Silicon Image Announces First Quarter 2013 Earnings

  Silicon Image Announces First Quarter 2013 Earnings

            Growth Reflects Continued Strength In Mobile Business

Business Wire

SUNNYVALE, Calif. -- April 30, 2013

Silicon Image, Inc. (NASDAQ: SIMG), a leading provider of HD connectivity
solutions, today reported financial results for its first quarter ended March
31, 2013.

Revenue for the first quarter of 2013 was $62.0 million, approximately a 13%
increase from revenue of $55.0 million in the first quarter of 2012, and a 4%
increase from $59.6 million in the fourth quarter of 2012.

“We are pleased with our first quarter performance,” said Camillo Martino,
chief executive officer of Silicon Image, Inc. “Revenue exceeded our
expectations and bottom line growth showed significant improvement. Our mobile
business is up more than 50% year-on-year and 11% over last quarter. In the
first quarter, we built a solid foundation to achieve our financial goals for
2013.”

GAAP net loss for the first quarter of 2013 was $0.6 million, or $0.01 per
share, compared with a net loss of $0.3 million, or $0.00 per share, for the
fourth quarter of 2012 and a net loss of $9.6 million, or $0.12 per share, for
the first quarter of 2012.

Non-GAAP net income for the first quarter of 2013 was $3.2 million, or $0.04
per diluted share, compared with a non-GAAP net income of $6.2 million, or
$0.08 per diluted share, for the fourth quarter of 2012 and a non-GAAP net
loss of $0.8 million, or $0.01 per share, for the first quarter of 2012.
Non-GAAP net income (loss) for these periods excludes stock-based compensation
expense, amortization of intangible assets, write-off of certain unsalable
inventory, business acquisition related expenses and restructuring charges.

During the first quarter of 2013, pursuant to the $30 million accelerated
share repurchase agreement entered in November 2012, Silicon Image received an
additional 750,000 shares of its common stock. The company’s cash and
short-term investments balance as of March 31, 2013 was $116.5 million.

A reconciliation of GAAP and non-GAAP items is provided in a table following
the Condensed Consolidated Statements of Operations.

The following are Silicon Image’s financial performance estimates for the
second quarter of 2013:

Revenue: $71 million to $73 million
Gross Margin: approximately 58%
GAAP operating expenses: $37 million to $38 million
Non-GAAP operating expenses: $34 million to $35 million
Diluted shares outstanding: approximately 78.8 million
Non-GAAP tax rate: approximately 30% of non-GAAP pre-tax income

Use of Non-GAAP Financial Information

Silicon Image presents and discusses gross margin, operating expenses, net
income (loss) and basic and diluted net income (loss) per share in accordance
with Generally Accepted Accounting Principles (GAAP), and on a non-GAAP basis
for informational purposes only. Silicon Image believes that non-GAAP
reporting, giving effect to the adjustments shown in the attached
reconciliation, provides meaningful information and therefore uses non-GAAP
reporting to supplement its GAAP reporting and internally in evaluating
operations, managing and monitoring performance, and determining bonus
compensation. Further, Silicon Image uses non-GAAP information as certain
non-cash charges such as amortization of intangibles, stock based
compensation, write-off of certain unsalable inventory, business acquisition
related expenses and restructuring charges do not reflect the cash operating
results of the business. Silicon Image has chosen to provide this supplemental
information to investors, analysts and other interested parties to enable them
to perform additional analyses of its operating results and to illustrate the
results of operations giving effect to such non-GAAP adjustments. The non-GAAP
financial information presented herein should be considered supplemental to,
and not as a substitute for, or superior to, financial measures calculated in
accordance with GAAP.

Conference Call

Silicon Image will host an investor conference call today to discuss its first
quarter of 2013 results at 2:00 p.m. Pacific Time and will webcast the event.
To access the conference call, dial 877-941-4774 or 480-629-9760 and enter
pass code 4612156. The webcast and replay will be accessible on Silicon
Image's investor relations website at http://ir.siliconimage.com. A replay of
the conference call will be available within two hours of the conclusion of
the conference call through May 14, 2013. To access the replay, please dial
800-406-7325 or 303-590-3030 and enter pass code 4612156.

About Silicon Image, Inc.

SiliconImage is a leading provider of connectivity solutions that enable the
reliabledistribution and presentation of high-definition content for mobile,
consumer electronics, and PC markets. The companydelivers its technology via
semiconductor and intellectual property productsthat are compliant with
global industry standards and feature market leadingSilicon Image innovations
such as InstaPort™ and InstaPrevue™. Silicon Image's products are deployed by
the world's leading electronics manufacturers in devices such as mobile
phones, tablets, DTVs, Blu-ray Disc™ players, audio-video receivers, digital
cameras, as well as desktop and notebook PCs. Silicon Image has driven the
creation of the highly successful HDMI® and DVI™industry standards, the
latest standard for mobile devices - MHL®, and theleading 60GHz wireless HD
video standard - WirelessHD®. Via its wholly-ownedsubsidiary, Simplay Labs,
Silicon Image offers manufacturers comprehensivestandards interoperability
and compliance testing services. For moreinformation, visit us
athttp://www.siliconimage.com.

