GigaMedia Announces Third-Quarter 2013 Financial Results

           GigaMedia Announces Third-Quarter 2013 Financial Results

PR Newswire

TAIPEI, Nov. 13, 2013

TAIPEI, Nov. 13, 2013 /PRNewswire/ -- GigaMedia Limited (NASDAQ: GIGM) today
announced its unaudited financial results for the third quarter of 2013.

"Earlier this year, we formed new mobile games and social casino games teams –
part of our strategic expansion initiatives in online games," stated Collin
Hwang, chief executive officer of GigaMedia Limited. "We have made good
progress in adding new talent to these teams and developing these new game
platforms, which has strengthened our outlook for 2014."

"We also launched a new cloud computing business this year to drive further
growth," stated CEO Collin Hwang. "I am very pleased to announce that we
expect our first top-line contributions from the cloud business in 4Q13 and we
forecast momentum to continue from exciting new growth plans for 2014."

"Overall, our 2014 financial outlook is bright with a growing pipeline of
mobile and social casino games, the MMO game ArcheAge, a new and expanding
cloud business, and a solid balance sheet," stated CEO Collin Hwang. "We
expect our sharply lowered cost structure, growth plans and strategic M&A to
drive significant growth in shareholder value in 2014 and beyond."

Third-Quarter Overview

  oRevenues of $3.8 million, all from GigaMedia's online games business.
    Multiple new growth initiatives in online games and cloud computing
    planned for 2014. (See, "Business Outlook.")
  oGigaMedia continued to maintain strong cost controls in the third quarter.
    Consolidated operating expenses were $6.6 million, including a non-cash
    impairment of $3.1 million mainly related to a legacy game project.
    Excluding the non-cash impairment, consolidated operating expenses were
    approximately $3.4 million, down approximately 41 percent from 3Q12.
  oRecord-low headquarters operating expenses, down 64 percent from 3Q12.
  oNet loss of approximately $3.1 million, including 1) the aforementioned
    non-cash impairment of $3.1 million and 2) non-operating income of $1.3
    million. Excluding the non-cash impairment, net income was approximately
    $30 thousand.
  oCash flow from operations was nearly neutral with a net outflow of
    approximately $78 thousand.
  oCashand marketable securities-current of approximately $74.3 million, or
    approximately $1.46 per share, up from $73.0 million at the end of 2Q13;
    zero debt.

Recent Developments

  oImproved outlook for 2014, with growth expected in both online games and
    cloud computing. (See, "Business Outlook.")
  oAdded top management talent: Simon Lee appointed new chief executive
    officer of GigaMedia's cloud business, GigaCloud. Mr. Lee has deep
    experience in the regional cloud industry and a strong track record of
    developing new business and driving growth. Under Mr. Lee's leadership,
    GigaCloud expects to make initial revenue contributions to GigaMedia in
    4Q13 and is implementing a new growth strategy.
  oAdded new independent director Alfred Wong to GigaMedia's board. Mr. Wong
    brings to GigaMedia extensive experience in regional business development
    and mergers and acquisitions as GigaMedia increases its focus on driving
    growth in 2014.
  oAcquired in October a majority stake in a Taiwanese mobile game developer;
    strategic acquisition immediately adds mobile game technology and skilled
    team to support mobile game growth initiatives; total consideration
    approximately US$500 thousand.
  oDisposed of legacy investment in Taiwan-based game studio; consequently
    GigaMedia to record a disposal gain of approximately $1.0 million in 4Q13.

Unaudited Consolidated Financial Results

GigaMedia Limited is a diversified provider of online games and cloud
computing services. GigaMedia's online games business FunTown develops and
operates a suite of games in Taiwan and Hong Kong, with focus on Web/mobile
games and social casino games. GigaMedia's cloud computing business GigaCloud
was launched in early April 2013 and is focused on providing small and
medium-sized enterprises in Greater China with critical communications
services and IT solutions that increase flexibility, efficiency and
competitiveness.

Unaudited consolidated results of GigaMedia are summarized in the table below.

