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Pixelworks Reports Second Quarter 2009 Financial Results
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- 32% Sequential Revenue Growth
- Proactive Cost Management
- Positive Cash from Operations
Second quarter 2009 revenue was
Second quarter 2009 GAAP gross profit margin was 47.7%, compared with 38.6% in the first quarter of 2009 and 50.5% in the second quarter of 2008. Second quarter 2009 non-GAAP gross profit margin was 52.0%, compared with 45.4% in the first quarter of 2009 and 54.0% in the second quarter of 2008. Both GAAP and non-GAAP gross profit margin in the second quarter of 2009 were above the range of guidance provided by management, as a result of continued product cost reductions.
As a result of expense reduction measures implemented prior to and
during the quarter and lower than anticipated expenses associated with
development projects, second quarter 2009 operating expenses were lower
than management’s original estimate on both a GAAP and non-GAAP basis.
Second quarter 2009 GAAP operating expenses were
On a GAAP basis, the Company recorded net income of
Included in GAAP net income in the second quarter of 2009 was a net gain
of
As a result of the 2009 debenture repurchases, the Company’s long-term
debt balance has been reduced from
“In spite of a challenging economic environment, we saw strong Q2
results on a number of fronts,” said
Business Outlook for Third Quarter 2009
The following statements are based on the Company’s current
expectations. These statements are forward-looking, subject to risks and
uncertainties, and actual results may differ materially. These
statements do not include the potential impact of any investments
outside the ordinary course of business, mergers or acquisitions that
may be completed after
The Company expects to record GAAP net loss per share in the third
quarter of 2009 of
-
Third quarter revenue of
$15.0 million to $17.0 million ; - Gross profit margin of approximately 40% to 46% on a GAAP basis and 45% to 50% on a non-GAAP basis; and
-
Operating expenses of
$8.5 million to $9.5 million on a GAAP basis and$8.0 million to $9.0 million on a non-GAAP basis.
Conference Call Information
About
For more information, please visit the Company’s Web site at www.pixelworks.com.
Note:
Non-GAAP Financial Measures
This press release makes reference to non-GAAP gross profit margins, non-GAAP operating expenses and non-GAAP net income (loss), which exclude gains on the repurchase of long-term debt, other-than-temporary impairment of a marketable security, restructuring charges, acquisition-related items, stock-based compensation expense, other income and additional amortization of a non-cancelable prepaid royalty, all of which are required under GAAP. The Company believes these non-GAAP measures provide a meaningful perspective on the Company’s operating results and underlying cash flow dynamics, but cautions investors to consider these measures in addition to, not as a substitute for, its consolidated financial results as presented in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial measures is included in this earnings release which is available in the investor relations section of the Company’s website.
Safe Harbor Statement
This release contains statements, including, without limitation, the
statements in Bruce Walicek’s quote and the “Business Outlook for Third
Quarter 2009” section above, that are forward-looking statements within
the meaning of the “Safe Harbor” provisions of the federal Securities
Litigation Reform Act of 1995. Such statements are based on current
expectations, estimates and projections about the Company’s business.
These statements are not guarantees of future performance and involve
numerous risks, uncertainties and assumptions that are difficult to
predict. Actual results could vary materially from those contained in
forward-looking statements due to many factors, including, without
limitation: current global economic challenges; levels of inventory at
distributors and customers; timely customer transition to new product
designs; product mix; failure or difficulty in achieving design wins;
changes in the digital display and projection markets; changes in
customer ordering patterns or lead times; competitive factors, such as
rival chip architectures, introduction or traction by competing designs,
or pricing pressures; seasonality in the consumer electronics market;
our new product sales and yield rates; supply of products from third
party foundries; changes in estimated product costs; the success of our
products in expanded markets; our efforts to achieve profitability from
operations; insufficient, excess or obsolete inventory and variations in
inventory valuation; changes in the recoverability of intangible assets
and long-lived assets; and our lower cash position as a result of our
debt repurchases. More information regarding potential factors
that could affect the Company’s financial results and could cause actual
results to differ materially is included from time to time in the
Company’s
The forward-looking statements contained in this release speak as of the date of this release, and we do not undertake any obligation to update any such statements.
