 
18,300

 
18
 %
Other
1,565

 
3,660

 
(57
)%
Total Product Revenue, net
91,683

 
96,479

 
(5
)%
Adjusted Operating Expenses
72,547

 
83,440

 
(13
)%
Adjusted EBITDA
$
19,136

 
$
13,039

 
47
 %
Adjusted EBITDA Margin
20.9
%
 
13.5
%
 
 
 
 
 
 
 
 
Total Product Revenue, net
$
91,683

 
$
96,479

 
(5
)%
Hardware
(2,512
)
 
(3,824
)
 
(34
)%
Other Products
(1,565
)
 
(3,660
)
 
(57
)%
Core Product Revenue (excludes revenue from Hardware and Other Products)
$
87,606

 
$
88,995

 
(2
)%

Segment Results and Operating Highlights - IP Licensing:
 
(In thousands)
 
 
 
Three Months Ended December 31,
 
 
 
2019
 
2018
 
% Change
US Pay TV Providers
$
47,208

 
$
42,348

 
11
%
CE Manufacturers
10,575

 
8,890

 
19
%
New Media, International Pay TV Providers and Other
25,732

 
20,742

 
24
%
Total IP Licensing Revenue, net
83,515

 
71,980

 
16
%
Adjusted Operating Expenses
27,137

 
25,742

 
5
%
Adjusted EBITDA
$
56,378

 
$
46,238

 
22
%
Adjusted EBITDA Margin
67.5
%
 
64.2
%
 
 

Conference Call Information

TiVo management will host a conference call today, February 18, 2020, at 2:00 p.m. PT/5:00 p.m. ET to discuss the financial and operational results. Investors and analysts interested in participating are welcome to call (866) 621-1214 (or international +1-706-643-4013) and reference conference ID 2758129. The conference call may also be accessed via live webcast in the Investor Relations section of TiVo’s website at http://ir.tivo.com. A replay of the audio webcast will be available on the TiVo Investor Relations website after the public filing of the transcript of the call is completed in accordance with regulatory requirements. A telephonic replay of the call will be accessible after the transcript is filed through February 25, 2020 by dialing (855) 859-2056 (or international +1-404-537-3406) and entering conference ID 2758129.

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 Excluding Goodwill Impairment, 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, discounts on convertible debt and mark-to-market adjustments for interest rate





swaps and interest on escheat liabilities; 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 goodwill impairment, restructuring and asset impairment charges, merger, separation and transformation costs, 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 and changes in escheat liabilities.

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.

Non-GAAP Cost of Hardware Revenues is defined as GAAP Cost of hardware revenues, excluding depreciation and amortization of intangible assets, excluding equity-based compensation and 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, merger, separation and transformation costs, 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 and gain on settlement of acquired receivable.

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.

Total OpEx Excluding Goodwill Impairment is defined as GAAP Total Operating costs and expenses excluding goodwill impairment.

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, merger, separation and transformation costs, 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 and additional depreciation resulting from facility rationalization actions.

Non-GAAP Total COGS and OpEx is defined as GAAP Total Operating costs and expenses, excluding depreciation, amortization of intangible assets, goodwill impairment, restructuring and asset impairment charges, equity-based compensation, merger, separation and transformation costs, 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 and gain on settlement of acquired receivable.

Adjusted EBITDA is defined as GAAP operating income (loss) excluding depreciation, amortization of intangible assets, goodwill impairment, restructuring and asset impairment charges, equity-based compensation, strategic review costs, merger, separation and transformation costs, 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 and gain on settlement of acquired receivable.

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 escheat liability, 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 or dispose of businesses on a predictable cycle, management excludes the amortization of intangible assets, merger, separation and transformation costs, transition and integration costs, retention earn-outs payable to former shareholders of acquired businesses, earnout settlements, CEO transition cash 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 goodwill impairment, 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 escheat liability. 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, mark-to-market adjustments for interest rate swaps and interest on escheat liability 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) brings entertainment together, making it easy to find, watch and enjoy. We serve up the best movies, shows and videos from across live TV, on-demand, streaming services and countless apps, helping people to watch on their terms. For studios, networks and advertisers, TiVo delivers a passionate group of watchers to increase viewership and engagement across all screens. Go to tivo.com and enjoy watching.