GIGAMEDIA 3Q13 UNAUDITED CONSOLIDATED FINANCIAL RESULTS
(unaudited, all figures in                   Change                    Change
US$ thousands, except per  3Q13      2Q13    (%)     3Q13     3Q12     (%)
share amounts)
Revenues                   3,810     3,654   4       3,810    7,193    -47
Gross Profit               2,030     1,928   5       2,030    4,888    -58
Loss from Operations       4,552     1,325   NM      4,552    909      NM
Net Income (Loss)          (3,112)   84      NM      (3,112)  5,869    NM
Attributable to GigaMedia
Net Earnings (Loss) Per
Share Attributable to      (0.06)    0.00    NM      (0.06)   0.11     NM
GigaMedia, Diluted
EBITDA ^ ^(A) ^            (2,582)   642     NM      (2,582)  6,707    NM
Cash, Cash Equivalents,
Restricted Cash, and       74,281    72,960  2       74,281   98, 359  -24
Marketable
Securities-Current
NM – Not Meaningful
^(A) EBITDA (earnings before interest, taxes, depreciation, and amortization)
is provided as a supplement to results provided in accordance with U.S.
generally accepted accounting principles ("GAAP"). (See, "Use of Non-GAAP
Measures," for more details.) ^

Consolidated revenues for the third quarter of 2013 were $3.8 million; this
compared to $3.7 million in the second quarter of 2013 and $7.2 million in the
third quarter of 2012. Quarter-over-quarter results reflected growth in the
company's MMO games, which offset a decrease in GigaMedia's PC-based casual
online games. Year-over-year results reflected the effect on Giga's currently
PC-based online games business of the continuing shift in player preferences
for browser/mobile games, as well as the deconsolidation of IAHGames revenues
following the disposal of a majority ownership interest in IAHGames in August
2012.

In response to market trends, GigaMedia is currently rebuilding its portfolio
with browser/mobile games and social casino games and plans to begin offering
these games to its user base starting in early 2014.

Average monthly revenue per active paying account was $27.96 during the third
quarter of 2013 compared to $27.76 in the previous quarter. Peak concurrent
users were approximately 24,000 in the third quarter compared to approximately
23,000 in the second quarter.

Consolidated gross profit for the third quarter of 2013 was $2.0 million
compared to $1.9 million in the second quarter of 2013 and to $4.9 million in
the third quarter of 2012. Third-quarter 2013 consolidated gross profit margin
was 53.3 percent compared to 52.8 percent in the second quarter of 2013 and
68.0 percent in the third quarter of 2012.

Consolidated operating expenses  for the third quarter of 2013 were $6.6
million, which included non-cash impairment losses of approximately $3.1
million in the third quarter related primarily to the write-off of a legacy
game project. Excluding the non-cash impairment losses, consolidated operating
expenses were approximately $3.4 million. This compared to consolidated
operating expenses of $3.3 million in the second quarter of 2013 and to $5.8
million in the third quarter of 2012.

Consolidated product development and engineering expenses were $510 thousand
in the third quarter of 2013 compared to $319 thousand in the previous quarter
and $334 thousand in the third quarter of 2012.

Consolidated selling and marketing expenses were $1.3 million in the third
quarter of 2013 compared to $1.2 million in the previous quarter and $1.9
million in the third quarter of 2012.

Consolidated general and administrative expenses were $1.7 million in the
third quarter versus $1.7 million in the previous quarter and $3.6 million in
the third quarter of 2012. Corporate operating expenses were a record low at
approximately $840 thousand in the third quarter of 2013, down from $990
thousand in the second quarter of 2013.

Consolidated loss from operations for the third quarter of 2013 was $4.6
million. Excluding the third-quarter 2013 non-cash impairment losses,
consolidated loss from operations was approximately $1.4 million. This
compared to a loss of $1.3 million in the second quarter of 2013 and
approximately $910 thousand in the third quarter of 2012. The period
variations mainly reflected the impact of the third-quarter 2013 non-cash
impairment losses of approximately $3.1 million.

Consolidated non-operating expenses/income during the third quarter of 2013
was income of $1.3 million compared to income of $1.4 million in the second
quarter of 2013 and income of $6.8 million recorded in the third quarter of
2012.

Consolidated net income for the third quarter of 2013 was a loss of $3.1
million. Excluding the previously mentioned third-quarter 2013 non-cash
impairments, net income was approximately $30 thousand. This compared to net
income of $84 thousand in the second quarter of 2013 and income of $5.9
million in the third quarter of 2012.

