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SUNNYVALE, Calif., Aug 09, 2005 /PRNewswire-FirstCall via COMTEX/ -- Silicon Image, Inc. (Nasdaq: SIMG), a leader in multi-gigabit semiconductor solutions for the secure transmission and storage of rich digital media, today reported financial results for its second quarter ended June 30, 2005.
Selected Second Quarter Highlights:
-- Record revenue of $50.7 million, an increase of 17.0 percent from the year ago quarter and a 14.4 percent sequential increase
-- GAAP net income of $10.5 million, or $0.12 per diluted share compared to a net loss of $0.3 million, or $0.00 per share for the year ago quarter and net income of $16.6 million, or $0.19 per diluted share last quarter
-- Non-GAAP* net income of $10.7 million or $0.12 per diluted share compared to non-GAAP net income of $8.3 million, or $0.10 per diluted share in the year ago second quarter and non-GAAP net income of $7.7 million, or $0.09 per diluted share last quarter
-- Non-GAAP* net income as a percentage of revenue was 21.1 percent as compared to 19.2 percent in the year ago quarter and 17.5 percent last quarter
-- 30 percent sequential quarterly growth in Consumer Electronics product revenue
-- Signed 48 new HDMI adopters
-- Announced SteelVine Storage Architecture design win with major OEM, LaCie, targeting CE applications
-- Top-tier accounting firm Deloitte & Touche engaged as independent auditors in July 2005
-- Awarded ISO 9001 certification
-- Elected Peter Hanelt as chairman of the board of directors in July 2005
Silicon Image achieved record revenue of $50.7 million for the second quarter. This was an increase of 17.0 percent from revenue of $43.4 million in the second quarter of 2004, and an increase of 14.4 percent sequentially from the $44.3 million in revenue in the first quarter of 2005.
Net income under Generally Accepted Accounting Principles (GAAP), which includes stock compensation expense, amortization of intangible assets, patent assertion costs and realized gain on an investment security was $10.5 million, or $0.12 per diluted share, for the quarter ended June 30, 2005. This compares to a net loss of $0.3 million, or $0.00 per share, for the year ago second quarter, and net income of $16.6 million, or $0.19 per diluted share for the first quarter of 2005.
Second quarter non-GAAP* net income was $10.7 million or $0.12 per diluted share, and was calculated excluding non-cash expenses for stock compensation, a non-cash expense for the amortization of intangible assets, gains and losses on an investment security and patent assertion costs. This compares to non- GAAP net income of $8.3 million, or $0.10 per diluted share, for the second quarter of 2004 and non-GAAP net income $7.7 million, or $0.09 per diluted share, for the first quarter of 2005.
"We continue to execute well on both the top and bottom lines. Our innovative product and business strategy has positioned us well for continued growth with high definition TV, PC and storage platforms, enabling secure digital content delivery in the home," said Steve Tirado, president and chief executive officer.
"Our noteworthy operational performance in the second quarter is helping to drive the continued growth of our cash and investment balances, ending the quarter with $116.8 million in cash and short term investments, up from $100.4 million at the end of March," added Darrel Slack, chief financial officer. "In addition, we are pleased to have engaged the top-tier accounting firm Deloitte & Touche as our independent auditors."
The company will host a conference call at 5:30 a.m. Pacific time today to discuss its second quarter 2005 results and business outlook. The call will be broadcast over the Internet and can be accessed on the investor relation site located at www.siliconimage.com. A replay of the conference call will be available on this site until 12:00 p.m. Pacific time on August 21, 2005.
* Note Regarding Non-GAAP Financial Information
The non-GAAP financial information set forth in this press release is presented for informational purposes only. Our presentation of non-GAAP financial information excludes stock compensation expense or benefit and amortization of intangible assets. It also excludes patent assertion costs and gains or losses on certain investment securities, which are not directly attributable to our ongoing operations and are expected to be non-recurring or to be incurred over a limited period of time. We believe that the exclusion of these items can help investors better understand our underlying operating performance. Additionally, items such as these mentioned above have the potential to distort our ability to provide a meaningful comparison of financial results across reporting periods. For these reasons, management does not evaluate these items when assessing the performance of our ongoing operations or when allocating resources.
