Silicon Image Announces Third Quarter Fiscal 2014 Earnings

Conference Call

Silicon Image will host an investor conference call today to discuss its third quarter of 2014 results at 2:00 p.m. Pacific Time and will webcast the event. To access the conference call, dial 888-428-9490 or 719-325-2455 and enter pass code 8005803. The webcast and replay will be accessible on Silicon Image's investor relations website at http://www.SiliconImage.com. A replay of the conference call will be available within two hours of the conclusion of the conference call through November 13, 2014. To access the replay, please dial 888-203-1112 or 719-457-0820 and enter pass code 8005803.

About Silicon Image, Inc.

Silicon Image (NASDAQ: SIMG) is a leading provider of multimedia connectivity solutions and services for mobile, consumer electronics and PC markets. Silicon Image’s semiconductor and intellectual property products feature wireless and wired technologies that deliver connectivity across a wide array of devices in the home, office and on the go. Silicon Image has driven the creation of the industry standards HDMI®, DVI™, MHL® and WirelessHD®, and offers manufacturers comprehensive standards interoperability and compliance testing services via its wholly-owned subsidiary, Simplay Labs. For more information, visit http://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							Nine Months Ended
	September 30,			June 30,		September 30,		September 30,			September 30,
	2014			2014		2013		2014			2013
Revenue:
Product	$	56,003		$	50,938	$	66,337	$	153,707		$	180,359
Licensing		14,325			8,598		12,974		37,718			34,670
Total revenue		70,328			59,536		79,311		191,425			215,029
Cost of revenue and operating expenses:
Cost of product revenue (1)(2)		27,760			24,814		33,222		77,369			90,043
Cost of licensing revenue		10			-		185		30			614
Research and development (3)		17,772			17,416		18,424		52,145			57,207
Selling, general and administrative (4)		15,101			15,166		16,191		47,132			48,690
Amortization and impairment of acquisition-related intangible assets		1,168			510		405		1,886			886
Restructuring expense (recoveries) (5)		(463	)		113		483		(221	)		476
Total cost of revenue and operating expenses		61,348			58,019		68,910		178,341			197,916
Income from operations		8,980			1,517		10,401		13,084			17,113
Gain from sale of a privately held company investment		4,071			-		-		4,071			-
Proceeds from a legal settlement		-			-		-		-			1,275
Other than temporary impairment of a privately held company investment		-			-		-		-			(1,500	)
Interest income and other, net		260			1,043		168		1,321			1,059
Income before provision for income taxes and equity in net loss of an unconsolidated affiliate		13,311			2,560		10,569		18,476			17,947
Income tax expense		3,013			1,487		1,488		7,054			5,118
Equity in net loss of an unconsolidated affiliate		-			-		116		150			375
Net income	$	10,298		$	1,073	$	8,965	$	11,272		$	12,454

Net income per share – basic	$	0.13		$	0.01	$	0.12	$	0.14		$	0.16
Net income per share – diluted	$	0.13		$	0.01	$	0.11	$	0.14		$	0.16
Weighted average shares – basic		78,297			78,150		77,530		78,103			77,399
Weighted average shares – diluted		79,670			79,988		78,995		79,996			78,783

(1) Includes amortization of acquisition-related intangible assets	$	225		$	225	$	250	$	675		$	500
(2) Includes stock-based compensation expense	$	154		$	148	$	163	$	475		$	451
(3) Includes stock-based compensation expense	$	845		$	792	$	879	$	2,550		$	2,724
(4) Includes stock-based compensation expense	$	1,355		$	1,344	$	1,440	$	4,650		$	4,649
(5) Includes stock-based compensation expense	$	52		$	44	$	-	$	126		$	-


SILICON IMAGE, INC.
GAAP NET INCOME TO NON-GAAP NET INCOME RECONCILIATION
(In thousands, except per share amounts)
Unaudited


	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2014			2014			2013			2014			2013
GAAP net income	$	10,298		$	1,073		$	8,965		$	11,272		$	12,454
Non-GAAP adjustments:
Stock-based compensation expense (1)		2,406			2,328			2,482			7,801			7,824
Amortization of intangible assets (2)		917			735			480			2,085			1,461
Amortization of intangible assets of an unconsolidated affiliate (2)		-			-			52			40			128
Strategic initiative and acquisition related expenses (2)		-			138			-			138			-
Gain from business acquisition (2)		-			(361	)		-			(361	)		-
Gain from sale of a privately held company investment (2)		(4,071	)		-			-			(4,071	)		-
Other than temporary impairment of a privately held company investment (3)		-			-			-			-			1,500
Other income from prepaid royalty settlement (3)		-			(639	)		-			(639	)		-
Proceeds from a legal settlement (3)		-			-			-			-			(1,275	)
Recovery related to previously written-down inventory (3)		-			-			(960	)		-			(960	)
Restructuring expense (recoveries) (3)		(515	)		69			483			(347	)		476
Impairment of intangible assets (3)		476			-			175			476			175
Non-GAAP net income before tax adjustments		9,511			3,343			11,677			16,394			21,783
Tax adjustments (4)		(744	)		38			(2,462	)		20			(2,953	)
Non-GAAP net income	$	8,767		$	3,381		$	9,215		$	16,414		$	18,830

Non-GAAP net income per share — basic	$	0.11		$	0.04		$	0.12		$	0.21		$	0.24
Non-GAAP net income per share — diluted	$	0.11		$	0.04		$	0.12		$	0.21		$	0.24
Weighted average shares — basic		78,297			78,150			77,530			78,103			77,399
Weighted average shares — diluted		79,670			79,988			78,995			79,996			78,783

Stock-based compensation expense is composed of the following:
Cost of revenue	$	154		$	148		$	163		$	475		$	451
Research and development		845			792			879			2,550			2,724
Selling, general and administrative		1,355			1,344			1,440			4,650			4,649
Restructuring expense		52			44			-			126			-
Total	$	2,406		$	2,328		$	2,482		$	7,801		$	7,824

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