Consolidated EBITDA for the third quarter of 2013 was a loss of $2.6 million.
Excluding the third-quarter 2013 non-cash impairments, consolidated EBITDA was
approximately $558 thousand. This compared to income of $642 thousand in the
second quarter of 2013 and to income of $6.7 million in the third quarter of
2012.

Strong Financial Position

During the third quarter, GigaMedia continued to maintain a strong balance
sheet. As of September 30, 2013, GigaMedia had $74.3 million in cash and
marketable securities-current, or approximately $1.46 per share, compared to
$73.0 million at the end of the second quarter of 2013. The company has zero
debt.

Business Outlook

The following forward-looking statements reflect GigaMedia's expectations as
of November 13, 2013. Given potential changes in economic conditions and
consumer spending, the evolving nature of online games, and various other risk
factors, including those discussed in the company's 2012 Annual Report on Form
20-F filed with the U.S. Securities and Exchange Commission as referenced
below, actual results may differ materially.

Online games business

In response to the ongoing downturn in the PC-based games market in which
GigaMedia has historically operated, management is repositioning its online
games business to align itself with strong growth in browser/mobile games and
social casino games. Investments in rebuilding GigaMedia's game pipeline and
upgrading systems are ongoing to support anticipated future growth.

In the short term, as this transition continues, management expects revenues
to be negatively impacted by the downturn in PC-based games, as well as the
end of A.V.A. operations in December, following a decision by management
against renewing the game license under new, less favorable terms.

Longer term, management expects revenue growth from 1) new browser/mobile
games; 2) new social casino games; and 3) new licensed games, to more than
offset short-term challenges. The company expects launches of multiple new
mobile games and new social casino games over the next several months, to be
followed by launch of ArcheAge in the second half of 2014.

The pace of future growth will be subject to the timing of the aforesaid
rapidly developing growth initiatives, as well as potential new strategic
transactions, making near-term forecasts difficult. Nonetheless, based on
progress to date in strengthening the pipeline, building a new technology
platform, and executing new growth plans, management is confident the online
games business will deliver growing revenues in 2014.

Cloud services business

GigaMedia's cloud services business was launched in April 2013 with a
cloud-based Software as a Service (SaaS) offering of hosted phone, fax,
storage, and video security systems for SMEs. Management plans to expand the
scope, reach, and quality of its cloud offerings going forward. Expansion of
GigaCloud in 2014 will begin with both new hosted and new private SaaS
applications and services refocused on larger SMEs; new consulting services
are also planned. Longer term, GigaCloud targets a full range of cloud
products and services, which will include Infrastructure as a Service (IaaS)
and Platform as a Service (PaaS).

Management expects GigaCloud to make initial small revenue contributions in
the fourth quarter of 2013. Based on results to date and the company's
strategic growth plans, management is confident the cloud business will
deliver growing revenues in 2014.

Overall Outlook

Financial results in the fourth quarter of 2013 may be negatively impacted by
a non-cash impairment of goodwill related to legacy PC-based online game
operations and by revenue softness as the company transitions its online games
business. The company expects cash to increase in the fourth quarter of 2013
from the disposal of its interest in a Taiwan-based game studio. In 2014, the
company expects accelerating revenue growth driven by major new product
launches and subscriber growth in its online games and cloud computing
businesses. Based on improvements gained to date from implementing its
strategic growth plans, management is confident in its ability to deliver
significant improvement in the company's 2014 financials and increasing
shareholder value.

Use of Non-GAAP Measures

To supplement GigaMedia's consolidated financial statements presented in
accordance with US GAAP, the company uses the following measure defined as
non-GAAP by the SEC: EBITDA. Management believes that EBITDA (earnings before
interest, taxes, depreciation, and amortization) is a useful supplemental
measure of performance because it excludes certain non-cash items such as
depreciation and amortization and that EBITDA is a measure of performance used
by some investors, equity analysts and others to make informed investment
decisions. EBITDA is not a recognized earnings measure under GAAP and does not
have a standardized meaning. Non-GAAP measures such as EBITDA should be
considered in addition to results prepared in accordance with GAAP, but should
not be considered a substitute for, or superior to, other financial measures
prepared in accordance with GAAP. A limitation of using EBITDA is that it does
not include all items that impact the company's net income for the period.
Reconciliations to the GAAP equivalents of the non-GAAP financial measures are
provided on the attached unaudited financial statements.

