Conference Call
The company will host an investor conference call today to discuss its third quarter results at 2:00 p.m. Pacific Time and will web cast that event. To access the conference call, dial 719-325-4746 and enter pass code 4946309. The webcast will be accessible on Silicon Image's investor relations website at http://www.SiliconImage.com. A replay of the conference call will be available within two hours of the conclusion of the conference call though November 6, 2008. To access the replay, please dial 888-203-1112 or 719-457-0820 and enter pass code 4946309.
About Silicon Image, Inc.
Silicon Image, Inc. is a global leader in driving the architecture and semiconductor implementation for the secure distribution, presentation and storage of high-definition content in the consumer electronics, personal computing, and mobile device markets. With a rich history of technology innovation that includes creating industry standards such as SATA, DVI and HDMI, Silicon Image partners with the world’s leading entertainment creators and electronics manufacturers to deliver digital HD content to consumers anytime, anywhere, on any device. Silicon Image is also a leading provider of semiconductor intellectual property solutions for high-definition multimedia and data storage applications. Additionally, Simplay Labs, LLC, a wholly-owned subsidiary of Silicon Image, offers robust testing tools, technologies, support services, consulting and product certification to electronics manufacturers to maximize performance, interoperability and ensure the highest-quality HD experience to consumers. With engineering, sales and customer support facilities located throughout North America, Asia and Europe, Silicon Image (NASDAQ:SIMG) is globally headquartered in Sunnyvale, California. For more information, please visit www.siliconimage.com.
NOTE: Silicon Image and Simplay HD are trademarks, registered trademarks or service marks of Silicon Image, Inc. in the United States and other countries. HDMI and High-Definition Multimedia Interface are trademarks or registered trademarks of HDMI Licensing, LLC in the United States and other countries, and are used under license from HDMI Licensing, LLC. All other trademarks and registered trademarks are the property of their respective owners.
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 design wins in the 2008/2009 customer design win season, revenue, gross margin, operating expenses, interest income, tax rates and shares outstanding in the fourth quarter of 2008, the company's ability to deliver financial performance in line with its stated goals and new products and technologies to market, and the performance and customer benefits of Silicon Image’s products. These forward-looking statements involve risks and uncertainties, including the company's ability to secure additional design wins in 2008 and 2009 and to deliver financial performance in-line with its stated goals and new products and technologies to market 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 filed by Silicon Image with the U.S. Securities and Exchange Commission. These forward-looking statements are made of the date of this press release, and Silicon Image assumes no obligation to update any such forward-looking information.
| SILICON IMAGE, INC. | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (In thousands) | ||||||
| (Unaudited) | ||||||
|
September 30, 2008 |
December 31, 2007 | |||||
| Assets | ||||||
| Current Assets: | ||||||
| Cash and cash equivalents | $ | 72,368 | $ | 137,822 | ||
| Short-term investments | 128,171 | 111,889 | ||||
| Accounts receivable, net | 23,603 | 21,254 | ||||
| Inventories | 16,503 | 20,198 | ||||
| Prepaid expenses and other current assets | 9,629 | 13,732 | ||||
| Deferred income taxes, current | 4,881 | 3,984 | ||||
| Total current assets | 255,155 | 308,879 | ||||
| Property and equipment, net | 21,606 | 24,191 | ||||
| Goodwill | 19,210 | 19,210 | ||||
| Intangible assets, net | 34,508 | 39,269 | ||||
| Deferred income taxes, non-current | 24,387 | 19,978 | ||||