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, future growth, profitability and success of the Company’s Product and IP Licensing businesses, the timing and completion of the TiVo/Xperi combination transaction, the prospects for the combined TiVo/Xperi company, growth of certain markets for intellectual property licensing, as well as future business strategies, future product offerings and 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, whether inside or outside the Company’s control, in the merger process, delays in product development or deployments, the failure to deliver competitive service offerings and lack of market acceptance of any offerings delivered, as well as the other potential factors described under "Risk Factors" included in TiVo’s Annual Report on Form 10-K for the year ended December 31, 2019 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.

Android TV is a trademark of Google LLC.


Investor Relations                    Press Relations
Nicole Noutsios                        Lerin O'Neill
TiVo Corporation                     TiVo Corporation
+1 510-315-1003                        +1 408-562-8455
[email protected]                     [email protected]






TIVO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
Revenues, net:
 
 
 
 
 
 
 
Licensing, services and software
$
172,686

 
$
164,635

 
$
659,261

 
$
681,130

Hardware
2,512

 
3,824

 
8,868

 
14,735

Total Revenues, net
175,198

 
168,459

 
668,129

 
695,865

Costs and expenses:
 
 
 
 
 
 
 
Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets
42,051

 
42,602

 
156,533

 
169,149

Cost of hardware revenues, excluding depreciation and amortization of intangible assets
3,967

 
5,231

 
18,117

 
19,491

Research and development
34,801

 
43,391

 
148,422

 
177,285

Selling, general and administrative
52,147

 
47,141

 
191,417

 
181,047

Depreciation
5,242

 
5,212

 
21,247

 
21,464

Amortization of intangible assets
28,153

 
27,873

 
112,727

 
147,336

Restructuring and asset impairment charges
1,257

 
1,493

 
7,741

 
10,061

Goodwill impairment
217,108

 
269,000

 
354,561

 
269,000

Total costs and expenses
384,726

 
441,943

 
1,010,765

 
994,833

Operating loss
(209,528
)
 
(273,484
)
 
(342,636
)
 
(298,968
)
Interest expense
(13,422
)
 
(12,909
)
 
(49,902
)
 
(49,150
)
Interest income and other, net
4,376

 
2,711

 
8,526

 
5,682

Gain (loss) on interest rate swaps
509

 
(3,760
)
 
(4,966
)
 
3,425

Loss on debt extinguishment
(1,852
)
 

 
(2,152
)
 

Loss from continuing operations before income taxes
(219,917
)
 
(287,442
)
 
(391,130
)
 
(339,011
)
Income tax (benefit) expense
(1,837
)
 
747

 
14,144

 
14,052

Loss from continuing operations, net of tax
(218,080
)
 
(288,189
)
 
(405,274
)
 
(353,063
)
(Loss) Income from discontinued operations, net of tax
(4,414
)
 
(23
)
 
(4,793
)
 
3,715

Net loss
$
(222,494
)
 
$
(288,212
)
 
$
(410,067
)
 
$
(349,348
)
 
 
 
 
 
 
 
 
Basic loss per share:
 
 
 
 
 
 
 
Continuing operations
$
(1.72
)
 
$
(2.33
)
 
$
(3.23
)
 
$
(2.87
)
Discontinued operations
(0.03
)
 

 
(0.04
)
 
0.03

Basic loss per share
$
(1.75
)
 
$
(2.33
)
 
$
(3.27
)
 
$
(2.84
)
Weighted average shares used in computing basic per share amounts
126,444

 
123,802

 
125,484

 
123,020

 
 
 
 
 
 
 
 
Diluted loss per share:
 
 
 
 
 
 
 
Continuing operations
$
(1.72
)
 
$
(2.33
)
 
$
(3.23
)
 
$
(2.87
)
Discontinued operations
(0.03
)
 

 
(0.04
)
 
0.03

Diluted loss per share
$
(1.75
)
 
$
(2.33
)
 
$
(3.27
)
 
$
(2.84
)
Weighted average shares used in computing diluted per share amounts
126,444

 
123,802

 
125,484

 
123,020

 
 
 
 
 
 
 
 
Dividends declared per share
$

 
$
0.18

 
$
0.34

 
$
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)
 
