SUNNYVALE, Calif., April 23,
2009 – Silicon Image, Inc. (NASDAQ: SIMG), a leader in semiconductors
and intellectual property for the secure distribution, presentation
and storage of high-definition content, today reported financial results
for its first quarter ended March 31, 2009.
Revenue for the first quarter
of 2009 was $40.5 million, compared to $59.4 million for the fourth
quarter of 2008 and $67.1 million for the first quarter of 2008.
GAAP net loss for the first
quarter of 2009 was $33.3 million, or $0.45 per diluted share, compared
to a net income of $5.0 million, or $0.07 per diluted share, for the
fourth quarter of 2008 and net loss of $562,000, or $0.01 per diluted
share, for the first quarter of 2008. GAAP net loss for the first quarter
of 2009 includes a goodwill impairment charge of $19.2 million.
GAAP net income for the fourth quarter of 2008 includes pre-tax restructuring
expenses of $4.0 million.
Non-GAAP net loss for the first
quarter of 2009 was $3.6 million, or $0.05 per diluted share, compared
to net income of $15.7 million, or $0.21 per diluted share, for the
fourth quarter of 2008 and net income of $3.4 million, or $0.04 per
diluted share, for the first quarter of 2008. Non-GAAP net income excludes
stock-based compensation expense, amortization of intangible assets,
restructuring charges, and goodwill impairment.
A reconciliation of GAAP and
non-GAAP items is provided in a table following the Condensed Consolidated
Statements of Income.
"During the first quarter
of 2009 we continued to make good progress capturing design wins and
working with industry leaders to form new technology standards consortiums,"
said Steve Tirado, president and chief executive officer of Silicon
Image. "Our financial performance for the first quarter was in
line with our internal plan and reflective of the global economic environment."
The following
are Silicon Image’s financial performance estimates for the
second quarter of 2009:
Revenue: $40 million - $42
million
Gross margin: 54% - 55%
GAAP operating expenses: $35
million - $36 million
Non-GAAP operating expenses:
$29 million - $30 million
Interest income: $0.8 million
- $0.9 million
Diluted shares outstanding:
approximately 75 million
Cash flow neutral
Use of Non-GAAP Financial
Information
Silicon Image presents and
discusses gross margin, operating expenses, net income and basic and
diluted net income per share in accordance with Generally Accepted Accounting
Principles (GAAP) and on a non-GAAP basis for informational purposes
only. Silicon Image believes that non-GAAP reporting, giving effect
to the adjustments shown in the attached reconciliation, provides meaningful
information and therefore uses non-GAAP reporting to supplement its
GAAP reporting and internally in evaluating operations, managing and
monitoring performance, and determining bonus compensation. Further,
Silicon Image uses non-GAAP information as certain non-cash charges
such as amortization of intangibles, stock based compensation and goodwill
impairment do not reflect the cash operating results of the business.
Silicon Image has chosen to provide this supplemental information to
investors, analysts and other interested parties to enable them to perform
additional analyses of its operating results and to illustrate the results
of operations giving effect to such non-GAAP adjustments. The non-GAAP
financial information presented herein should be considered supplemental
to, and not as a substitute for, or superior to, financial measures
calculated in accordance with GAAP.
Conference Call
The company will host an investor
conference call today to discuss its first quarter 2009 results at 2:00
p.m. Pacific Time and will Web cast that event. To access the conference
call, dial 877-741-4248 or 719-325-4815 and enter pass code 5534052.
The Web cast will be accessible on Silicon Image's investor relations
Web site at http://www.SiliconImage.com. A replay of the conference
call will be available within two hours of the conclusion of the conference
call through April 28, 2009. To access the replay, please dial 888-203-1112
or 719-457-0820 and enter pass code 5534052.
About Silicon Image, Inc.
Silicon Image, Inc. is a leading
provider of semiconductor and intellectual property products for the
secure distribution, presentation and storage of high-definition content.
With a rich history of technology innovation that includes creating
industry standards such as DVI and HDMI, the company’s solutions facilitate
the use of digital content amongst consumer electronics, personal computer
(PC) and storage devices, with the goal to securely deliver digital
content anytime, anywhere and on any device. Founded in 1995, the company
is headquartered in Sunnyvale, California, with regional engineering
and sales offices in China, Germany, Japan, Korea, Taiwan and the United
Kingdom. For more information, please visit www.siliconimage.com.