About Silicon Image
Headquartered in Sunnyvale, Calif., Silicon Image, Inc. designs, develops and markets multi-gigabit semiconductor and system solutions for a variety of communications applications demanding high-bandwidth capability. With its proprietary Multi-layer Serial Link (MSL(TM)) architecture, Silicon Image is well positioned for leadership in multiple mass markets including PCs, consumer electronics, and storage. Silicon Image is a leader in the global PC/display arena with its innovative digital interconnect technology and is now emerging as a leading player in the fields of storage and consumer electronics by offering robust, high-bandwidth semiconductors. For more information on Silicon Image, visit www.siliconimage.com.
Safe Harbor Statement
This news release contains forward-looking information within the meaning of federal securities regulations. These forward-looking statements include statements related to future financial results, cash and investment balances, business outlook, business programs and initiatives, market growth, standards adoption and product introductions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. In particular, future demand in the PC display, consumer electronics and storage markets may differ from current expectations, adversely affecting the company's expected future results and cash and investment balances, new product introductions may not be timely or successful, business programs and initiatives and markets may not grow at the rates anticipated and standards may not be adopted at the rates anticipated. In addition, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Factors Affecting Future Results" in the most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K filed by Silicon Image with the SEC. Silicon Image assumes no obligation to update this forward-looking information.
NOTE: Silicon Image, PanelLink Cinema, SteelVine, MSL and www.siliconimage.com are trademarks, registered trademarks or service marks of Silicon Image, Inc. in the United States and other countries.
SILICON IMAGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (GAAP BASIS)
(In thousands, except Three Months Ended Six Months Ended
per share amounts) (unaudited) (unaudited)
June 30, March 31, June 30, June 30, June 30,
2005 2005 2004 2005 2004
Revenue:
Product $47,323 $40,808 $36,826 $88,131 $68,876
Development,
licensing and
royalties 3,398 3,512 6,535 6,910 10,343
Total revenue 50,721 44,320 43,361 95,041 79,219
Cost of revenue and
operating expenses:
Cost of revenue (1) 20,987 15,505 17,695 36,492 32,210
Research and
development (2) 11,903 8,122 16,245 20,025 33,043
Selling, general and
administrative (3) 8,801 3,904 10,067 12,705 21,718
Amortization of
intangible assets 274 274 357 548 713
Patent assertion costs 72 49 98 121 263
Total cost of revenue
and operating
expenses 42,037 27,854 44,462 69,891 87,947
Income (loss) from
operations 8,684 16,466 (1,101) 25,150 (8,728)
Interest income and
other, net 641 617 104 1,259 188
Gain (loss) on equity
investment 1,382 (119) 990 1,263 990
Income (loss) before
provision for
income taxes 10,707 16,964 (7) 27,672 (7,550)
Provision for income
taxes 247 331 255 578 572
Net income (loss) $10,460 $16,633 ($262) $27,094 ($8,122)
Net income per
share - basic $0.13 $0.21 $0.00 $0.34 ($0.11)
Net income per
share - diluted $0.12 $0.19 $0.00 $0.31 ($0.11)
Weighted average
shares - basic 78,981 78,307 73,352 78,722 72,934
Weighted average
shares - diluted 86,817 87,376 73,352 87,157 72,934
(1) Cost of revenue includes stock compensation expense (benefit) of $41,
$(1,197), $849, $(1,156) and $2,000 for the three months ended June 30,
2005, March 31, 2005 and June 30, 2004 and the six months ended June 30,
2005 and June 30, 2004, respectively.
(2) Research and development includes stock compensation expense (benefit)
of $747, $(4,438), $4,776, $(3,691) and $10,989 for the three months ended
June 30, 2005, March 31, 2005 and June 30, 2004 and the six months ended
June 30, 2005 and June 30, 2004, respectively.
