Silicon Image, Inc. (NASDAQ: SIMG), a leading provider of HD
connectivity solutions, today reported financial results for its
first quarter ended March 31, 2013.
Revenue for the first quarter of 2013 was $62.0 million,
approximately a 13% increase from revenue of $55.0 million in the
first quarter of 2012, and a 4% increase from $59.6 million in the
fourth quarter of 2012.
“We are pleased with our first quarter performance,” said
Camillo Martino, chief executive officer of Silicon Image, Inc.
“Revenue exceeded our expectations and bottom line growth showed
significant improvement. Our mobile business is up more than 50%
year-on-year and 11% over last quarter. In the first quarter, we
built a solid foundation to achieve our financial goals for
2013.”
GAAP net loss for the first quarter of 2013 was $0.6 million, or
$0.01 per share, compared with a net loss of $0.3 million, or $0.00
per share, for the fourth quarter of 2012 and a net loss of $9.6
million, or $0.12 per share, for the first quarter of 2012.
Non-GAAP net income for the first quarter of 2013 was $3.2
million, or $0.04 per diluted share, compared with a non-GAAP net
income of $6.2 million, or $0.08 per diluted share, for the fourth
quarter of 2012 and a non-GAAP net loss of $0.8 million, or $0.01
per share, for the first quarter of 2012. Non-GAAP net income
(loss) for these periods excludes stock-based compensation expense,
amortization of intangible assets, write-off of certain unsalable
inventory, business acquisition related expenses and restructuring
charges.
During the first quarter of 2013, pursuant to the $30 million
accelerated share repurchase agreement entered in November 2012,
Silicon Image received an additional 750,000 shares of its common
stock. The company’s cash and short-term investments balance as of
March 31, 2013 was $116.5 million.
A reconciliation of GAAP and non-GAAP items is provided in a
table following the Condensed Consolidated Statements of
Operations.
The following are Silicon Image’s financial performance
estimates for the second quarter of 2013:
Revenue: $71 million to $73 millionGross Margin: approximately
58%GAAP operating expenses: $37 million to $38 millionNon-GAAP
operating expenses: $34 million to $35 millionDiluted shares
outstanding: approximately 78.8 millionNon-GAAP tax rate:
approximately 30% of non-GAAP pre-tax income
Use of Non-GAAP Financial Information
Silicon Image presents and discusses gross margin, operating
expenses, net income (loss) and basic and diluted net income (loss)
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, write-off of
certain unsalable inventory, business acquisition related expenses
and restructuring charges 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
Silicon Image will host an investor conference call today to
discuss its first quarter of 2013 results at 2:00 p.m. Pacific Time
and will webcast the event. To access the conference call, dial
877-941-4774 or 480-629-9760 and enter pass code 4612156. The
webcast and replay will be accessible on Silicon Image's investor
relations website at http://ir.siliconimage.com. A replay of the
conference call will be available within two hours of the
conclusion of the conference call through May 14, 2013. To access
the replay, please dial 800-406-7325 or 303-590-3030 and enter pass
code 4612156.
About Silicon Image, Inc.
Silicon Image is a leading provider of connectivity
solutions that enable the reliable distribution and
presentation of high-definition content for mobile, consumer
electronics, and PC markets. The company delivers its
technology via semiconductor and intellectual property
products that are compliant with global industry standards and
feature market leading Silicon Image innovations such as
InstaPort™ and InstaPrevue™. Silicon Image's products are deployed
by the world's leading electronics manufacturers in devices such as
mobile phones, tablets, DTVs, Blu-ray Disc™ players, audio-video
receivers, digital cameras, as well as desktop and notebook PCs.
Silicon Image has driven the creation of the highly successful
HDMI® and DVI™ industry standards, the latest standard for
mobile devices - MHL®, and the leading 60GHz wireless HD video
standard - WirelessHD®. Via its wholly-owned subsidiary,
Simplay Labs, Silicon Image offers manufacturers
comprehensive standards interoperability and compliance
testing services. For more information, visit us
at http://www.siliconimage.com.
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. All other trademarks and
registered trademarks are the property of their respective owners
in the United 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, tax rates,
company growth, progress and stock repurchases. These
forward-looking statements involve risks and uncertainties,
including the risks of uncertain economic conditions, competition
in our markets, Silicon Image'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 U.S. 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 SEC.