NOTE: Silicon Image, the Silicon
Image logo, LiquidHD, LiquidPlay, and MHL are trademarks, registered
trademarks or service marks of Silicon Image, Inc. in the United States
and/or other countries. HDMI is a trademark or registered trademark
of HDMI Licensing, LLC in the United States and/or other countries.
All other trademarks and registered trademarks are the property of their
respective owners in the Unites States and/or other countries.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of federal securities laws and regulations.
These forward-looking statements include, but are not limited to, statements
related to Silicon Image's future operating results, including revenue,
gross margin, operating expenses, interest income, tax rates and use
of cash. These forward-looking statements involve risks and uncertainties,
including the risks of uncertain economic conditions, competition in
our markets, the Company's ability to deliver financial performance
in-line with its stated goals and other risks and uncertainties described
from time to time in Silicon Image's filings with the Securities and
Exchange Commission (SEC). These risks and uncertainties could cause
the actual results to differ materially from those anticipated by these
forward-looking statements. In addition, see the Risk Factors section
of the most recent Form 10-K and 10-Q filed by Silicon Image with the
U.S. Securities and Exchange Commission. These forward-looking statements
are made on the date of this press release, and Silicon Image assumes
no obligation to update any such forward-looking information.
# # #
| SILICON
IMAGE, INC. |
| CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
| (In thousands,
except per share amounts) |
|
| (unaudited) |
|
| |
Three Months Ended
|
|
| |
March 31, 2009 |
|
December 31, 2008 |
|
March 31, 2008 |
|
| Revenue: |
|
|
|
|
|
|
| Product |
$34,595 |
|
$49,204 |
|
$57,187 |
|
| Licensing |
5,917 |
|
10,239 |
|
9,926 |
|
| Total
revenue |
40,512 |
|
59,443 |
|
67,113 |
|
| Cost of revenue
and operating expenses: |
|
|
|
|
|
|
| Cost
of product revenue (1) |
18,219 |
|
24,618 |
|
27,788 |
|
| Cost
of license revenue |
196 |
|
123 |
|
349 |
|
| Research
and development (2) |
17,734 |
|
20,265 |
|
21,542 |
|
| Selling,
general and administrative (3) |
13,715 |
|
16,866 |
|
18,318 |
|
| Impairment
of goodwill |
19,210 |
|
- |
|
- |
|
| Amortization
of intangible assets |
1,473 |
|
1,587 |
|
1,587 |
|
| Restructuring
expense (4) |
759 |
|
3,982 |
|
- |
|
| Total
cost of revenue and operating expenses |
71,306 |
|
67,441 |
|
69,584 |
|
| Loss from operations |
(30,794) |
|
(7,998) |
|
(2,471) |
|
| Interest income and
other, net |
939 |
|
1,151 |
|
1,916 |
|
| Loss before provision
for income taxes |
(29,855) |
|
(6,847) |
|
(555) |
|
| Provision (benefit)
for income taxes |
3,474 |
|
(11,860) |
|
7 |
|
| Net income (loss) |
$(33,329) |
|
$5,013 |
|
$(562) |
|
| |
|
|
|
|
|
|
| Net income (loss) per
share – basic and diluted |
$(0.45) |
|
$0.07 |
|
$(0.01) |
|
| Weighted average shares
– basic |
74,421 |
|
74,068 |
|
80,987 |
|
| Weighted average shares
– diluted |
74,421 |
|
74,940 |
|
80,987 |
|
| _________________ |
|
|
|
|
|
|
| (1) Includes stock
compensation expense |
$199 |
|
$313 |
|
$350 |
|
| (2) Includes stock
compensation expense |
1,374 |
|
1,934 |
|
1,234 |
|
| (3) Includes stock