(3) Selling, general and administrative includes stock compensation
expense (benefit) of $514, $(3,692), $3,507, $(3,178) and $8,211 for the
three months ended June 30, 2005, March 31, 2005 and June 30, 2004 and the
six months ended June 30, 2005 and June 30, 2004, respectively.
SILICON IMAGE, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (LOSS)
Three Months Ended Six Months Ended
(unaudited) (unaudited)
(In thousands)
June 30, March 31, June 30, June 30, June 30,
2005 2005 2004 2005 2004
GAAP net income (loss): $10,460 $16,633 ($262) $27,094 ($8,122)
Adjustments:
Stock compensation
expense (benefit)
applicable to cost
of revenue (1) 41 (1,197) 849 (1,156) 2,000
Stock compensation
expense (benefit)
applicable to research
and development (1) 747 (4,438) 4,776 (3,691) 10,989
Stock compensation
expense (benefit)
applicable to selling,
general and
administrative (1) 514 (3,692) 3,507 (3,178) 8,211
Total stock
compensation expense
(benefit) (1) 1,302 (9,327) 9,132 (8,025) 21,200
Amortization of goodwill
and intangible assets (2) 274 274 357 548 713
Patent assertion costs (3) 72 49 98 121 263
Loss (gain) on investment
security (4) (1,382) 119 (990) (1,263) (990)
Non-GAAP net income $10,726 $7,748 $8,335 $18,475 $13,064
(1) This adjustment represents expenses (benefit) associated with stock option modifications, including repricings, and certain stock options issued to employees of acquired companies and to non-employees in exchange for services. Stock-based compensation expense (benefit) fluctuates based in large part on changes in our stock price.
(2) This adjustment represents expenses for the amortization of goodwill and intangible assets recorded in connection with our acquisitions. These ongoing 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 expenses incurred to assert our patents in a pending lawsuit will be incurred over a limited period of time and are not directly attributable to our ongoing business operations. We believe these expenses may vary based on events that are unrelated to our ongoing business operations.
(4) This loss (gain) relates to warrants and stock received by the company from a transaction involving the licensing of certain of our intellectual property. These gains or losses are infrequent and unusual, and reflect market and other conditions that are unrelated to our ongoing business operations.
NON-GAAP SUPPLEMENTAL FINANCIAL INFORMATION
The non-GAAP financial information set forth in this press release is presented for informational purposes only. Our presentation of non-GAAP financial information excludes stock compensation expense or benefit and amortization of intangible assets. It also excludes patent assertion costs and gains and losses on certain investment securities, which are not directly attributable to our ongoing operations and are expected to be non-recurring or to be incurred over a limited period of time. We believe that the exclusion of these items can help investors better understand out underlying operating performance. Additionally, items such as these mentioned above have the potential to distort our ability to provide a meaningful comparison of financial results across reporting periods. For these reasons, management does not evaluate these items when assessing the performance of our ongoing operations or when allocating resources. Because of these exclusions, the following presentation is not in accordance with Generally Accepted Accounting Principles (GAAP). A discussion of the reasons that management believes that the exclusion of these items provides useful information to investors is set forth in the notes to the table under the caption "Reconciliation of GAAP to Non-GAAP Net Income (Loss)" and in the notes to the table below.
(In thousands, except Three Months Ended Six Months Ended
per share amounts) (unaudited) (unaudited)
June 30, March 31, June 30, June 30, June 30,
2005 2005 2004 2005 2004
Revenue: $47,323 $40,808 $36,826 $88,131 $68,876
Product 3,398 3,512 6,535 6,910 10,343
Development,
licensing and
royalties 50,721 44,320 43,361 95,041 79,219
Total revenue
Non-GAAP cost and
operating expenses:
Non-GAAP cost of
revenue (1) 20,946 16,702 16,846 37,648 30,210
Non-GAAP research and
development (2) 11,156 12,560 11,469 23,716 22,054
Non-GAAP selling,
general and
administrative (3) 8,287 7,596 6,560 15,883 13,507
Non-GAAP total cost
of revenue and
operating
expenses (4) 40,389 36,858 34,875 77,247 65,771
Non-GAAP income from
operations (5) 10,332 7,462 8,486 17,794 13,448
Interest income
and other, net 641 617 104 1,259 188
Provision for income
taxes 247 331 255 578 572
Non-GAAP net
income (6) $10,726 $7,748 $8,335 $18,475 $13,064
Non-GAAP net income per
share - diluted (6) $0.12 $0.09 $0.10 $0.21 $0.16
Weighted average shares* 86,817 87,376 84,874 87,157 83,967
* Weighted average shares include weighted average shares outstanding
during the period, as well as the dilutive effect of outstanding stock
options as if they had been converted to shares during the period in
accordance with the treasury stock method.