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, 2013 December 31, 2012
March 31, 2012 Revenue: Product
$
50,341 $ 46,808 $ 43,024 Licensing
11,698
12,796 11,979 Total revenue
62,039 59,604 55,003
Cost of
revenue and operating expenses: Cost of product revenue (1)
25,798 30,105 23,099 Cost of licensing revenue
267
220 125 Research and development (2)
18,558 17,305 21,707
Selling, general and administrative (3)
16,402 12,279 16,137
Amortization of acquisition-related intangible assets
251
(889) 496 Restructuring expense
(7)
(54) 5 Total cost of revenue and operating expenses
61,269 58,966 61,569
Income (loss) from operations
770 638 (6,566) Interest
income and other, net
391 555
538 Income (loss) before provision for income taxes and
equity in net loss of an unconsolidated affiliate
1,161
1,193 (6,028) Income tax expense
1,742 1,458 2,948 Equity in
net loss of an unconsolidated affiliate
-
- 600 Net loss
$ (581) $
(265) $ (9,576) Net loss per share – basic and
diluted
$ (0.01) $ (0.00) $ (0.12) Weighted average
shares – basic and diluted
77,421 79,564 82,722 (1)
Includes stock-based compensation expense
$ 135 $ 104
$ 218 (2) Includes stock-based compensation expense
$
1,018 $ 871 $ 1,160 (3) Includes stock-based compensation
expense
$ 1,771 $ 1,200 $ 1,910
SILICON IMAGE, INC. GAAP NET LOSS TO NON-GAAP NET INCOME
(LOSS) RECONCILIATION (In thousands, except per share amounts)
Unaudited
Three Months Ended
March 31, 2013 December 31, 2012
March 31, 2012 GAAP net loss
$ (581 ) $
(265 ) $ (9,576 ) Non-GAAP adjustments: Stock-based compensation
expense (1)
2,924 2,175 3,288 Amortization of intangible
assets (2)
501 (639 ) 496 Amortization of intangible assets
of an unconsolidated affiliate (2)
- - 134 Business
strategic initiative and acquisition related expenses (2)
-
- 1,528 Write-down of certain unsalable inventory (3)
-
6,245 - Restructuring expense (3)
(7 )
(54 ) 5 Non-GAAP net income (loss)
before tax adjustments
2,837 7,462 (4,125 ) Tax adjustments
(4)
368 (1,218 )
3,301 Non-GAAP net income (loss)
$ 3,205
$ 6,244 $ (824 ) Non-GAAP net
income (loss) per share — basic
$ 0.04 $ 0.08 $ (0.01
) Non-GAAP net income (loss) per share — diluted
$
0.04 $ 0.08 $ (0.01 ) Weighted average shares — basic
77,421 79,564 82,722 Weighted average shares — diluted
78,433 80,389 82,722 Stock-based compensation expense
is composed of the following: Cost of revenue
$ 135 $
104 $ 218 Research and development
1,018 871 1,160 Selling,
general and administrative
1,771
1,200 1,910 Total
$ 2,924
$ 2,175 $ 3,288
Discussion of Non-GAAP Financial Measures
(1) Stock-Based Compensation Related Items: Stock-based
compensation expense relates primarily to equity awards, such as
stock options and restricted stock units. Stock-based compensation
is a non-cash expense that varies in amount from period to period
and is dependent on market forces that are often beyond our
control. As such, management excludes this item from our internal
operating forecasts and models. Management believes that non-GAAP
measures adjusted for stock-based compensation provide investors
with a basis to measure our core performance against the
performance of other companies without the variability created by
stock-based compensation as a result of the variety of equity
awards used by companies and the varying methodologies and
subjective assumptions used in determining such non-cash
expense.
(2) Business Strategic Initiative and Acquisition Related Items:
We exclude certain expense items resulting from our business
strategic initiative and acquisitions including the following, when
applicable:(i) amortization of purchased intangible assets
associated with our acquisitions; or relating to our unconsolidated
affiliates and (ii) business strategic initiative and
acquisition-related charges. The amortization of purchased
intangible assets associated with our acquisitions results in our
recording expenses in our GAAP financial statements that were
already expensed by the acquired company before the acquisition and
for which we have not expended cash. Moreover, had we internally
developed the products acquired, the amortization of intangible
assets, and the expenses of uncompleted research and development
would have been expensed in prior periods. Accordingly, we analyze
the performance of our operations in each period without regard to
such expenses. In addition, our business strategic initiatives and
acquisitions result in non-continuing operating expenses, which
would not otherwise have been incurred by us in the normal course
of our business operations. During January 2012, we established a
research and development center in Hyderabad, India, whereby we
hired 75 employees from our subcontractor and had to incur a
onetime fee of approximately $3.056 million towards acquiring these
employees. We amortized this fee over the first two quarters of
2012 amounting to $1,528 million per quarter. We do not expect a
fee of similar nature to be paid in our normal course of business
and consider it infrequent and non-recurring. We believe that
providing non-GAAP information for business strategic initiative
and acquisition-related expense items in addition to the
corresponding GAAP information allows the users of our financial
statements to better review and understand the historic and current
results of our continuing operations, and also facilitates
comparisons to less acquisitive peer companies.
