Revenue:
|
$71 million to $76 million
|
|
Gross Margin:
|
approximately 56.5%
|
|
GAAP operating expenses:
|
approximately $36 million
|
|
Non-GAAP operating expenses:
|
approximately $32.5 million
|
|
Diluted shares outstanding:
|
approximately 80.5 million
|
|
Non-GAAP tax rate:
|
approximately 30% of non-GAAP pre-tax income
|
SILICON IMAGE, INC.
|
||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||
(In thousands, except per share amounts)
|
||||||||||||
Unaudited
|
||||||||||||
Three Months Ended
|
||||||||||||
March 31, 2014
|
December 31, 2013
|
March 31, 2013
|
||||||||||
Revenue:
|
||||||||||||
Product
|
$ | 46,766 | $ | 46,949 | $ | 50,341 | ||||||
Licensing
|
14,795 | 14,428 | 11,698 | |||||||||
Total revenue
|
61,561 | 61,377 | 62,039 | |||||||||
Cost of revenue and operating expenses:
|
||||||||||||
Cost of product revenue (1)(2)(3)
|
24,795 | 22,897 | 25,798 | |||||||||
Cost of licensing revenue
|
20 | 267 | 267 | |||||||||
Research and development (4)
|
16,957 | 19,787 | 18,558 | |||||||||
Selling, general and administrative (5)
|
16,865 | 16,046 | 16,402 | |||||||||
Amortization of acquisition-related intangible assets
|
208 | 230 | 251 | |||||||||
Restructuring expense (6)
|
129 | 1,307 | (7 | ) | ||||||||
Total cost of revenue and operating expenses
|
58,974 | 60,534 | 61,269 | |||||||||
Income from operations
|
2,587 | 843 | 770 | |||||||||
Interest income and other, net
|
18 | 144 | 391 | |||||||||
Income before provision for income taxes and equity in net loss of an unconsolidated affiliate
|
2,605 | 987 | 1,161 | |||||||||
Income tax expense
|
2,554 | 1,837 | 1,742 | |||||||||
Equity in net loss of an unconsolidated affiliate
|
150 | 114 | 123 | |||||||||
Net loss
|
$ | (99 | ) | $ | (964 | ) | $ | (704 | ) | |||
Net loss per share – basic and diluted
|
$ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | |||
Weighted average shares – basic and diluted
|
77,858 | 77,417 | 77,421 | |||||||||
(1) Includes restructuring expense
|
$ | - | $ | 284 | $ | - | ||||||
(2) Includes amortization of acquisition-related intangible assets
|
$ | 225 | $ | 225 | $ | 250 | ||||||
(3) Includes stock-based compensation expense
|
$ | 173 | $ | 152 | $ | 135 | ||||||
(4) Includes stock-based compensation expense
|
$ | 913 | $ | 852 | $ | 1,018 | ||||||
(5) Includes stock-based compensation expense
|
$ | 1,951 | $ | 1,687 | $ | 1,771 | ||||||
(6) Includes stock-based compensation expense
|
$ | 30 | $ | - | $ | - |
GAAP NET LOSS TO NON-GAAP NET INCOME RECONCILIATION
|
||||||||||||
(In thousands, except per share amounts)
|
||||||||||||
Unaudited
|
||||||||||||
Three Months Ended
|
||||||||||||
March 31, 2014
|
December 31, 2013
|
March 31, 2013
|
||||||||||
GAAP net loss
|
$ | (99 | ) | $ | (964 | ) | $ | (704 | ) | |||
Non-GAAP adjustments:
|
||||||||||||
Stock-based compensation expense (1)
|
3,067 | 2,691 | 2,924 | |||||||||
Amortization of intangible assets (2)
|
433 | 455 | 501 | |||||||||
Amortization of intangible assets of an unconsolidated affiliate (2)
|
40 | 40 | 35 | |||||||||
Strategic initiative and acquisition related expenses (2)
|
- | 1,000 | - | |||||||||
Restructuring expense (3)
|
99 | 1,591 | (7 | ) | ||||||||
Recovery of certain unsalable inventory (3)
|
- | (825 | ) | - | ||||||||
Non-GAAP net income before tax adjustments
|
3,540 | 3,988 | 2,749 | |||||||||
Tax adjustments (4)
|
726 | 89 | 395 | |||||||||
Non-GAAP net income
|
$ | 4,266 | $ | 4,077 | $ | 3,144 | ||||||
Non-GAAP net income per share — basic
|
$ | 0.05 | $ | 0.05 | $ | 0.04 | ||||||
Non-GAAP net income per share — diluted
|
$ | 0.05 | $ | 0.05 | $ | 0.04 | ||||||
Weighted average shares — basic
|
77,858 | 77,417 | 77,421 | |||||||||
Weighted average shares — diluted
|
80,100 | 78,990 | 78,433 | |||||||||
Stock-based compensation expense is composed of the following:
|
||||||||||||
Cost of revenue
|
$ | 173 | $ | 152 | $ | 135 | ||||||
Research and development
|
913 | 852 | 1,018 | |||||||||
Selling, general and administrative
|
1,951 | 1,687 | 1,771 | |||||||||
Restructuring expense
|
30 | - | - | |||||||||
Total
|
$ | 3,067 | $ | 2,691 | $ | 2,924 |
(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)
|
Strategic Initiative and Acquisition Related Items: We exclude certain expense items resulting from our 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) 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 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. In the fourth quarter of fiscal 2013, as a result of us executing an agreement with a specific customer, one of the earn-out conditions were met and we paid the privately-held company $1.0 million. 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 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) restructuring and related costs and (ii) recovery of certain unsalable inventory. 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. In the fourth quarter of 2013, we received recovery related to previously written-down inventory. The inventory recovery is unusual and one-time event, which we do not expect to recur. 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, 2014, December 31, 2013 and March 31, 2013, 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.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
