Silicon Image Reports Third Quarter 2009 Financial Results

October 22, 2009 4:03 PM EDT

SUNNYVALE, Calif.--(BUSINESS WIRE)-- 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 third quarter ended September 30, 2009.

Revenue for the third quarter of 2009 was $37.2 million, compared to $37.3 million for the second quarter of 2009 and $77.8 million for the third quarter of 2008.

GAAP net loss for the third quarter of 2009 was $15.5 million, or $0.21 per diluted share, compared to a net loss of $13.3 million, or $0.18 per diluted share, for the second quarter of 2009 and net income of $6.1 million, or $0.08 per diluted share, for the third quarter of 2008. GAAP net loss for the third quarter of 2009 includes a one time charge of approximately $2.0 million for professional fees. GAAP net loss for the second quarter of 2009 includes pre-tax restructuring expenses of $7.1 million.

Non-GAAP net loss for the third quarter of 2009 was $3.4 million, or $0.04 per diluted share, compared to a non-GAAP net loss of $4.3 million, or $0.06 per diluted share, for the second quarter of 2009 and non-GAAP net income of $17.7 million, or $0.23 per diluted share, for the third quarter of 2008. Non-GAAP net income (loss) for these periods exclude stock-based compensation expense, amortization of intangible assets, restructuring charges, and certain professional fees.

A reconciliation of GAAP and non-GAAP items is provided in a table following the Condensed Consolidated Statements of Operations.

"The company is in the process of implementing a number of important internal changes that will continue to improve our operating infrastructure from both execution and cost standpoints," said Hal Covert, president and chief operating officer of Silicon Image. "These changes will enhance our ability to take full advantage of the roll-out of our new products that will be underway as we enter 2010. Our new products and enhanced operational infrastructure are key factors in the company's plan to improve revenue generation and achieve profitability in 2010," concluded Covert.

The following are Silicon Image's financial performance estimates for the fourth quarter of 2009:

Revenue: $34 million - $37 million

Gross margin: 54% - 55%

GAAP operating expenses: approximately $71 million

Non-GAAP operating expenses: approximately $25 million

Interest income: approximately $0.7 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 third quarter 2009 results at 2:00 p.m. Pacific Time and will webcast the event. To access the conference call, dial 800-533-7619 or 785-830-1923 and enter pass code 8745196. The webcast 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 October 27, 2009. To access the replay, please dial 888-203-1112 or 719-457-0820 and enter pass code 8745196.

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 and Taiwan. For more information, please visit www.siliconimage.com.

NOTE: Silicon Image and the Silicon Image logo are trademarks, registered trademarks or service marks of Silicon Image, Inc. in the United States and/or other countries. HDMI, the HDMI logo, and High-Definition Multimedia Interface are trademarks or registered trademarks 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 and use of cash, and improvements in the company's operating infrastructure and the impact of such improvements on the roll-out of the company's new products. These forward-looking statements involve risks and uncertainties, including the risks of uncertain economic conditions, competition in our markets, the company's ability to improve its operating infrastructure and 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                   Nine Months Ended

                        September    June 30,     September  September    September
                        30, 2009     2009         30, 2008   30, 2009     30, 2008

Revenue:

Product                 $ 30,716     $ 29,436     $ 64,974   $ 94,747     $ 183,997

Licensing                 6,440        7,900        12,802     20,257       30,975

Total revenue             37,156       37,336       77,776     115,004      214,972

Cost of revenue and
operating expenses:

Cost of product           16,801       17,264       31,518     52,284       87,921
revenue (1)

Cost of licensing         156          274          223        626          1,064
revenue

Research and              17,807       17,619       20,714     53,160       64,554
development (2)

Selling, general and      17,222       12,678       17,468     43,615       54,853
administrative (3)

Amortization of           1,473        1,473        1,587      4,419        4,761
intangible assets

Restructuring expense     348          7,098        1,876      8,205        1,876

