Item 8. Financial Statements and Supplementary Data
Item 8. Financial Statements and Supplementary Data
Our consolidated balance sheets as of December 31, 2020 and 2019, and the related consolidated statements of operations, equity, comprehensive income (loss) and cash flows for each of the years in the three-year period ended December 31, 2020 are set forth in this Annual Report at Item 15(a)(1).
70
SELECTED QUARTERLY FINANCI AL INFORMATION (UNAUDITED)
The following table presents our unaudited quarterly results of operations for the eight quarters in the periods ended December 31, 2020 and 2019.
The following table should be read in conjunction with the consolidated financial statements and related notes contained elsewhere in this Annual Report. We have prepared the unaudited information on the same basis as our audited consolidated financial statements. This table includes all adjustments, consisting only of normal recurring adjustments, that we consider necessary for fair statement of our financial position and operating results for the quarters presented. Operating results for any quarter are not necessarily indicative of results for any future quarters or for a full year. We employ a calendar month-end reporting period for our quarterly reporting.
Three Months Ended (1)
Mar 31,
2019
Jun 30,
2019
Sep 30,
2019
Dec 31,
2019
Mar 31,
2020
Jun 30,
2020 (2)
Sep 30,
2020
Dec 31,
2020
(in thousands, except per share amounts)
Revenue:
Licensing, services and software
$
56,312
$
75,031
$
57,750
$
90,420
$
117,487
$
135,996
$
195,319
$
427,801
Hardware
255
84
117
98
178
1,635
7,478
6,126
Total Revenue
56,567
75,115
57,867
90,518
117,665
137,631
202,797
433,927
Operating expenses:
Cost of licensing, services and software revenue, excluding depreciation and amortization of intangible assets
2,049
2,460
1,462
2,158
1,540
8,252
21,854
25,634
Cost of hardware revenue, excluding depreciation and amortization of intangible assets
158
69
44
61
44
1,428
12,216
7,389
Research, development and other related costs
26,659
25,346
25,998
32,846
28,607
38,227
57,731
70,589
Selling, general and administrative
29,281
27,252
27,588
33,550
36,606
68,195
63,785
76,770
Depreciation expense
1,668
1,759
1,629
1,665
1,729
3,333
6,753
6,103
Amortization expense
25,459
25,314
25,146
24,027
22,509
32,044
50,894
51,379
Litigation expense
1,290
1,231
1,527
1,079
2,103
3,871
8,527
6,281
Total operating expenses
86,564
83,431
83,394
95,386
93,138
155,350
221,760
244,145
Operating income (loss)
(29,997
)
(8,316
)
(25,527
)
(4,868
)
24,527
(17,719
)
(18,963
)
189,782
Interest expense
(6,685
)
(6,199
)
(5,506
)
(4,987
)
(4,251
)
(6,958
)
(13,393
)
(13,271
)
Other income, net
2,302
4,806
429
1,491
565
578
2,305
1,007
Loss on debt extinguishment
—
—
—
—
—
(8,300
)
—
—
Income (loss) before taxes
(34,380
)
(9,709
)
(30,604
)
(8,364
)
20,841
(32,399
)
(30,051
)
177,518
Provision for (benefit from) income taxes
(8,950
)
(3,547
)
(14,583
)
8,056
2,056
(9,299
)
482
(1,126
)
Net income (loss)
(25,430
)
(6,162
)
(16,021
)
(16,420
)
18,785
(23,100
)
(30,533
)
178,644
Less: Net loss attributable to noncontrolling interest
(347
)
(341
)
(407
)
(408
)
(551
)
(487
)
(781
)
(1,147
)
Net income (loss) attributable to the Company
$
(25,083
)
$
(5,821
)
$
(15,614
)
$
(16,012
)
$
19,336
$
(22,613
)
$
(29,752
)
$
179,791
Income (loss) per share attributable to the Company:
Basic
$
(0.51
)
$
(0.12
)
$
(0.32
)
$
(0.32
)
$
0.39
$
(0.33
)
$
(0.28
)
$
1.70
Diluted
$
(0.51
)
$
(0.12
)
$
(0.32
)
$
(0.32
)
$
0.39
$
(0.33
)
$
(0.28
)
$
1.68
Weighted average number of shares used in per share calculations-basic
48,721
49,259
49,459
49,566
49,945
69,160
107,499
105,498
Weighted average number of shares used in per share calculations-diluted
48,721
49,259
49,459
49,566
50,199
69,160
107,499
106,907
(1)
The sum of quarterly amounts, including per share amounts, may not equal amounts reported for year-to-date periods. This is due to the effects of rounding and changes in the number of weighted-average shares outstanding for each period.