December 31,
2019
 
December 31,
2018
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
373,719

 
$
161,955

Short-term marketable securities
51,293

 
158,956

Accounts receivable, net
158,016

 
152,866

Inventory
3,197

 
7,449

Prepaid expenses and other current assets
27,023

 
30,806

Total current assets
613,248

 
512,032

Long-term marketable securities

 
73,207

Property and equipment, net
48,264

 
53,586

Intangible assets, net
415,054

 
513,770

Goodwill
1,189,825

 
1,544,343

Right-of-use assets
59,888

 

Other long-term assets
56,293

 
63,365

Total assets
$
2,382,572

 
$
2,760,303

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued expenses
$
126,249

 
$
104,981

Unearned revenue
50,968

 
46,072

Current portion of long-term debt
343,035

 
373,361

Total current liabilities
520,252

 
524,414

Unearned revenue, less current portion
39,879

 
54,495

Long-term debt, less current portion
642,504

 
618,776

Deferred tax liabilities, net
34,231

 
45,030

Long-term lease liabilities
61,603

 

Other long-term liabilities
10,420

 
24,647

Total liabilities
1,308,889

 
1,267,362

Stockholders' equity:
 
 
 
Preferred stock

 

Common stock
129

 
126

Treasury stock
(38,176
)
 
(32,124
)
Additional paid-in capital
3,235,996

 
3,239,395

Accumulated other comprehensive loss
(3,612
)
 
(3,869
)
Accumulated deficit
(2,120,654
)
 
(1,710,587
)
Total stockholders’ equity
1,073,683

 
1,492,941

Total liabilities and stockholders’ equity
$
2,382,572

 
$
2,760,303


See notes to the Consolidated Financial Statements in our Annual Report on Form 10-K.
  






TIVO CORPORATION AND SUBSIDIARIES
REVENUE AND SEGMENT DETAILS
(In thousands)
(Unaudited)
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
Total Revenues, net
$
175,198

 
$
168,459

 
$
668,129

 
$
695,865

Legacy TiVo Solutions IP Licenses

 

 

 
(20,063
)
Hardware
(2,512
)
 
(3,824
)
 
(8,868
)
 
(14,735
)
Other Products
(1,565
)
 
(3,660
)
 
(3,097
)
 
(8,667
)
Core Revenue (excludes revenue from Legacy TiVo Solutions IP Licenses, Hardware and Other Products)
$
171,121

 
$
160,975

 
$
656,164

 
$
652,400


 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
Product Revenue
 
 
 
 
 
 
 
Platform Solutions
$
68,590

 
$
74,519

 
$
267,441

 
$
315,814

Software and Services
21,528

 
18,300

 
80,443

 
76,249

Other
1,565

 
3,660

 
3,097

 
8,667

Total Product Revenue, net
91,683

 
96,479

 
350,981

 
400,730

 
 
 
 
 
 
 
 
IP Licensing Revenue
 
 
 
 
 
 
 
US Pay TV Providers
47,208

 
42,348

 
173,217

 
185,954

CE Manufacturers
10,575

 
8,890

 
42,503

 
35,644

New Media, International Pay TV Providers and Other
25,732

 
20,742

 
101,428

 
73,537

Total IP Licensing Revenue, net
83,515

 
71,980

 
317,148

 
295,135

 
 
 
 
 
 
 
 
Total Revenues, net
$
175,198

 
$
168,459

 
$
668,129

 
$
695,865


 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
Total Product Revenue, net
$
91,683

 
$
96,479

 
$
350,981

 
$
400,730

Hardware
(2,512
)
 
(3,824
)
 
(8,868
)
 
(14,735
)
Other Products
(1,565
)
 
(3,660
)
 
(3,097
)
 
(8,667
)
Core Product Revenue (excludes revenue from Hardware and Other Products)
$
87,606

 
$
88,995

 
$
339,016

 
$
377,328

 
 
 
 
 
 
 
 
Total IP Licensing Revenue, net
$
83,515

 
$
71,980

 
$
317,148

 
$
295,135

Legacy TiVo Solutions IP Licenses

 

 

 
(20,063
)
Core Intellectual Property Licensing Revenue (excludes revenue from Legacy TiVo Solutions IP Licenses)
$
83,515

 
$
71,980

 
$
317,148

 
$
275,072






 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
Adjusted EBITDA:
 
 
 
 
 
 
 
Product
$
19,136

 
$
13,039

 
$
48,490

 
$
67,010

IP Licensing
56,378

 
46,238

 
221,186

 
195,603

Corporate
(14,335
)
 