(In thousands)
|
||||||||
Unaudited
|
||||||||
March 31, 2014
|
December 31, 2013
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 84,980 | $ | 82,220 | ||||
Short-term investments
|
53,154 | 56,003 | ||||||
Accounts receivable, net
|
37,128 | 34,729 | ||||||
Inventories
|
15,325 | 11,727 | ||||||
Prepaid expenses and other current assets
|
6,146 | 7,733 | ||||||
Deferred income taxes
|
202 | 191 | ||||||
Total current assets
|
196,935 | 192,603 | ||||||
Property and equipment, net
|
14,016 | 14,676 | ||||||
Deferred income taxes, non-current
|
1,300 | 4,368 | ||||||
Intangible assets, net
|
9,600 | 10,348 | ||||||
Goodwill
|
21,646 | 21,646 | ||||||
Other assets
|
8,319 | 8,498 | ||||||
Total assets
|
$ | 251,816 | $ | 252,139 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$ | 13,441 | $ | 12,894 | ||||
Accrued and other current liabilities
|
18,641 | 20,622 | ||||||
Deferred margin on sales to distributors
|
8,700 | 9,634 | ||||||
Deferred license revenue
|
1,417 | 2,742 | ||||||
Total current liabilities
|
42,199 | 45,892 | ||||||
Other long-term liabilities
|
14,303 | 16,522 | ||||||
Total liabilities
|
56,502 | 62,414 | ||||||
Stockholders’ equity
|
195,314 | 189,725 | ||||||
Total liabilities and stockholders’ equity
|
$ | 251,816 | $ | 252,139 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(In thousands)
|
||||||||
Unaudited
|
||||||||
Three Months Ended March 31,
|
||||||||
2014
|
2013
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$ | (99 | ) | $ | (704 | ) | ||
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
|
||||||||
Depreciation
|
1,573 | 1,573 | ||||||
Stock-based compensation expense
|
3,067 | 2,924 | ||||||
Amortization of investment premium
|
248 | 328 | ||||||
Tax benefits from employee stock-based transactions
|
44 | 8 | ||||||
Amortization of intangible assets
|
748 | 702 | ||||||
Deferred income taxes
|
(11 | ) | - | |||||
Excess tax benefits from employee stock-based transactions
|
(44 | ) | (8 | ) | ||||
Realized gain on sale of short-term investments
|
- | (9 | ) | |||||
Equity in net loss of unconsolidated affiliate
|
150 | 123 | ||||||
Others
|
(24 | ) | 560 | |||||
Changes in assets and liabilities:
|
||||||||
Accounts receivable
|
(2,375 | ) | (3,138 | ) | ||||
Inventories
|
(3,598 | ) | (3,013 | ) | ||||
Prepaid expenses and other assets
|
1,616 | 904 | ||||||
Accounts payable
|
786 | 8,286 | ||||||
Accrued and other liabilities
|
(1,029 | ) | (2,506 | ) | ||||
Deferred margin on sales to distributors
|
(934 | ) | 2,875 | |||||
Deferred license revenue
|
(1,325 | ) | 125 | |||||
Cash provided by (used in) operating activities
|
(1,207 | ) | 9,030 | |||||
Cash flows from investing activities:
|
||||||||
Proceeds from sales of short-term investments
|
7,535 | 13,027 | ||||||
Purchases of short-term investments
|
(4,964 | ) | (5,431 | ) | ||||
Purchases of property and equipment
|
(1,256 | ) | (835 | ) | ||||
Cash paid for assets purchased from a privately-held company
|
- | (300 | ) | |||||
Purchase of intellectual properties
|
- | (378 | ) | |||||
Cash provided by investing activities
|
1,315 | 6,083 | ||||||
Cash flows from financing activities:
|
||||||||
Proceeds from employee stock program
|
3,334 | 2,606 | ||||||
Excess tax benefits from employee stock-based transactions
|
44 | 8 | ||||||
Repurchase of restricted stock units for income tax withholding
|
(713 | ) | (653 | ) | ||||
Payment to acquire treasure shares
|
(11 | ) | - | |||||
Cash paid to settle contingent consideration liabilities
|
(9 | ) | (45 | ) | ||||
Cash provided by financing activities
|
2,645 | 1,916 | ||||||
Effect of exchange rate changes on cash and cash equivalents
|
7 | (134 | ) | |||||
Net increase in cash and cash equivalents
|
2,760 | 16,895 | ||||||
Cash and cash equivalents — beginning of period
|
82,220 | 29,069 | ||||||
Cash and cash equivalents — end of period
|
$ | 84,980 | $ | 45,964 | ||||
Supplemental cash flow information:
|
||||||||
Cash payment for income taxes
|
$ | (1,773 | ) | $ | (1,655 | ) | ||
Restricted stock units vested
|
$ | 1,895 | $ | 1,649 | ||||
Property and equipment and other assets purchased but not paid for
|
$ | 247 | $ | 1,418 | ||||
Unrealized gain (loss) on short-term investments
|
$ | 8 | $ | (132 | ) |