| PIXELWORKS, INC. | |||||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | |||||||||||||||||||
| 2009 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||
| Revenue, net | $ | 14,213 | $ | 10,780 | $ | 20,793 | $ | 24,993 | $ | 44,769 | |||||||||||||
| Cost of revenue (1) | 7,440 | 6,624 | 10,295 | 14,064 | 22,600 | ||||||||||||||||||
| Gross profit | 6,773 | 4,156 | 10,498 | 10,929 | 22,169 | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development (2) | 4,532 | 4,776 | 7,193 | 9,308 | 13,915 | ||||||||||||||||||
| Selling, general and administrative (3) | 3,340 | 3,873 | 4,491 | 7,213 | 9,177 | ||||||||||||||||||
| Restructuring | 64 | 37 | (158 | ) | 101 | 850 | |||||||||||||||||
| Amortization of acquired intangible assets | - | - | 74 | - | 164 | ||||||||||||||||||
| Total operating expenses | 7,936 | 8,686 | 11,600 | 16,622 | 24,106 | ||||||||||||||||||
| Loss from operations | (1,163 | ) | (4,530 | ) | (1,102 | ) | (5,693 | ) | (1,937 | ) | |||||||||||||
| Gain on repurchase of long-term debt, net | 3,836 | 9,024 | - | 12,860 | 11,557 | ||||||||||||||||||
| Interest expense | (145 | ) | (251 | ) | (419 | ) | (396 | ) | (992 | ) | |||||||||||||
| Interest income | 75 | 98 | 553 | 173 | 1,536 | ||||||||||||||||||
| Amortization of debt issuance costs | (26 | ) | (61 | ) | (125 | ) | (87 | ) | (271 | ) | |||||||||||||
| Other-than-temporary impairment of a marketable security | - | - | - | - | (6,490 | ) | |||||||||||||||||
| Other income | - | - | 218 | - | 218 | ||||||||||||||||||
| Interest and other income, net | 3,740 | 8,810 | 227 | 12,550 | 5,558 | ||||||||||||||||||
| Income (loss) before income taxes | 2,577 | 4,280 | (875 | ) | 6,857 | 3,621 | |||||||||||||||||
| Provision (benefit) for income taxes | 358 | (1,617 | ) | 375 | (1,259 | ) | (1,262 | ) | |||||||||||||||
| Net income (loss) | $ | 2,219 | $ | 5,897 | $ | (1,250 | ) | $ | 8,116 | $ | 4,883 | ||||||||||||
| Net income (loss) per share: | |||||||||||||||||||||||
| Basic | $ | 0.17 | $ | 0.44 | $ | (0.09 | ) | $ | 0.61 | $ | 0.33 | ||||||||||||
| Diluted | $ | 0.16 | $ | 0.44 | $ | (0.09 | ) | $ | 0.61 | $ | 0.33 | ||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | 13,291 | 13,352 | 14,577 | 13,321 | 14,753 | ||||||||||||||||||
| Diluted | 13,475 | 14,023 | 14,577 | 13,344 | 14,766 | ||||||||||||||||||
| (1 | ) | Includes: | |||||||||||||||||||||
| Amortization of acquired developed technology | $ | 573 | $ | 617 | $ | 705 | $ | 1,190 | $ | 1,410 | |||||||||||||
| Additional amortization of non-cancelable prepaid royalty | 50 | 68 | - | 118 | - | ||||||||||||||||||
| Restructuring | (4 | ) | 47 | - | 43 | - | |||||||||||||||||
| Stock-based compensation | 3 | 7 | 20 | 10 | 38 | ||||||||||||||||||
| (2 | ) | Includes stock-based compensation | 108 | 118 | 449 | 226 | 898 | ||||||||||||||||
| (3 | ) | Includes stock-based compensation | 105 | 252 | 313 | 357 | 738 | ||||||||||||||||
| PIXELWORKS, INC. | ||||||||||||||||||||||
| RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL INFORMATION * | ||||||||||||||||||||||
|
(In thousands, except per share data) |
||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||||
| 2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||
| Reconciliation of GAAP gross profit and non-GAAP gross profit | ||||||||||||||||||||||
| GAAP gross profit | $ | 6,773 | $ | 4,156 | $ | 10,498 | $ | 10,929 | $ | 22,169 | ||||||||||||
| Amortization of acquired developed technology | 573 | 617 | 705 | 1,190 | 1,410 | |||||||||||||||||
| Additional amortization of non-cancelable prepaid royalty | 50 | 68 | - | 118 | - | |||||||||||||||||
| Restructuring | (4 | ) | 47 | - | 43 | - | ||||||||||||||||
| Stock-based compensation | 3 | 7 | 20 | 10 | 38 | |||||||||||||||||
| Total reconciling items included in cost of revenue | 622 | 739 | 725 | 1,361 | 1,448 | |||||||||||||||||
| Non-GAAP gross profit | $ | 7,395 | $ | 4,895 | $ | 11,223 | $ | 12,290 | $ | 23,617 | ||||||||||||
| Non-GAAP gross profit margin | 52.0 | % | 45.4 | % | 54.0 | % | 49.2 | % | 52.8 | % | ||||||||||||
| Reconciliation of GAAP and non-GAAP operating expenses | ||||||||||||||||||||||
| GAAP operating expenses | $ | 7,936 | $ | 8,686 | $ | 11,600 | $ | 16,622 | $ | 24,106 | ||||||||||||
| Reconciling item included in research and development: | ||||||||||||||||||||||
| Stock-based compensation | 108 | 118 | 449 | 226 | 898 | |||||||||||||||||
| Reconciling item included in selling, general and administrative: | ||||||||||||||||||||||