(3) Other Items: We exclude certain other items that are the
result of either unique or unplanned events including the
following, when applicable:(i) write-down of certain
unsalable inventory due to defects in the material used by one of
our assembly vendors in the packaging process and (ii)
restructuring and related costs. It is difficult to estimate the
amount or timing of these items in advance. Restructuring charges
result from events which arise from unforeseen circumstances, which
often occur outside of the ordinary course of continuing
operations. The inventory write-down is an unusual and one-time
event for which we are seeking recovery from the vendor. Although
these events are reflected in our GAAP financials, these unique
transactions may limit the comparability of our on-going operations
with prior and future periods. As such, we believe that these
expenses do not accurately reflect the underlying performance of
our continuing operations for the period in which they are
incurred. We assess our operating performance both with these
amounts included and excluded, and by providing this information,
we believe the users of our financial statements are better able to
understand the financial results of what we consider our continuing
operations.
(4) Tax adjustments: For the three months ended March 31, 2013,
December 31, 2012 and March 31, 2012, our non-GAAP tax rate was
approximately 30% of non-GAAP pre-tax income. Non-GAAP tax rate is
primarily based on net expected cash flow for income taxes.
SILICON IMAGE, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands) Unaudited
March
31, 2013 December 31, 2012 ASSETS Current Assets:
Cash and cash equivalents
$ 45,964 $ 29,069 Short-term
investments
70,522 78,398 Accounts receivable, net
40,515 37,936 Inventories
14,281 11,268 Prepaid
expenses and other current assets
6,816 8,105 Deferred
income taxes
841 841 Total current assets
178,939
165,617 Property and equipment, net
14,125 14,840 Deferred
income taxes, non-current
4,144 4,144 Intangible assets, net
10,750 11,452 Goodwill
21,646 21,646 Other assets
10,625 9,043 Total assets
$ 240,229 $ 226,742
LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities:
Accounts payable
$ 19,826 $ 10,690 Accrued and other current
liabilities
16,605 19,600 Deferred margin on sales to
distributors
13,215 10,340 Deferred license revenue
2,310 2,185 Total current liabilities
51,956 42,815
Other long-term liabilities
17,024 16,827 Total liabilities
68,980 59,642 Stockholders’ equity
171,249 167,100
Total liabilities and stockholders’ equity
$ 240,229 $
226,742
SILICON IMAGE, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Unaudited
Three Months Ended March 31,
2013 2012 Cash flows from operating
activities: Net loss
$ (581) $ (9,576)
Adjustments to reconcile net loss to cash provided by (used in)
operating activities: Depreciation
1,573 1,591 Stock-based
compensation expense
2,924 3,288 Amortization of investment
premium
328 509 Tax benefits from employee stock-based
transactions
8 310 Amortization of intangible assets
702 496 Excess tax benefits from employee stock-based
transactions
(8) (310) Realized gain on sale of short-term
investments
(9) (45) Equity in net loss of unconsolidated
affiliate
- 600 Others
560 358 Changes in assets and
liabilities: Accounts receivable
(3,138) (9,967) Inventories
(3,013) (2,161) Prepaid expenses and other assets
904
969 Accounts payable
8,286 6,483 Accrued and other
liabilities
(2,506) (1,847) Deferred margin on sales to
distributors
2,875 3,442 Deferred license revenue
125 858 Cash provided by (used in) operating
activities
9,030 (5,002)
Cash flows
from investing activities: Proceeds from sales of short-term
investments
13,027 23,031 Purchases of short-term
investments
(5,431) (15,797) Purchases of property and
equipment
(835) (2,191) Investment in a privately held
company
- (3,500)
Cash paid for assets purchased from a
privately held company
(300) - Advances for intellectual properties
(378) -
Other investing activities
- (500) Cash
provided by investing activities
6,083
1,043
Cash flows from financing activities: Proceeds from
employee stock program
2,606 2,486 Excess tax benefits from
employee stock-based transactions
8 310 Repurchases of
restricted stock units for income tax withholding
(653)
(1,465) Cash paid to settle contingent consideration liabilities
(45) - Cash provided by financing
activities
1,916 1,331 Effect of
exchange rate changes on cash and cash equivalents
(134) (26) Net increase (decrease) in cash and
cash equivalents
16,895 (2,654) Cash and cash equivalents —
beginning of period
29,069 37,125 Cash
and cash equivalents — end of period
$ 45,964
$ 34,471
Supplemental cash flow information: Cash payment
for income taxes
$ (1,655) $ (209) Restricted stock
units vested
$ 1,649 $ 3,929 Property and equipment
and other assets purchased but not paid for
$ 1,418 $
1,150 Unrealized gain (loss) on available-for-sale securities
$ (132) $ 174
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