Pixelworks Reports Second Quarter 2013 Financial Results

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, whether as a result of new information, future events or otherwise.



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,
	2013			2013			2012			2013			2012
Revenue, net	$	9,554		$	8,271		$	15,524		$	17,825		$	29,854
Cost of revenue (1)		4,932			4,294			7,865			9,226			14,386
Gross profit		4,622			3,977			7,659			8,599			15,468
Operating expenses:
Research and development (2)		6,010			5,884			4,715			11,894			9,808
Selling, general and administrative (3)		3,274			3,598			3,792			6,872			7,811
Total operating expenses		9,284			9,482			8,507			18,766			17,619
Loss from operations		(4,662	)		(5,505	)		(848	)		(10,167	)		(2,151	)
Interest expense and other, net		(97	)		(98	)		(101	)		(195	)		(199	)
Loss before income taxes		(4,759	)		(5,603	)		(949	)		(10,362	)		(2,350	)
Provision (benefit) for income taxes		165			(198	)		150			(33	)		(613	)
Net loss	$	(4,924	)	$	(5,405	)	$	(1,099	)	$	(10,329	)	$	(1,737	)

Net loss per share - basic and diluted	$	(0.26	)	$	(0.29	)	$	(0.06	)	$	(0.56	)	$	(0.10	)

Weighted average shares outstanding - basic and diluted		18,652			18,456			18,238			18,554			18,133
——————
(1) Includes:
Additional amortization of non-cancelable prepaid royalty	$	98		$	91		$	156		$	189		$	288
Stock-based compensation		31			40			37			71			76
(2) Includes stock-based compensation		215			258			183			473			405
(3) Includes stock-based compensation		354			386			256			740			497



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,
	2013			2013			2012			2013			2012
Reconciliation of GAAP and non-GAAP gross profit
GAAP gross profit	$	4,622		$	3,977		$	7,659		$	8,599		$	15,468
Additional amortization of non-cancelable prepaid royalty		98			91			156			189			288
Stock-based compensation		31			40			37			71			76
Total reconciling items included in cost of revenue		129			131			193			260			364
Non-GAAP gross profit	$	4,751		$	4,108		$	7,852		$	8,859		$	15,832
Non-GAAP gross profit margin		49.7	%		49.7	%		50.6	%		49.7	%		53.0	%

Reconciliation of GAAP and non-GAAP operating expenses
GAAP operating expenses	$	9,284		$	9,482		$	8,507		$	18,766		$	17,619
Reconciling item included in research and development:
Stock-based compensation		215			258			183			473			405
Reconciling item included in selling, general and administrative:
Stock-based compensation		354			386			256			740			497
Total reconciling items included in operating expenses		569			644			439			1,213			902
Non-GAAP operating expenses	$	8,715		$	8,838		$	8,068		$	17,553		$	16,717

Reconciliation of GAAP and non-GAAP net loss
GAAP net loss	$	(4,924	)	$	(5,405	)	$	(1,099	)	$	(10,329	)	$	(1,737	)
Reconciling items included in cost of revenue		129			131			193			260			364
Reconciling items included in operating expenses		569			644			439			1,213			902
Tax effect of non-GAAP adjustments		18			(43	)		136			(25	)		(8	)
Non-GAAP net loss	$	(4,208	)	$	(4,673	)	$	(331	)	$	(8,881	)	$	(479	)

Non-GAAP net loss per share - basic and diluted	$	(0.23	)	$	(0.25	)	$	(0.02	)	$	(0.48	)	$	(0.03	)

Non-GAAP weighted average shares outstanding - basic and diluted		18,652			18,456			18,238			18,554			18,133

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