(17,136
)
 
(58,383
)
 
(62,521
)
Adjusted EBITDA
$
61,179

 
$
42,141

 
$
211,293

 
$
200,092






TIVO CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In thousands)
(Unaudited)
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
GAAP loss from continuing operations before income taxes
$
(219,917
)
 
$
(287,442
)
 
$
(391,130
)
 
$
(339,011
)
Amortization of intangible assets
28,153

 
27,873

 
112,727

 
147,336

Restructuring and asset impairment charges
1,257

 
1,493

 
7,741

 
10,061

Goodwill impairment
217,108

 
269,000

 
354,561

 
269,000

Equity-based compensation
6,246

 
11,553

 
28,705

 
39,779

Merger, separation and transformation costs
12,307

 

 
26,212

 

Transition and integration costs
394

 
494

 
1,736

 
9,797

Earnout amortization

 

 

 
1,494

CEO transition cash costs

 

 
1,000

 
(975
)
Remeasurement of contingent consideration

 

 

 
1,104

Gain on sale of strategic investments
(2,030
)
 
(145
)
 
(2,030
)
 
(662
)
Loss on debt extinguishment
1,852

 

 
2,152

 

Change in escheat liability

 

 
165

 

Accretion of contingent consideration

 

 

 
235

Amortization of note issuance costs
683

 
591

 
2,422

 
2,300

Amortization of convertible note discount
3,018

 
3,369

 
12,809

 
13,246

Mark-to-market loss (income) related to interest rate swaps
(1,326
)
 
3,365

 
3,280

 
(6,848
)
Interest on escheat liability
(583
)
 

 
(1,001
)
 

Non-GAAP Pre-tax Income
$
47,162

 
$
30,151

 
$
159,349

 
$
146,856


 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
GAAP Diluted weighted average shares outstanding
126,444

 
123,802

 
125,484

 
123,020

Dilutive effect of equity-based compensation awards
1,004

 
536

 
757

 
575

Non-GAAP Diluted Weighted Average Shares Outstanding
127,448

 
124,338

 
126,241

 
123,595


 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
GAAP Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets
$
42,051

 
$
42,602

 
$
156,533

 
$
169,149

Equity-based compensation
(793
)
 
(1,295
)
 
(3,035
)
 
(4,558
)
Merger, separation and transformation costs
(8
)
 

 
(8
)
 

Transition and integration costs
(361
)
 
(315
)
 
(830
)
 
(373
)
Non-GAAP Cost of Licensing, Services and Software Revenues
$
40,889

 
$
40,992

 
$
152,660

 
$
164,218







 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
GAAP Cost of hardware revenues, excluding depreciation and amortization of intangible assets
$
3,967

 
$
5,231

 
$
18,117

 
$
19,491

Equity-based compensation
(26
)
 

 
(96
)
 

Non-GAAP Cost of Hardware Revenues
$
3,941

 
$
5,231

 
$
18,021

 
$
19,491


 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
GAAP Research and development expenses
$
34,801

 
$
43,391

 
$
148,422

 
$
177,285

Equity-based compensation
(1,786
)
 
(4,029
)
 
(7,119
)
 
(13,986
)
Merger, separation and transformation costs
(24
)
 

 
(24
)
 

Transition and integration costs
(2
)
 
(178
)
 
(589
)
 
(1,613
)
Earnout amortization

 

 

 
(287
)
Non-GAAP Research and Development Expenses
$
32,989

 
$
39,184

 
$
140,690

 
$
161,399


 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
GAAP Selling, general and administrative expenses
$
52,147

 
$
47,141

 
$
191,417

 
$
181,047

Equity-based compensation
(3,641
)
 
(6,229
)
 
(18,455
)
 
(21,235
)
Merger, separation and transformation costs
(12,275
)
 

 
(26,180
)
 

Transition and integration costs
(31
)
 
(1
)
 
(317
)
 
(7,811
)
Earnout amortization

 

 

 
(1,207
)
CEO transition cash costs

 

 
(1,000
)
 
975

Remeasurement of contingent consideration

 

 

 
(1,104
)
Non-GAAP Selling, General and Administrative Expenses
$
36,200

 
$
40,911

 
$
145,465

 
$
150,665


 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
GAAP Total operating costs and expenses
$
384,726

 
$
441,943

 
$
1,010,765

 
$
994,833

Depreciation
(5,242
)
 