| Other assets | 1,357 | 1,421 | ||||
| Total assets | $ | 356,223 | $ | 412,948 | ||
| Liabilities and Stockholders ’ Equity | ||||||
| Current Liabilities: | ||||||
| Accounts payable | $ | 32,096 | $ | 17,892 | ||
| Accrued liabilities and other current liabilities | 18,033 | 36,996 | ||||
| Deferred license revenue | 3,045 | 3,860 | ||||
| Deferred margin on sales to distributors | 23,892 | 26,443 | ||||
| Current liabilities | 77,066 | 85,191 | ||||
| Other long-term liabilities | 10,738 | 13,910 | ||||
| Total liabilities | 87,804 | 99,101 | ||||
| Stockholders ’ Equity: | ||||||
| Total stockholders ’ equity | 268,419 | 313,847 | ||||
| Total liabilities and stockholders ’ equity | $ | 356,223 | $ | 412,948 | ||
| SILICON IMAGE, INC. | |||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||
| September 30, 2008 | June 30, 2008 | September 30, 2007 | September 30, 2008 | September 30, 2007 | |||||||||||
| Revenue: | |||||||||||||||
| Product | $ | 64,974 | $ | 61,836 | $ | 74,173 | $ | 183,997 | $ | 195,715 | |||||
| Licensing | 12,802 | 8,247 | 12,109 | 30,975 | 39,457 | ||||||||||
| Total revenue | 77,776 | 70,083 | 86,282 | 214,972 | 235,172 | ||||||||||
| Cost of revenue and operating expenses: | |||||||||||||||
| Cost of revenue (1) | 31,741 | 29,107 | 37,500 | 88,985 | 105,196 | ||||||||||
| Research and development (2) | 20,714 | 22,298 | 20,489 | 64,554 | 56,709 | ||||||||||
| Selling, general and administrative (3) | 17,468 | 19,067 | 16,827 | 54,853 | 51,122 | ||||||||||
| Amortization of intangible assets | 1,587 | 1,587 | 540 | 4,761 | 1,692 | ||||||||||
| Restructuring expenses | 1,876 | - | - | 1,876 | - | ||||||||||
| Total cost of revenue and operating expenses | 73,386 | 72,059 | 75,356 | 215,029 | 214,719 | ||||||||||
| Income (loss) from operations | 4,390 | (1,976) | 10,926 | (57) | 20,453 | ||||||||||
| Interest income and other, net | 1,798 | 1,380 | 2,302 | 5,094 | 8,618 | ||||||||||
|
Income (loss) before income taxes |
6,188 | (596) | 13,228 | 5,037 | 29,071 | ||||||||||
| Provision (benefit) for income taxes | 114 | (134) | 9,118 | (13) | 17,673 | ||||||||||
| Net income (loss) | $ | 6,074 | $ | (462) | $ | 4,110 | $ | 5,050 | $ | 11,398 | |||||
| Net income (loss) per share – basic and diluted | $ | 0.08 | $ | (0.01) | $ | 0.05 | $ | 0.07 | $ | 0.13 | |||||
| Weighted average shares – basic | 73,861 | 73,399 | 84,489 | 76,088 | 86,008 | ||||||||||
| Weighted average shares – diluted | 75,334 | 73,399 | 85,937 | 77,185 | 88,063 | ||||||||||
|
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ |
|||||||||||||||
| (1) Includes stock-based compensation expense | $ | 351 | $ | 431 | $ | 421 | $ | 1,132 | $ | 1,210 | |||||
| (2) Includes stock-based compensation expense | 1,753 | 2,213 | 2,181 | 5,200 | 6,545 | ||||||||||
| (3) Includes stock-based compensation expense | 2,004 | 3,614 | 2,731 | 8,057 | 6,796 | ||||||||||
| SILICON IMAGE, INC. | |||||||||||||||
| GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME RECONCILIATION | |||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||
| (unaudited) | |||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||
| September 30, 2008 | June 30, 2008 | September 30, 2007 |
September 30, 2008 |
September 30, 2007 |
|||||||||||
| GAAP Net income (loss) | $ | 6,074 | $ | (462) | $ | 4,110 | $ | 5,050 | $ | 11,398 | |||||
| Non-GAAP adjustments: | |||||||||||||||
| Stock-based compensation expense (1) | 4,108 | 6,258 | 5,333 | 14,389 | 14,551 | ||||||||||
| Amortization of intangible assets (2) | 1,587 | 1,587 | 540 | 4,761 | 1,692 | ||||||||||
| Restructuring expenses | 1,876 | - | - | 1,876 | - | ||||||||||
| Non-GAAP Net income before tax adjustments | 13,645 | 7,383 | 9,983 | 26,076 | 27,641 | ||||||||||
| Income tax effects on above adjustments | 4,037 | (2,354) | (1,712) | - | (4,519) | ||||||||||
| Non-GAAP net income | $ | 17,682 | $ | 5,029 | $ | 8,271 | $ | 26,076 | $ | 23,122 | |||||
| Non-GAAP net income per share — basic | $ | 0.24 | $ | 0.07 | $ | 0.10 | $ | 0.34 | $ | 0.27 | |||||
