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Pixelworks Reports First Quarter 2009 Financial Results
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First quarter 2009 revenue was
First quarter 2009 GAAP gross profit margin was 38.6%, compared with 45.4% in the fourth quarter of 2008 and 48.7% in the first quarter of 2008. First quarter 2009 non-GAAP gross profit margin was 45.4%, compared with 50.4% in the fourth quarter of 2008 and 51.7% in the first quarter of 2008. Both GAAP and non-GAAP gross profit margin in the first quarter of 2009 were within the range of guidance provided by management, which anticipated the impact of lower overhead cost absorption in the quarter.
As a result of cost reduction measures taken during the quarter, first
quarter 2009 operating expenses were lower than management’s original
estimate on both a GAAP and non-GAAP basis. First quarter 2009 GAAP
operating expenses were
A tax benefit of
On a GAAP basis, the Company recorded net income of
Included in GAAP net income in the first quarter of 2009 was a net gain
of
Under its previously announced stock repurchase program, the Company repurchased approximately 229,000 shares during the first quarter of 2009.
“As anticipated, Q1 was a difficult quarter, as the global economic
downturn impacted orders for semiconductors across nearly every market,
including video processing. Quick action to further reduce expenses
helped maximize cost savings during the quarter. In addition, our bond
repurchase further strengthened our balance sheet, supporting our
ability to effectively execute our business strategy. Despite the
cautionary economic environment, Pixelworks’ next-generation products
continue to build momentum in the market,” said
Business Outlook for Second 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 second
quarter of 2009 of
-
The Company anticipates second quarter revenue of
$13 million to $15 million . Revenue is highly dependent on a number of factors including, but not limited to, general economic conditions, levels of inventory at distributors and customers, consumer confidence and spending, timely customer transition to new product designs, new product introductions, the Company’s ability to secure additional design wins, production yields and seasonality in the consumer electronics market. - GAAP gross profit margin of approximately 38% to 42% and non-GAAP gross profit margin of approximately 43% to 47%. Gross profit margin may be higher or lower than expected due to many factors including, but not limited to, revenue levels and product mix, new product yields, changes in estimated product costs, competitive pricing actions, and inventory reserve changes.
-
GAAP operating expenses of
$9.0 million to $10.0 million and non-GAAP operating expenses of$8.5 million to $9.5 million .
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 impairments of a marketable security, restructuring charges, acquisition-related items, stock-based compensation expense 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 its 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 the statements in Bruce
Walicek’s quote and the “Business Outlook for Second 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 certain risks,
uncertainties and assumptions that are difficult to predict. Actual
results could vary materially from the description contained herein due
to many factors including those described above and the following:
current global economic challenges, changes in the digital display and
projection markets; competitive factors, such as rival chip
architectures, introduction or traction by competing designs, or pricing
pressures; changes in customer ordering patterns or lead times;
seasonality in the consumer electronics market; new product yield rates;
supply of products from third party foundries; 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 other risk factors listed from time to time
in the Company’s
The forward-looking statements we make today, speak as of today, and
we do not undertake any obligation to update any such statements to
reflect events or circumstances occurring after today. Please refer to
our Annual Report on Form 10-K for the year ended
| PIXELWORKS, INC. | |||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
| (In thousands, except per share data) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended | |||||||||||||||
| March 31, | December 31, | March 31, | |||||||||||||
| 2009 | 2008 | 2008 | |||||||||||||
| Revenue, net | $ | 10,780 | $ | 18,916 | $ | 23,976 | |||||||||
| Cost of revenue (1) | 6,624 | 10,335 | 12,305 | ||||||||||||
| Gross profit | 4,156 | 8,581 | 11,671 | ||||||||||||
| Operating expenses: | |||||||||||||||
| Research and development (2) | 4,776 | 6,121 | 6,722 | ||||||||||||
| Selling, general and administrative (3) | 3,873 | 4,355 | 4,686 | ||||||||||||
| Restructuring | 37 | 618 | 1,008 | ||||||||||||
| Amortization of acquired intangible assets | - | - | 90 | ||||||||||||
| Total operating expenses | 8,686 | 11,094 | 12,506 | ||||||||||||
| Loss from operations | (4,530 | ) | (2,513 | ) | (835 | ) | |||||||||
| Gain on repurchase of long-term debt, net | 9,024 | - | 11,557 | ||||||||||||
| Interest expense | (251 | ) | (360 | ) | (573 | ) | |||||||||
| Interest income | 98 | 161 | 983 | ||||||||||||
| Amortization of debt issuance costs | (61 | ) | (72 | ) | (146 | ) | |||||||||