Goodwill impairment       -            -            -          19,210       -

Total cost of revenue     53,807       56,406       73,386     181,519      215,029
and operating expenses

Income (loss) from        (16,651 )    (19,070 )    4,390      (66,515 )    (57     )
operations

Interest income and       696          598          1,798      2,233        5,094
other, net

Income (loss) before
provision for income      (15,955 )    (18,472 )    6,188      (64,282 )    5,037
taxes

Income tax expense        (444    )    (5,143  )    114        (2,113  )    (13     )
(benefit)

Net income (loss)       $ (15,511 )  $ (13,329 )  $ 6,074    $ (62,169 )  $ 5,050

Net income (loss) per
share - basic and       $(0.21    )  $(0.18    )  $0.08      $(0.83    )  $0.07
diluted

Weighted average          75,053       74,806       73,861     74,763       76,088
shares - basic

Weighted average          75,053       74,806       75,334     74,763       77,185
shares - diluted

______________________

(1) Includes
stock-based             $ 363        $ 244        $ 351      $ 806        $ 1,132
compensation expense

(2) Includes
stock-based               2,374        1,617        1,753      5,365        5,200
compensation expense

(3) Includes
stock-based               4,911        2,352        2,004      9,255        8,057
compensation expense

SILICON IMAGE, INC.

GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS) RECONCILIATION

(In thousands, except per share amounts)

(unaudited)

                Three Months Ended                     Nine Months Ended

                September    June 30, 2009  September  September 30,  September
                30, 2009                    30, 2008   2009           30, 2008

GAAP net        $ (15,511 )  $ (13,329 )    $ 6,074    $ (62,169 )    $ 5,050
income (loss)

Non-GAAP
adjustments:

Stock-based
compensation      7,648        4,213          4,108      15,426         14,389
expense (1)

Amortization
of intangible     1,473        1,473          1,587      4,419          4,761
assets (2)

Restructuring     348          7,098          1,876      8,205          1,876
expense

Professional      2,015        -              -          2,015          -
fees (4)

Goodwill          -            -              -          19,210         -
impairment (3)

Non-GAAP net
income (loss)     (4,027  )    (545    )      13,645     (12,894 )      26,076
before tax
adjustments

Income tax
effects on        674          (3,721  )      4,037      1,639          -
above
adjustments

Non-GAAP net    $ (3,353  )  $ (4,266  )    $ 17,682   $ (11,255 )    $ 26,076
income (loss)

Non-GAAP net
income (loss)   $ (0.04   )  $ (0.06   )    $ 0.24     $ (0.15   )    $ 0.34
per share --
basic

Non-GAAP net
income (loss)   $ (0.04   )  $ (0.06   )    $ 0.23     $ (0.15   )    $ 0.34
per share --
diluted

Weighted
average shares    75,053       74,806         73,861     74,763         76,088
-- basic

Weighted
average shares    75,053       74,806         75,334     74,763         77,185
-- diluted

(1) For the three months and nine months ended September 30, 2009 and 2008, and
for the three months ended June 30, 2009, these adjustments represent the
non-cash amortization of stock-based compensation.

Cost of         $ 363        $ 244          $ 351      $ 806          $ 1,132
Revenue

Research and      2,374        1,617          1,753      5,365          5,200
Development

Selling,
General and       4,911        2,352          2,004      9,255          8,057
Administrative

Total           $ 7,648      $ 4,213        $ 4,108    $ 15,426       $ 14,389

(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 for the
three months ended March 31, 2009.

(4) This adjustment represents the professional fees incurred during the three
months ended September 30, 2009 associated with a potential strategic
acquisition which we evaluated and decided not to pursue.