| Non-GAAP net income per share — diluted | $ | 0.23 | $ | 0.07 | $ | 0.10 | $ | 0.34 | $ | 0.26 | |||||
| Weighted average shares — basic | 73,861 | 73,399 | 84,489 | 76,088 | 86,008 | ||||||||||
| Weighted average shares — diluted | 75,334 | 74,815 | 85,937 | 77,185 | 88,063 | ||||||||||
|
(1) For the three months and nine months ended September 30, 2008 and 2007, and for the three months ended June 30, 2008, these adjustments represent the non-cash amortization of stock-based compensation associated with the adoption of SFAS No. 123 (R) Share-based Payment. |
|||||||||||||||
| Cost of Revenue | $ | 351 | $ | 431 | $ | 421 | $ | 1,132 | $ | 1,210 | |||||
| Research and Development | 1,753 | 2,213 | 2,181 | 5,200 | 6,545 | ||||||||||
| Selling, General and Administrative | 2,004 | 3,614 | 2,731 | 8,057 | 6,796 | ||||||||||
| Total | $ | 4,108 | $ | 6,258 | $ | 5,333 | $ | 14,389 | $ | 14,551 | |||||
|
(2) This adjustment represents 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. |
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| SILICON IMAGE, INC. | ||||||
| Condensed Consolidated Statements of Cash Flows | ||||||
| (In thousands) (unaudited) | ||||||
|
Nine months ended
|
||||||
| 2008 | 2007 | |||||
| Cash flows from operating activities: | ||||||
| Net income | $ | 5,050 | $ | 11,398 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation | 7,894 | 7,456 | ||||
| Amortization of intangible assets | 4,761 | 1,692 | ||||
| Provision for doubtful accounts | 621 | 450 | ||||
| Stock-based compensation expense | 14,389 | 14,549 | ||||
| Income tax benefit (deficiency) from employee based compensation plans | (475) | 789 | ||||
| Excess tax benefits from employee stock transactions | (527) | (2,880) | ||||
| (Accretion) of investment discount/Amortization of investment premium | 768 | (260) | ||||
| Realized gain on investments | (106) | (27) | ||||
|
Non-cash restructuring expenses |
459 | |||||
| Loss on disposal of property and equipment | 562 | 995 | ||||
| Deferred income taxes | (5,306) | (206) | ||||
| Changes in assets and liabilities: | ||||||
| Accounts receivable | (2,835) | (3,029) | ||||
| Inventories | 3,695 | 8,736 | ||||
| Prepaid expenses and other assets | 4,167 | 1,167 | ||||
| Accounts payable | 4,590 | 6,421 | ||||
| Accrued liabilities and other liabilities | (7,090) | (22,263) | ||||
| Deferred revenue | (815) | (839) | ||||
| Deferred margin on sales to distributors | (2,551) | 12,852 | ||||
| Cash provided by operating activities | 27,251 | 37,001 | ||||
| Cash flows from investing activities: | ||||||
| Proceeds from sales and maturities of short-term investments | 171,231 | 100,434 | ||||
| Purchases of short-term investments | (188,443) | (26,287) | ||||
| Business acquisition, net of cash acquired | - | (13,751) | ||||
| Purchases of property and equipment | (6,028) | (10,105) | ||||
| Purchase of intellectual property | - | (15,040) | ||||
| Cash provided by (used in) investing activities | (23,240) | 35,251 | ||||
| Cash flows from financing activities: | ||||||
| Proceeds from issuances of common stock, net | 4,748 | 12,305 | ||||
| Excess tax benefits from employee stock transactions | 527 | 2,880 | ||||
| Payment for vendor financed software and intangibles purchased | (6,153) | (528) | ||||
| Payments to acquire treasury stock | (68,180) | (38,096) | ||||
| Cash used in financing activities | (69,058) | (23,439) | ||||
| Effect of exchange rate changes on cash and cash equivalents | (407) | (76) | ||||
| Net increase (decrease) in cash and cash equivalents | (65,454) | 48,737 | ||||
| Cash and cash equivalents — beginning of period | 137,822 | 81,921 | ||||
| Cash and cash equivalents — end of period | $ | 72,368 | $ | 130,658 | ||
| Supplemental cash flow information: | ||||||
| Cash payment for interest | $ | 38 | $ | 33 | ||
| Cash payment for income taxes | 1,924 | 29,018 | ||||
| Unrealized net gain (loss) on investment securities | (399) | 163 | ||||
| Property and equipment purchased but not paid for | 302 | 1,604 | ||||