1. Our management believes that non-GAAP cost of revenue provides useful
supplemental information regarding the company's business operations.
Management believes this non-GAAP measure facilitates comparisons to our
historical and ongoing operating results. Management also internally uses
this non-GAAP measure for forecasting and budgeting purposes. The following
table reconciles GAAP cost of revenue to non-GAAP cost of revenue for the
periods presented below:
Three Months Ended Six Months Ended
(unaudited) (unaudited)
(In thousands)
June 30, March 31, June 30, June 30, June 30,
2005 2005 2004 2005 2004
GAAP Cost of Revenue $20,987 $15,505 $17,695 $36,492 $32,210
Adjustments:
Stock compensation
expense (benefit) 41 (1,197) 849 (1,156) 2,000
Non-GAAP Cost of
Revenue $20,946 $16,702 $16,846 $37,648 $30,210
2. Our management believes that non-GAAP research and development expense provides useful supplemental information regarding the company's business operations. Management believes this non-GAAP measure facilitates comparisons to our historical and ongoing operating results. Management also internally uses this non-GAAP measure for forecasting and budgeting purposes. The following table reconciles GAAP research and development expense to non-GAAP research and development expense for the periods presented below:
Three Months Ended Six Months Ended
(unaudited) (unaudited)
(In thousands)
June 30, March 31, June 30, June 30, June 30,
2005 2005 2004 2005 2004
GAAP Research and
Development Expense $11,903 $8,122 $16,245 $20,025 $33,043
Adjustments:
Stock compensation
expense (benefit) 747 (4,438) 4,776 (3,691) 10,989
Non-GAAP Research
and Development
Expense $11,156 $12,560 $11,469 $23,716 $22,054
3. Our management believes that non-GAAP selling, general and administrative expense provides useful supplemental information regarding the company's business operations. Management believes this non-GAAP measure facilitates comparisons to our historical and ongoing operating results. Management also internally uses this non-GAAP measure for forecasting and budgeting purposes. The following table reconciles GAAP selling, general and administrative expense to non-GAAP selling, general and administrative expense for the periods presented below:
Three Months Ended Six Months Ended
(unaudited) (unaudited)
(In thousands)
June 30, March 31, June 30, June 30, June 30,
2005 2005 2004 2005 2004
GAAP Selling, General
and Administrative
Expense $8,801 $3,904 $10,067 $12,705 $21,718
Adjustments:
Stock compensation
expense (benefit) 514 (3,692) 3,507 (3,178) 8,211
Non-GAAP Selling,
General and
Administrative Expense $8,287 $7,596 $6,560 $15,883 $13,507
4. Our management believes that non-GAAP total cost of revenue and operating expenses provides useful supplemental information regarding the company's business operations. Management believes this non-GAAP measure facilitates comparisons to our historical and ongoing operating results. Management also internally uses this non-GAAP measure for forecasting and budgeting purposes. The following table reconciles GAAP total cost of revenue and operating expenses to non-GAAP total cost of revenue and operating expenses for the periods presented below:
Three Months Ended Six Months Ended
(unaudited) (unaudited)
(In thousands)
June 30, March 31, June 30, June 30, June 30,
2005 2005 2004 2005 2004
GAAP Total Cost of
Revenue and Operating
Expenses $42,037 $27,854 $44,462 $69,891 $87,947
Adjustments:
Stock compensation
expense (benefit) 1,302 (9,327) 9,132 (8,025) 21,200
Amortization of goodwill
and intangible assets 274 274 357 548 713