SILICON IMAGE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

Unaudited

                                           September 30, 2009  December 31, 2008

Assets

Current Assets:

Cash and cash equivalents                  $ 27,883            $ 95,414

Short-term investments                       125,335             89,591

Accounts receivable, net                     24,454              5,922

Inventories                                  12,538              12,775

Prepaid expenses and other current assets    17,417              15,275

Deferred income taxes                        6,731               6,665

Total current assets                         214,358             225,642

Property and equipment, net                  15,125              19,394

Intangible assets, net                       28,503              32,921

Deferred income taxes, non-current           22,591              28,193

Goodwill                                     -                   19,210

Other assets                                 719                 1,181

Total assets                               $ 281,296           $ 326,541

Liabilities and Stockholders' Equity

Current Liabilities:

Accounts payable                           $ 13,570            $ 7,278

Accrued and other liabilities                18,178              23,023

Deferred license revenue                     4,299               2,348

Deferred margin on sales to distributors     2,628               6,881

Total current liabilities                    38,675              39,530

Other long-term liabilities                  9,259               8,064

Total liabilities                            47,934              47,594

Stockholders' Equity:

Total stockholders' equity                   233,362             278,947

Total liabilities and stockholders'        $ 281,296           $ 326,541
equity

SILICON IMAGE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS

(In thousands)

Unaudited

                                          Nine Months Ended

                                          September 30, 2009  September 30, 2008

Cash flows from operating activities:

Net income (loss)                         $ (62,169  )        $ 5,050

Adjustments to reconcile net income
(loss) to cash provided by (used in)
operating activities:

Impairment of goodwill                      19,210              -

Stock-based compensation expense            15,426              14,389

Depreciation                                6,814               7,894

Deferred income taxes                       5,536               (5,306   )

Amortization of intangible assets           4,419               4,761

Amortization of investment premium          2,351               768

Non-cash restructuring expenses             226                 459

Loss on disposal and retirement of          178                 562
property and equipment

Provision for doubtful accounts             42                  621

Tax deficiency from employee stock-based    (1,711   )          (475     )
compensation plans

Gain on derivative transactions             (211     )          -

Excess tax benefits from employee stock     (32      )          (527     )
transactions

Realized gain on sale of short-term         -                   (106     )
investments

Changes in assets and liabilities:

Accounts receivable                         (18,543  )          (2,835   )

Inventories                                 237                 3,695

Prepaid expenses and other current          (1,437   )          4,167
assets

Accounts payable                            7,403               4,590

Accrued and other current liabilities       (3,669   )          (7,090   )

Deferred license revenue                    1,951               (815     )

Deferred margin on sales to distributors    (4,253   )          (2,551   )

Cash provided by (used in) operating        (28,232  )          27,251
activities

Cash flows from investing activities:

Proceeds from sales of short-term           110,716             171,231
investments

Purchases of short-term investments         (148,592 )          (188,443 )

Purchases of property and equipment         (2,855   )          (6,028   )

Proceeds from sale of property and          120                 -
equipment

Cash used in investing activities           (40,611  )          (23,240  )

Cash flows from financing activities:

Proceeds from issuances of common stock,    2,543               4,748
net

Excess tax benefits from employee stock     32                  527
transactions

Payments for vendor financed software       (1,250   )          (6,153   )
and intangibles purchased

Repurchase of restricted stock units for    (280     )          -
income tax withholding

Repurchase of common stock                  -                   (68,180  )

Cash provided by (used in) financing        1,045               (69,058  )
activities

Effect of exchange rate changes on cash     267                 (407     )
and cash equivalents

Net decrease in cash and cash               (67,531  )          (65,454  )
equivalents

Cash and cash equivalents -- beginning      95,414              137,822
of period

Cash and cash equivalents -- end of       $ 27,883              72,368
period

Supplemental cash flow information:

Net cash payment (refund) for income      $ (4,766   )        $ 1,924
taxes

Restricted stock units vested             $ 780               $ -

Unrealized net gain (loss) on short-term  $ 220               $ (399     )
investments

Property and equipment purchased but not  $ 167               $ 302
paid for

    Source: Silicon Image, Inc.

Related Categories

Press Releases

Stocks Mentioned

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?