Silicon Image and the Silicon Image logo are trademarks, registered trademarks
or service marks of Silicon Image, Inc. in the United States and/or other
countries. All other trademarks and registered trademarks are the property of
their respective owners in the United States and/or other countries.

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 revenue, gross margin, operating expenses, tax
rates, company growth, progress and stock repurchases. These forward-looking
statements involve risks and uncertainties, including the risks of uncertain
economic conditions, competition in our markets, Silicon Image's ability to
deliver financial performance in-line with its stated goals and other risks
and uncertainties described from time to time in Silicon Image's filings with
the U.S. 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 and 10-Q filed by Silicon Image
with the SEC. These forward-looking statements are made on the date of this
press release, and Silicon Image assumes no obligation to update any such
forward-looking information.


SILICON IMAGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Unaudited
                                                               
                                                                   
                                   Three Months Ended
                                   March 31, 2013  December 31,  March 31,
                                                    2012           2012
Revenue:
Product                            $    50,341      $   46,808     $  43,024
Licensing                              11,698        12,796      11,979
Total revenue                          62,039        59,604      55,003
Cost of revenue and operating
expenses:
Cost of product revenue (1)             25,798          30,105        23,099
Cost of licensing revenue               267             220           125
Research and development (2)            18,558          17,305        21,707
Selling, general and                    16,402          12,279        16,137
administrative (3)
Amortization of
acquisition-related intangible          251             (889)         496
assets
Restructuring expense                  (7)           (54)        5
Total cost of revenue and              61,269        58,966      61,569
operating expenses
Income (loss) from operations           770             638           (6,566)
Interest income and other, net         391           555         538
Income (loss) before provision
for income taxes and equity in          1,161           1,193         (6,028)
net loss of an unconsolidated
affiliate
Income tax expense                      1,742           1,458         2,948
Equity in net loss of an               -             -           600
unconsolidated affiliate
Net loss                           $    (581)      $   (265)     $  (9,576)
                                                                   
Net loss per share – basic and     $    (0.01)      $   (0.00)     $  (0.12)
diluted
Weighted average shares – basic         77,421          79,564        82,722
and diluted

(1) Includes stock-based           $    135         $   104        $  218
compensation expense
(2) Includes stock-based           $    1,018       $   871        $  1,160
compensation expense
(3) Includes stock-based           $    1,771       $   1,200      $  1,910
compensation expense
                                                                      


SILICON IMAGE, INC.
GAAP NET LOSS TO NON-GAAP NET INCOME (LOSS) RECONCILIATION
(In thousands, except per share amounts)
Unaudited
                                                            
                                                                
                           Three Months Ended
                           March 31, 2013  December 31, 2012  March 31, 2012
GAAP net loss              $   (581    )    $    (265     )     $   (9,576  )
Non-GAAP adjustments:
Stock-based compensation       2,924             2,175              3,288
expense (1)
Amortization of                501               (639     )         496
intangible assets (2)
Amortization of
intangible assets of an        -                 -                  134
unconsolidated affiliate
(2)
Business strategic
initiative and                 -                 -                  1,528
acquisition related
expenses (2)
Write-down of certain          -                 6,245              -
unsalable inventory (3)
Restructuring expense         (7      )       (54      )       5       
(3)
Non-GAAP net income
(loss) before tax              2,837             7,462              (4,125  )
adjustments
Tax adjustments (4)           368            (1,218   )       3,301   
Non-GAAP net income        $   3,205      $    6,244        $   (824    )
(loss)
                                                                
Non-GAAP net income        $   0.04         $    0.08           $   (0.01   )
(loss) per share — basic
Non-GAAP net income
(loss) per share —         $   0.04         $    0.08           $   (0.01   )
diluted
Weighted average shares        77,421            79,564             82,722
— basic
Weighted average shares        78,433            80,389             82,722
— diluted
                                                                
Stock-based compensation
expense is composed of
the following:
Cost of revenue            $   135          $    104            $   218
Research and development       1,018             871                1,160
Selling, general and          1,771          1,200           1,910   
administrative
Total                      $   2,924      $    2,175        $   3,288   
                                                                

Discussion of Non-GAAP Financial Measures

(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) Business Strategic Initiative and Acquisition Related Items: We exclude
certain expense items resulting from our business 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) business 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
business 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. During January 2012, we established
a research and development center in Hyderabad, India, whereby we hired 75
employees from our subcontractor and had to incur a onetime fee of
approximately $3.056 million towards acquiring these employees. We amortized
this fee over the first two quarters of 2012 amounting to $1,528 million per
quarter. 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 business 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)
write-down of certain unsalable inventory due to defects in the material used
by one of our assembly vendors in the packaging process and (ii) restructuring
and related costs. 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. The inventory write-down is an unusual and one-time
event for which we are seeking recovery from the vendor. 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, 2013, December 31,
2012 and March 31, 2012, 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.