| Other-than-temporary impairment of marketable security | - | (1,400 | ) | (6,490 | ) | ||||||||||
| Interest and other income, net | 8,810 | (1,671 | ) | 5,331 | |||||||||||
| Income (loss) before income taxes | 4,280 | (4,184 | ) | 4,496 | |||||||||||
| Provision (benefit) for income taxes | (1,617 | ) | 940 | (1,637 | ) | ||||||||||
| Net income (loss) | $ | 5,897 | $ | (5,124 | ) | $ | 6,133 | ||||||||
| Net income (loss) per share - basic and diluted | $ | 0.44 | $ | (0.37 | ) | $ | 0.41 | ||||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 13,352 | 13,716 | 14,930 | ||||||||||||
| Diluted | 14,023 | 13,716 | 16,648 | ||||||||||||
| (1) Includes: | |||||||||||||||
| Amortization of acquired developed technology | $ | 617 | $ | 705 | $ | 705 | |||||||||
| Additional amortization of non-cancelable prepaid royalty | 68 | 144 | - | ||||||||||||
| Restructuring | 47 | 91 | - | ||||||||||||
| Stock-based compensation | 7 | 12 | 18 | ||||||||||||
|
(2) Includes stock-based compensation |
118 | 175 | 449 | ||||||||||||
| (3) Includes stock-based compensation | 252 | 233 | 425 | ||||||||||||
| PIXELWORKS, INC. | |||||||||||||||
| RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL INFORMATION * | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended | |||||||||||||||
| March 31, | December 31, | March 31, | |||||||||||||
| 2009 | 2008 | 2008 | |||||||||||||
| Reconciliation of GAAP gross profit and non-GAAP gross profit | |||||||||||||||
| GAAP gross profit | $ | 4,156 | $ | 8,581 | $ | 11,671 | |||||||||
| Amortization of acquired developed technology | 617 | 705 | 705 | ||||||||||||
| Additional amortization of non-cancelable prepaid royalty | 68 | 144 | - | ||||||||||||
| Restructuring | 47 | 91 | - | ||||||||||||
| Stock-based compensation | 7 | 12 | 18 | ||||||||||||
| Total reconciling items included in cost of revenue | 739 | 952 | 723 | ||||||||||||
| Non-GAAP gross profit | $ | 4,895 | $ | 9,533 | $ | 12,394 | |||||||||
| Non-GAAP gross profit margin | 45.4 | % | 50.4 | % | 51.7 | % | |||||||||
| Reconciliation of GAAP and non-GAAP operating expenses | |||||||||||||||
| GAAP operating expenses | $ | 8,686 | $ | 11,094 | $ | 12,506 | |||||||||
| Reconciling item included in research and development: | |||||||||||||||
| Stock-based compensation | 118 | 175 | 449 | ||||||||||||
| Reconciling item included in selling, general and administrative: | |||||||||||||||
| Stock-based compensation | 252 | 233 | 425 | ||||||||||||
| Restructuring | 37 | 618 | 1,008 | ||||||||||||
| Amortization of acquired intangible assets | - | - | 90 | ||||||||||||
| Total reconciling items included in operating expenses | 407 | 1,026 | 1,972 | ||||||||||||
| Non-GAAP operating expenses | $ | 8,279 | $ | 10,068 | $ | 10,534 | |||||||||
| Reconciliation of GAAP and non-GAAP net income (loss) | |||||||||||||||
| GAAP net income (loss) | $ | 5,897 | $ | (5,124 | ) | $ | 6,133 | ||||||||
| Gain on repurchase of long-term debt, net | (9,024 | ) | - | (11,557 | ) | ||||||||||
| Reconciling items included in cost of revenue | 739 | 952 | 723 | ||||||||||||
| Reconciling items included in operating expenses | 407 | 1,026 | 1,972 | ||||||||||||
| Other than temporary impairment of marketable security | - | 1,400 | 6,490 | ||||||||||||
| Tax effect of non-GAAP adjustments | 31 | 596 | - | ||||||||||||
| Non-GAAP net income (loss) | $ | (1,950 | ) | $ | (1,150 | ) | $ | 3,761 | |||||||
| Non-GAAP net income (loss) per share - basic and diluted | $ | (0.15 | ) | $ | (0.08 | ) | $ | 0.25 | |||||||
| Non-GAAP weighted average shares outstanding | |||||||||||||||
| Basic | 13,352 | 13,716 | 14,930 | ||||||||||||
| Diluted | 13,352 | 13,716 | 14,943 | ||||||||||||
| * 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 impairments of a marketable security, restructuring charges, acquisition-related items, stock-based compensation expense and additional amortization of a non-cancelable prepaid royalty. 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. | |||||||||||||||
| PIXELWORKS, INC. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| March 31, | December 31, | |||||||
| 2009 | 2008 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 32,539 | $ | 53,149 | ||||
| Short-term marketable securities | 5,706 | 8,058 | ||||||
| Accounts receivable, net | 4,457 | 6,149 | ||||||
| Inventories, net | 4,165 | 4,981 | ||||||
| Prepaid expenses and other current assets | 2,849 | 3,381 | ||||||
| Total current assets | 49,716 | 75,718 | ||||||
| Long-term marketable securities | 1,920 | 2,110 | ||||||
| Property and equipment, net | 4,331 | 5,187 | ||||||
| Other assets, net | 5,630 | 5,331 | ||||||
| Acquired intangible assets, net | 2,769 | 3,386 | ||||||
| Total assets | $ | 64,366 | $ | 91,732 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,674 | $ | 4,215 | ||||
| Accrued liabilities and current portion of long-term liabilities | 6,816 | 9,419 | ||||||
| Current portion of income taxes payable | 157 | 137 | ||||||
| Total current liabilities | 9,647 | 13,771 | ||||||
| Long-term liabilities, net of current portion | 1,722 | 2,035 | ||||||
| Income taxes payable, net of current portion | 8,868 | 10,581 | ||||||
| Long-term debt | 33,544 | 60,634 | ||||||
| Total liabilities | 53,781 | 87,021 | ||||||
| Shareholders' equity | 10,585 | 4,711 | ||||||
| Total liabilities and shareholders' equity | $ | 64,366 | $ | 91,732 | ||||
Source:
Pixelworks, Inc.
Steven Moore, 408-200-9221
smoore@pixelworks.com