About the Numbers in This Release

Quarterly results

All quarterly results referred to in the text, tables and attachments to this
release are unaudited. The financial statements from which the financial
results reported in this press release are derived have been prepared in
accordance with U.S. GAAP, unless otherwise noted as "non-GAAP," and are
presented in U.S. dollars.

Conference Call and Webcast

Management will hold an investor conference call and webcast on Thursday,
November 13, 2013 at 7:00 p.m. EasternStandard Time, which is 8:00 a.m.
Taipei Time on November 14, 2013, to discuss GigaMedia's third-quarter 2013
performance.

Dial-in numbers:

U.S.: +1-845-675-0437
International: +65-6723-9381
Passcode: 96171517

A replay will be available from 11:00 p.m. Eastern Standard Time on November
13, 2013 for seven days.

U.S.: +1-646-254-3697
International: +612-8199-0299
Passcode: 96171517

A link to the live and archived webcast will be available at
www.gigamedia.com.

Conference Call Format

The call will consist of brief prepared remarks, followed by live Q&A and
management responses to questions submitted via email. Questions may be sent
in advance to IR@gigamedia.com.tw.

About GigaMedia

Headquartered in Taipei, Taiwan, GigaMedia Limited (Singapore registration
number: 199905474H) is a diversified provider of online games and cloud
computing services. GigaMedia's online games business develops and operates a
suite of games in Taiwan and Hong Kong, with focus on Web-based/mobile games
and social casino games. The company's cloud computing business is focused on
providing SMEs in Greater China with critical communications services and IT
solutions that increase flexibility, efficiency and competitiveness. More
information on GigaMedia can be obtained from www.gigamedia.com.

The statements included above and elsewhere in this press release that are not
historical in nature are "forward-looking statements" within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements include statements regarding
expected financial performance (as described without limitation in the
"Business Outlook" section and in quotations from management in this press
release) and GigaMedia's strategic and operational plans. These statements are
based on management's current expectations and are subject to risks and
uncertainties and changes in circumstances. There are important factors that
could cause actual results to differ materially from those anticipated in the
forward looking statements, including but not limited to, our ability to
license, develop or acquire additional online games that are appealing to
users, our ability to retain existing online game players and attract new
players, and our ability to launch online games in a timely manner and
pursuant to our anticipated schedule. Further information on risks or other
factors that could cause results to differ is detailed in GigaMedia's Annual
Report on Form 20-F filed in April 2013 and its other filings with the United
States Securities and Exchange Commission.

For further information contact:

Brad Miller, Investor Relations Director
+886-2-2656-8016
Brad.Miller@GigaMedia.com

(Tables to follow)