SILICON IMAGE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Unaudited
                                                          
                                                             
                                            March 31, 2013   December 31, 2012
ASSETS
Current Assets:
Cash and cash equivalents                   $ 45,964         $ 29,069
Short-term investments                      70,522           78,398
Accounts receivable, net                    40,515           37,936
Inventories                                 14,281           11,268
Prepaid expenses and other current assets   6,816            8,105
Deferred income taxes                       841              841
Total current assets                        178,939          165,617
Property and equipment, net                 14,125           14,840
Deferred income taxes, non-current          4,144            4,144
Intangible assets, net                      10,750           11,452
Goodwill                                    21,646           21,646
Other assets                                10,625           9,043
Total assets                                $ 240,229        $ 226,742
                                                             
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable                            $ 19,826         $ 10,690
Accrued and other current liabilities       16,605           19,600
Deferred margin on sales to distributors    13,215           10,340
Deferred license revenue                    2,310            2,185
Total current liabilities                   51,956           42,815
Other long-term liabilities                 17,024           16,827
Total liabilities                           68,980           59,642
Stockholders’ equity                        171,249          167,100
Total liabilities and stockholders’         $ 240,229        $ 226,742
equity
                                                             


SILICON IMAGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Unaudited
                                                              
                                                                  
                                                  Three Months Ended March 31,
                                                     2013         2012
Cash flows from operating activities:
Net loss                                          $   (581)       $  (9,576)
Adjustments to reconcile net loss to cash
provided by (used in) operating activities:
Depreciation                                          1,573          1,591
Stock-based compensation expense                      2,924          3,288
Amortization of investment premium                    328            509
Tax benefits from employee stock-based                8              310
transactions
Amortization of intangible assets                     702            496
Excess tax benefits from employee stock-based         (8)            (310)
transactions
Realized gain on sale of short-term investments       (9)            (45)
Equity in net loss of unconsolidated affiliate        -              600
Others                                                560            358
Changes in assets and liabilities:
Accounts receivable                                   (3,138)        (9,967)
Inventories                                           (3,013)        (2,161)
Prepaid expenses and other assets                     904            969
Accounts payable                                      8,286          6,483
Accrued and other liabilities                         (2,506)        (1,847)
Deferred margin on sales to distributors              2,875          3,442
Deferred license revenue                             125          858
Cash provided by (used in) operating activities      9,030        (5,002)
Cash flows from investing activities:
Proceeds from sales of short-term investments         13,027         23,031
Purchases of short-term investments                   (5,431)        (15,797)
Purchases of property and equipment                   (835)          (2,191)
Investment in a privately held company                -              (3,500)
Cash paid for assets purchased from a privately       (300)          -
held company
Advances for intellectual properties                  (378)          -
Other investing activities                           -            (500)
Cash provided by investing activities                6,083        1,043
Cash flows from financing activities:
Proceeds from employee stock program                  2,606          2,486
Excess tax benefits from employee stock-based         8              310
transactions
Repurchases of restricted stock units for             (653)          (1,465)
income tax withholding
Cash paid to settle contingent consideration         (45)         -
liabilities
Cash provided by financing activities                1,916        1,331
Effect of exchange rate changes on cash and          (134)        (26)
cash equivalents
Net increase (decrease) in cash and cash              16,895         (2,654)
equivalents
Cash and cash equivalents — beginning of period      29,069       37,125
Cash and cash equivalents — end of period         $   45,964     $  34,471
Supplemental cash flow information:
Cash payment for income taxes                     $   (1,655)     $  (209)
Restricted stock units vested                     $   1,649       $  3,929
Property and equipment and other assets           $   1,418       $  1,150
purchased but not paid for
Unrealized gain (loss) on available-for-sale      $   (132)       $  174
securities
                                                                  

Contact:

MEDIA CONTACT:
Silicon Image, Inc.
Gabriele Collier, 408-616-4088
gcollier@siliconimage.com
or
INVESTOR CONTACT:
Investor Relations – The Blueshirt Group
Mike Bishop, 415-217-4968
mike@blueshirtgroup.com