compensation expense |
1,992 |
|
2,836 |
|
2,439 |
|
| (4) Includes stock
compensation expense |
- |
|
14 |
|
- |
|
| SILICON
IMAGE, INC. |
| GAAP
NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS) RECONCILIATION |
| |
|
|
|
|
|
|
| (In thousands, except
per share amounts) |
|
Three Months Ended |
| (unaudited) |
|
March 31, 2009 |
|
December 31, 2008 |
|
March 31, 2008 |
| GAAP net income (loss) |
|
$(33,329) |
|
$5,013 |
|
$(562) |
| |
|
|
|
|
|
|
| Non-GAAP adjustments: |
|
|
|
|
|
|
| Stock-based compensation
expense (1) |
|
3,565 |
|
5,097 |
|
4,023 |
| Amortization of intangible
assets (2) |
|
1,473 |
|
1,587 |
|
1,587 |
| Goodwill impairment
(3) |
|
19,210 |
|
- |
|
- |
| Restructuring expense
|
|
759 |
|
3,968 |
|
- |
| Non-GAAP net income
(loss) before tax adjustments |
|
(8,322) |
|
15,665 |
|
5,048 |
| |
|
|
|
|
|
|
| Income tax effects
on above adjustments (4) |
|
4,686 |
|
- |
|
(1,683) |
| Non-GAAP net income
(loss) |
|
$(3,636) |
|
$15,665 |
|
$3,365 |
| |
|
|
|
|
|
|
| Non-GAAP net income
(loss) per share — basic and diluted |
|
$(0.05) |
|
$0.21 |
|
$0.04 |
| |
|
|
|
|
|
|
| Weighted average shares
— basic |
|
74,421 |
|
74,068 |
|
80,987 |
| Weighted average shares
— diluted |
|
74,421 |
|
74,940 |
|
81,574 |
| |
|
|
|
|
|
|
| (1) For
the three months ended March 31, 2009, December 31and March 31, 2008,
these adjustments represent the |
|
|
| non-cash
amortization of stock-based compensation associated with SFAS No. 123
(R) Share-based Payment. |
|
|
| |
|
|
|
|
|
|
| Cost of Revenue |
|
$199 |
|
$313 |
|
$350 |
| Research and Development |
|
1,374 |
|
1,934 |
|
1,234 |
| Selling, General and
Administrative |
|
1,992 |
|
2,836 |
|
2,439 |
| Restructuring expense |
|
- |
|
14 |
|
- |
| Total |
|
$3,565 |
|
$5,097 |
|
$4,023 |
| |
|
|
|
|
|
|
| (2) These
adjustments represent expenses for the amortization of intangible assets
recorded in connection with our acquisitions. These on-going expenses |
| pertain
to intangible assets that are not expected to be replaced when fully
amortized, as might a depreciable tangible asset. |
|
|
| |
|
|
|
|
|
|
| (3) This adjustment
represents the impairment recorded on goodwill. |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| (4) Non-GAAP
related items for Q4 2008 were not tax-effected as our tax effective
rate results in a benefit for these periods. |
|
|
| SILICON
IMAGE, INC. |
| CONDENSED
CONSOLIDATED BALANCE SHEETS |
| (In thousands) |
| Unaudited |
| |
|
|
|
| |
March 31, 2009 |
|
December 31, 2008 |
| Assets |
|
| Current Assets: |
|
|
|
| Cash and cash
equivalents |
$21,099 |
|
$95,414 |
| Short-term investments |
147,908 |
|
89,591 |
| Accounts receivable,
net |
17,505 |
|
5,922 |
| Inventories |
12,249 |
|
12,775 |
| Prepaid expenses
and other current assets |
21,621 |
|
15,275 |
| Deferred income
taxes |
6,252 |
|
6,665 |
| Total
current assets |
226,634 |
|
225,642 |
| Property and equipment,
net |
17,527 |
|
19,394 |
| Goodwill |
- |
|
19,210 |
| Intangible assets,
net |
31,448 |
|
32,921 |
| Deferred income taxes,
non-current |
19,584 |
|
28,193 |
| Other assets |
984 |
|
1,181 |
| Total
assets |
$296,177 |
|
$326,541 |
| Liabilities and
Stockholders’ Equity |
|
|
|
| Current Liabilities: |
|
|
|
| Accounts payable |
$10,692 |
|
$7,278 |
| Accrued and other
liabilities |
20,566 |
|
23,023 |
| Deferred license
revenue |