GIGAMEDIA LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
                                          Three months ended
                                          9/30/2013    6/30/2013    9/30/2012
                                          unaudited    unaudited    unaudited
                                          USD          USD          USD
Operating revenues
Asian online game and service revenues    3,803,430    3,652,728    7,192,530
Cloud service revenues                    6,521        1,351        0
                                          3,809,951    3,654,079    7,192,530
Operating costs
Cost of Asian online game and service     1,709,214    1,667,002    2,304,217
revenues
Cost of Cloud service revenues            70,586       59,569       0
                                          1,779,800    1,726,571    2,304,217
Gross profit                              2,030,151    1,927,508    4,888,313
Operating expenses
Product development and engineering       510,189      319,015      333,780
expenses
Selling and marketing expenses           1,253,071    1,210,152    1,903,527
General and administrative expenses      1,677,786    1,712,604    3,553,053
Bad debt expenses                         979          11,230       7,161
Impairment losses                         3,139,999    0            0
                                          6,582,024    3,253,001    5,797,521
Loss from operations                      (4,551,873)  (1,325,493)  (909,208)
Non-operating income (expense)
Interest income                           48,499       53,326       67,766
Gain on sales of marketable securities    539,840      0            4,237,057
Interest recoveries (expense)             72           (13,824)     277,573
Foreign exchange gain (loss) - net        339,274      (132,412)    207,612
(Loss) gain on disposal of property,      (1)          5            (5)
plant and equipment
Gain on equity method investments - net   378,014      184,281      513,795
Gain on disposal of investments          0            1,219,712    1,455,935
Impairment loss on marketable             0            0            (174,504)
securities and investments
Other                                     19,185       100,258      189,162
                                          1,324,883    1,411,346    6,774,391
(Loss) income from continuing             (3,226,990)  85,853       5,865,183
operations before income taxes
Income tax expense                        (1,403)      (153)        (494,786)
(Loss) income from continuing             (3,228,393)  85,700       5,370,397
operations
Income (loss) from discontinued           116,272      (1,937)      14,387
operations, net of tax
Net (loss) income                        (3,112,121)  83,763       5,384,784
Less: Net loss (gain) attributable to
noncontrolling interest and subsidiary    92           (7)          483,935
preferred shares
Net (loss) income attributable to         (3,112,029)  83,756       5,868,719
GigaMedia
(Loss) earnings per share attributable
to GigaMedia
Basic:
(Loss) income from continuing         (0.06)       0.00         0.12
operations
Loss from discontinued operations     0.00         0.00         0.00
                                          (0.06)       0.00         0.12
Diluted:
(Loss) income from continuing         (0.06)       0.00         0.11
operations
Loss from discontinued operations     0.00         0.00         0.00
                                          (0.06)       0.00         0.11
Weighted average shares outstanding:
Basic                                     50,719,976   50,719,976   50,719,976
Diluted                                   50,719,976   51,805,045   52,164,344

GIGAMEDIA LIMITED
CONSOLIDATED BALANCE SHEETS
                                    9/30/2013    6/30/2013    9/30/2012
                                    unaudited    unaudited    unaudited
                                    USD          USD          USD
Assets
Current assets
Cash and cash equivalents           54,658,747   55,263,459   63,412,768
Marketable securities - current     19,622,706   17,697,033   34,202,346
Accounts receivable - net           2,480,216    2,081,571    3,840,731
Prepaid expenses                    616,367      799,026      658,753
Restricted cash                     0            0            743,611
Other receivables                   645,557      2,407        2,793,986
Other current assets                922,309      879,752      1,005,737
Total current assets                78,945,902   76,723,248   106,657,932
Marketable securities - noncurrent  4,263,473    4,241,916    4,421,299
Investments                         5,828,209    5,090,643    6,046,951
Property, plant & equipment - net   1,744,797    1,803,237    2,193,171
Goodwill                            16,630,544   16,392,173   29,388,112
Intangible assets - net             14,569,242   14,893,449   15,831,067
Prepaid licensing and royalty fees  4,683,692    7,943,568    9,398,615
Other assets                        431,908      481,069      707,679
Total assets                        127,097,767  127,569,303  174,644,826
Liabilities and equity
Accounts payable                    183,702      216,125      448,785
Accrued compensation                1,127,221    771,419      1,465,030
Accrued expenses                    3,007,902    3,561,367    7,279,465
Short-term borrowings               0            0            7,679,181
Other current liabilities           6,950,036    6,858,350    7,600,727
Total current liabilities           11,268,861   11,407,261   24,473,188
Other liabilities                   845,164      832,032      747,752
Total liabilities                   12,114,025   12,239,293   25,220,940
GigaMedia's shareholders' equity    115,322,174  115,668,461  149,762,146
Noncontrolling interest             (338,432)    (338,451)    (338,260)
Total equity                        114,983,742  115,330,010  149,423,886
Total liabilities and equity        127,097,767  127,569,303  174,644,826

GIGAMEDIA LIMITED
Reconciliations of Non-GAAP Results of Operations
                                            Three months ended
                                            9/30/2013    6/30/2013  9/30/2012
                                            unaudited    unaudited  unaudited
                                            USD          USD        USD
Reconciliation of Net (Loss) Income to
EBITDA
Net (loss) income attributable to           (3,112,029)  83,756     5,868,719
GigaMedia
Depreciation                                99,130       107,110    197,841
Amortization                               477,940      490,397    538,120
Interest income                             (48,790)     (39,842)   (373,723)
Income tax expense                          1,403        153        475,795
EBITDA                                      (2,582,346)  641,574    6,706,752



SOURCE GigaMedia Limited

Website: http://www.gigamedia.com
 
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