Patent assertion costs 72 49 98 121 263
Non-GAAP Total Cost of
Revenue and Operating
Expenses $40,389 $36,858 $34,875 $77,247 $65,771
5. Our management believes that non-GAAP income (loss) from operations provides useful supplemental information regarding the company's business operations. Management believes this non-GAAP measure facilitates comparisons to our historical and ongoing operating results. Management also internally uses this non-GAAP measure for forecasting and budgeting purposes. The following table reconciles GAAP income (loss) from operations to non-GAAP income from operations for the periods presented below:
Three Months Ended Six Months Ended
(unaudited) (unaudited)
(In thousands)
June 30, March 31, June 30, June 30, June 30,
2005 2005 2004 2005 2004
GAAP Income (Loss)
from Operations $8,684 $16,466 ($1,101) $25,150 ($8,728)
Adjustments:
Stock compensation
expense (benefit) 1,302 (9,327) 9,132 (8,025) 21,200
Amortization of goodwill
and intangible assets 274 274 357 548 713
Patent assertion costs 72 49 98 121 263
Non-GAAP Income from
Operations $10,332 $7,462 $8,486 $17,794 $13,448
6. Our management believes that non-GAAP income (loss) and non-GAAP net income (loss) per share provides useful supplemental information regarding the company's business operations. Management believes this non-GAAP measure facilitates comparisons to our historical and ongoing operating results. Management also internally uses this non-GAAP measure for forecasting and budgeting purposes. The following table reconciles GAAP net income (loss) and GAAP net income (loss) per share to non-GAAP net income and non-GAAP net income per share for the periods presented below:
Three Months Ended Six Months Ended
(unaudited) (unaudited)
(In thousands)
June 30, March 31, June 30, June 30, June 30,
2005 2005 2004 2005 2004
GAAP Net Income (Loss) $10,460 $16,633 ($262) $27,094 ($8,122)
Shares Outstanding 86,817 87,376 73,352 87,157 72,934
GAAP Net Income
(Loss) per Share $0.12 $0.19 $0.00 $0.31 ($0.11)
Adjustments:
Stock compensation
expense (benefit) 1,302 (9,327) 9,132 (8,025) 21,200
Amortization of goodwill
and intangible assets 274 274 357 548 713
Patent assertion costs 72 49 98 121 263
Loss (gain) on equity
investment (1,382) 119 (990) (1,263) (990)
Non-GAAP Net Income $10,726 $7,748 $8,335 $18,475 $13,064
Weighted average shares 86,817 87,376 84,874 87,157 83,967
Non-GAAP Net Income
per Share $0.12 $0.09 $0.10 $0.21 $0.16
SILICON IMAGE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands) June 30, March 31, December 31,
2005 2005 2004
Assets
Current assets:
Cash and short-term
investments $116,838 $100,407 $93,520
Accounts receivable, net 25,227 22,080 19,417
Inventories 12,854 12,144 13,926
Prepaid expenses and
other current assets 3,531 3,420 3,073
Total current assets 158,450 138,051 129,936
Property and equipment, net 8,584 9,108 9,494
Goodwill and intangible
assets, net 14,156 14,430 14,704
Other assets 779 731 774
Total assets $181,969 $162,320 $154,908
Liabilities and
Stockholders' Equity
Current liabilities:
Accounts payable $12,686 $7,218 $6,833
Debt and other current
liabilities 15,638 13,256 16,034
Deferred margin on sales
to distributors 9,985 10,032 9,962
Total current
liabilities 38,309 30,506 32,829
Stockholders' equity 143,660 131,814 122,079
Total liabilities and
stockholders' equity $181,969 $162,320 $154,908
SOURCE Silicon Image, Inc.
Darrel Slack, Chief Financial Officer, +1-408-616-1550, or fax, +1-408-830-9531, or Gloria Lee, Investor Relations, +1-408-962-4282, or fax, +1-408
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