(5,212
)
 
(21,247
)
 
(21,464
)
Amortization of intangible assets
(28,153
)
 
(27,873
)
 
(112,727
)
 
(147,336
)
Restructuring and asset impairment charges
(1,257
)
 
(1,493
)
 
(7,741
)
 
(10,061
)
Goodwill impairment
(217,108
)
 
(269,000
)
 
(354,561
)
 
(269,000
)
Equity-based compensation
(6,246
)
 
(11,553
)
 
(28,705
)
 
(39,779
)
Merger, separation and transformation costs
(12,307
)
 

 
(26,212
)
 

Transition and integration costs
(394
)
 
(494
)
 
(1,736
)
 
(9,797
)
Earnout amortization

 

 

 
(1,494
)
CEO transition cash costs

 

 
(1,000
)
 
975

Remeasurement of contingent consideration

 

 

 
(1,104
)
Non-GAAP Total COGS and OpEx
$
114,019

 
$
126,318

 
$
456,836

 
$
495,773






 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
GAAP Total operating costs and expenses
$
384,726

 
$
441,943

 
$
1,010,765

 
$
994,833

Goodwill impairment
(217,108
)
 
(269,000
)
 
(354,561
)
 
(269,000
)
Total OpEx Excluding Goodwill Impairment
$
167,618

 
$
172,943

 
$
656,204

 
$
725,833


 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
GAAP Operating loss
$
(209,528
)
 
$
(273,484
)
 
$
(342,636
)
 
$
(298,968
)
Depreciation
5,242

 
5,212

 
21,247

 
21,464

Amortization of intangible assets
28,153

 
27,873

 
112,727

 
147,336

Restructuring and asset impairment charges
1,257

 
1,493

 
7,741

 
10,061

Goodwill impairment
217,108

 
269,000

 
354,561

 
269,000

Equity-based compensation
6,246

 
11,553

 
28,705

 
39,779

Merger, separation and transformation costs
12,307

 

 
26,212

 

Transition and integration costs
394

 
494

 
1,736

 
9,797

Earnout amortization

 

 

 
1,494

CEO transition cash costs

 

 
1,000

 
(975
)
Remeasurement of contingent consideration

 

 

 
1,104

Adjusted EBITDA
$
61,179

 
$
42,141

 
$
211,293

 
$
200,092


 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
GAAP Interest expense
$
(13,422
)
 
$
(12,909
)
 
$
(49,902
)
 
$
(49,150
)
Accretion of contingent consideration

 

 

 
235

Amortization of note issuance costs
683

 
591

 
2,422

 
2,300

Amortization of convertible note discount
3,018

 
3,369

 
12,809

 
13,246

Reclassify current period cost of interest rate swaps
(818
)
 
(396
)
 
(1,686
)
 
(3,423
)
Interest on escheat liability
(583
)
 

 
(1,001
)
 

Non-GAAP Interest Expense
$
(11,122
)
 
$
(9,345
)
 
$
(37,358
)
 
$
(36,792
)






TIVO CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FORECAST FINANCIAL INFORMATION
(In millions)
(Unaudited)
 
FY 2020 Expectations
 
Low
 
High
GAAP (loss) income from continuing operations before income taxes
$
(18
)
 
$
4

Amortization of intangible assets
113

 
113

Equity-based compensation
33

 
35

Merger, separation and transformation costs
15

 
20

Amortization of note issuance costs and convertible note discount
7

 
8

Mark-to-market loss related to interest rate swaps (1)

 

Non-GAAP Pre-tax Income (1)
$
150

 
$
180

 
 
 
 
Cash Taxes
$
26

 
$
27


(1) Due to their nature, changes in the mark-to-market of interest rate swaps have not been included in the outlook. Actual results may differ materially from the outlook.

 
FY 2020 Expectations
 
Low
 
High
GAAP Operating income
$
46

 
$
68

Depreciation
23

 
24

Amortization of intangible assets
113

 
113

Equity-based compensation
33

 
35

Merger, separation and transformation costs
15

 
20

Adjusted EBITDA
$
230

 
$
260


 
FY 2020 Expectations
GAAP Diluted Weighted Average Shares Outstanding
128

Dilutive effect of equity-based compensation awards
1

Non-GAAP Diluted Weighted Average Shares Outstanding
129




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