| Stock-based compensation | 105 | 252 | 313 | 357 | 738 | |||||||||||||||||
| Restructuring | 64 | 37 | (158 | ) | 101 | 850 | ||||||||||||||||
| Amortization of acquired intangible assets | - | - | 74 | - | 164 | |||||||||||||||||
| Total reconciling items included in operating expenses | 277 | 407 | 678 | 684 | 2,650 | |||||||||||||||||
| Non-GAAP operating expenses | $ | 7,659 | $ | 8,279 | $ | 10,922 | $ | 15,938 | $ | 21,456 | ||||||||||||
| Reconciliation of GAAP and non-GAAP net income (loss) | ||||||||||||||||||||||
| GAAP net income (loss) | $ | 2,219 | $ | 5,897 | $ | (1,250 | ) | $ | 8,116 | $ | 4,883 | |||||||||||
| Gain on repurchase of long-term debt, net | (3,836 | ) | (9,024 | ) | - | (12,860 | ) | (11,557 | ) | |||||||||||||
| Reconciling items included in cost of revenue | 622 | 739 | 725 | 1,361 | 1,448 | |||||||||||||||||
| Reconciling items included in operating expenses | 277 | 407 | 678 | 684 | 2,650 | |||||||||||||||||
| Other than temporary impairment of a marketable security | - | - | - | - | 6,490 | |||||||||||||||||
| Other income | - | - | (218 | ) | - | (218 | ) | |||||||||||||||
| Tax effect of non-GAAP adjustments | (200 | ) | 31 | - | (169 | ) | - | |||||||||||||||
| Non-GAAP net income (loss) | $ | (918 | ) | $ | (1,950 | ) | $ | (65 | ) | $ | (2,868 | ) | $ | 3,696 | ||||||||
| Non-GAAP net income (loss) per share - basic and diluted | $ | (0.07 | ) | $ | (0.15 | ) | $ | (0.00 | ) | $ | (0.22 | ) | $ | 0.25 | ||||||||
| Non-GAAP weighted average shares outstanding: | ||||||||||||||||||||||
| Basic | 13,291 | 13,352 | 14,577 | 13,321 | 14,753 | |||||||||||||||||
| Diluted | 13,291 | 13,352 | 14,577 | 13,321 | 14,766 | |||||||||||||||||
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* Our non-GAAP gross profit, non-GAAP operating expenses, non-GAAP net income (loss) and non-GAAP net income (loss) per share differs from GAAP gross profit, GAAP operating expenses, GAAP net income (loss) and GAAP net income (loss) per share due to the exclusion of gains on the repurchase of long-term debt, other-than-temporary impairment of a marketable security, restructuring charges, acquisition-related items, stock-based compensation expense, additional amortization of a non-cancelable prepaid royalty and other income. Pixelworks' management believes the presentation of non-GAAP gross profit, non-GAAP operating expenses, non-GAAP net income (loss) and non-GAAP net income (loss) per share provides useful information to investors regarding Pixelworks' results of operations by allowing investors to better evaluate underlying cash flow dynamics. Pixelworks' management also uses each of these non-GAAP measures internally to better evaluate underlying cash flow dynamics. Pixelworks, however, cautions investors to consider these non-GAAP financial measures in addition to, and not as a substitute for, our GAAP financial measures. |
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| PIXELWORKS, INC. | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (In thousands) | |||||||
| (Unaudited) | |||||||
| June 30, | December 31, | ||||||
| 2009 | 2008 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 18,795 | $ | 53,149 | |||
| Short-term marketable securities | 6,848 | 8,058 | |||||
| Accounts receivable, net | 5,146 | 6,149 | |||||
| Inventories, net | 3,720 | 4,981 | |||||
| Prepaid expenses and other current assets | 3,230 | 3,381 | |||||
| Total current assets | 37,739 | 75,718 | |||||
| Long-term marketable securities | 2,550 | 2,110 | |||||
| Property and equipment, net | 5,070 | 5,187 | |||||
| Other assets, net | 5,030 | 5,331 | |||||
| Acquired intangible assets, net | 2,196 | 3,386 | |||||
| Total assets | $ | 52,585 | 91,732 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 4,489 | $ | 4,215 | |||
| Accrued liabilities and current portion of long-term liabilities | 7,458 | 9,419 | |||||
| Current portion of income taxes payable | 216 | 137 | |||||
| Total current liabilities | 12,163 | 13,771 | |||||
| Long-term liabilities, net of current portion | 1,993 | 2,035 | |||||
| Income taxes payable, net of current portion | 9,040 | 10,581 | |||||
| Long-term debt | 15,779 | 60,634 | |||||
| Total liabilities | 38,975 | 87,021 | |||||
| Shareholders' equity | 13,610 | 4,711 | |||||
| Total liabilities and shareholders' equity | $ | 52,585 | $ | 91,732 | |||
Source:
Pixelworks, Inc.
Steven Moore, 408-200-9221
smoore@pixelworks.com