(2)
Three months ended June 30, 2020 include one month of financial results of TiVo following the Mergers as well as related one-time merger related transaction costs. All periods subsequent to June 2020 include financial results from TiVo post-merger .
71
Other Supplementary Data
The following tables present our quarterly unaudited non-GAAP financial measures for the eight quarters in the periods ended December 31, 2020 and 2019. The non-GAAP financial measures adjust for either one-time or ongoing non-cash acquired intangibles amortization charges; costs related to actual or planned business combinations including transaction fees, integration costs, severance, facility closures, and retention bonuses; separation costs; and all forms of stock-based compensation. We believe that the non-GAAP measures used in this report provide investors with important perspectives into our ongoing business performance. Our management uses these non-GAAP financial measures when evaluating our operating performance. The non-GAAP financial measures disclosed by us should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. Our use of non-GAAP financial measures has certain limitations in that such non-GAAP financial measures may not be directly comparable to those reported by other companies. Other companies may use the same or similarly named measures, but exclude different items, which may not provide readers with a comparable view of our performance in relation to other companies.
Three Months Ended
Mar 31,
2019
Jun 30,
2019
Sep 30,
2019
Dec 31,
2019
Mar 31,
2020
Jun 30,
2020
Sep 30,
2020
Dec 31,
2020
(in thousands)
GAAP operating income (loss)
$
(29,997
)
$
(8,316
)
$
(25,527
)
$
(4,868
)
$
24,527
$
(17,719
)
$
(18,963
)
$
189,782
Adjustments to GAAP operating income (loss):
Stock-based compensation expense:
Cost of revenue
—
—
—
—
—
73
258
450
Research, development and other
3,603
3,146
3,544
4,350
3,036
2,838
3,580
4,138
Selling, general and administrative
4,020
4,075
4,444
4,372
4,951
5,558
6,319
7,934
Amortization expense
25,459
25,314
25,146
24,027
22,509
32,044
50,894
51,379
Merger and integration-related costs:
Transaction and other related costs recorded in selling, general and administrative
—
—
—
4,636
3,089
24,844
1,187
319
Separation costs recorded in selling, general and administrative
—
—
—
—
—
390
2,147
2,260
Severance and retention recorded to research, development and other
—
—
—
—
—
1,256
1,117
988
Severance and retention recorded to selling, general and administrative
—
—
—
—
—
5,645
2,474
1,292
Lease impairment recorded in selling, general and administrative
—
—
—
—
—
—
656
1,757
Non-GAAP operating income
$
3,085
$
24,219
$
7,607
$
32,517
$
58,112
$
54,929
$
49,669
$
260,299
Three Months Ended
Mar 31,
2019
Jun 30,
2019
Sep 30,
2019
Dec 31,
2019
Mar 31,
2020
Jun 30,
2020
Sep 30,
2020
Dec 31,
2020
(in thousands)
Cash flow from operations
$
13,821
$
55,072
$
35,321
$
65,039
$
32,644
$
34,598
$
62,191
$
298,170
Adjustments to cash flow from operations:
Purchases of property & equipment
(858
)
(5,685
)
(1,413
)
(857
)
(688
)
(1,204
)
(1,083
)
(4,404
)
Merger and integration costs
—
—
—
4,636
3,089
24,844
1,187
319
Separation-related costs
—
—
—
—
—
390
2,147
2,260
Severance
—
—
—
—
—
6,901
1,917
468
Adjusted free cash flow*
$
12,963
$
49,387
$
33,908
$
68,818
$
35,045
$
65,529
$
66,359
$
296,813
* Adjusted free cash flow is defined as operating cash flow, less purchases of property and equipment, plus merger and integration, separation, and severance costs.
72
Additional Financial Data
The following table presents our cash tax payments (in thousands):
Three Months Ended
Mar 31,
2019
Jun 30,
2019
Sep 30,
2019
Dec 31,
2019
Mar 31,
2020
Jun 30,
2020
Sep 30,
2020
Dec 31,
2020
Cash Tax Payments*
$
5,599
$
858
$
5,917
$
2,627
$
5,637
$
8,086
$
16,924
$
12,419
* Cash tax payments are defined as total income taxes paid, net of refunds, and are derived from supplemental cash flow disclosure information appearing on the Consolidated Statements of Cash Flows.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.