3,530 |
|
2,348 |
| Deferred margin
on sales to distributors |
3,127 |
|
6,881 |
| Total
current liabilities |
37,915 |
|
39,530 |
| Other long-term
liabilities |
8,304 |
|
8,064 |
| Total
liabilities |
46,219 |
|
47,594 |
| Stockholders’ Equity: |
|
|
|
| Total
stockholders’ equity |
249,958 |
|
278,947 |
| Total
liabilities and stockholders’ equity |
$296,177 |
|
$326,541 |
| SILICON
IMAGE, INC. |
| CONDENSED
CONSOLIDATED STATEMENTS OF CASHFLOWS |
| (In thousands) |
Three Months Ended March
31, |
| Unaudited |
2009 |
|
2008 |
| Cash flows from
operating activities: |
|
|
|
| Net
loss |
$(33,329) |
|
$(562) |
| Adjustments
to reconcile net loss to cash provided by operating activities: |
|
|
|
| Depreciation
|
2,281 |
|
2,722 |
| Provision
for doubtful accounts |
27 |
|
265 |
| Gain
on recovery of accounts receivable previously written off |
(107) |
|
- |
| Amortization/(accretion)
of investment premium/(discount) |
829 |
|
(43) |
| Amortization
of intangible assets |
1,473 |
|
1,587 |
| Impairment
of goodwill |
19,210 |
|
- |
| Stock-based
compensation expense |
3,565 |
|
4,023 |
| Tax
deficiency from employee based compensation plans |
(580) |
|
(647) |
| Excess
tax benefits from employee stock transactions |
(8) |
|
(42) |
| Deferred
income taxes |
9,022 |
|
(774) |
| Loss
on disposal of property and equipment |
199 |
|
7 |
| Gain
on derivative transactions |
(22) |
|
- |
| Realized
(gain)/loss on sale of short-term investments |
15 |
|
(49) |
| Changes
in assets and liabilities: |
|
|
|
| Accounts
receivable |
(11,541) |
|
(6,022) |
| Inventories |
526 |
|
6,082 |
| Prepaid
expenses and other assets |
(6,081) |
|
1,582 |
| Accounts
payable |
2,720 |
|
199 |
| Accrued
and other liabilities |
(1,141) |
|
(1,327) |
| Deferred
revenue |
1,182 |
|
1,111 |
| Deferred
margin on sales to distributors |
(3,754) |
|
(983) |
| Cash provided by (used in) operating activities |
(15,514) |
|
7,129 |
| Cash flows from
investing activities: |
|
|
|
| Purchases
of short-term investments |
(93,453) |
|
(75,134) |
| Proceeds
from sales of short-term investments |
34,460 |
|
118,265 |
| Purchases
of property and equipment |
(491) |
|
(2,597) |
| Proceeds
from sales of property and equipment |
97 |
|
- |
| Cash provided by (used in) investing activities |
(59,387) |
|
40,534 |
| Cash flows from
financing activities: |
|
|
|
| Proceeds
from issuances of common stock, net |
1,627 |
|
1,838 |
| Payments
for vendor financed software and intangibles purchased |
(625) |
|
- |
| Excess
tax benefits from employee stock transactions |
8 |
|
42 |
| Repurchase
of restricted stock units for income tax withholding |
(224) |
|
- |
| Repurchase
of common stock |
- |
|
(62,000) |
| Cash provided by (used in) financing activities |
786 |
|
(60,120) |
| Effect of exchange
rate changes on cash and cash equivalents |
(200) |
|
139 |
| Net decrease in cash
and cash equivalents |
(74,315) |
|
(12,318) |
| Cash and cash equivalents
— beginning of period |
95,414 |
|
137,822 |
| Cash and cash equivalents
— end of period |
$21,099 |
|
125,504 |
| Supplemental cash flow
information: |
|
|
|
| Restricted
stock units vested |
$625 |
|
$- |
| Cash
payment for income taxes, net of refunds |
$655 |
|
$222 |
| Unrealized
net gain on short-term investments |
$168 |
|
$57 |
| Property
and equipment purchased but not paid for |
$323 |
|
$515 |