Current Report Filing (8-k)

 

 

---

 

 

 

 

 

---

---

 

 

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 5, 2015

SILICON IMAGE, INC.
(Exact name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
	000-26887		77-0396307
	(Commission File Number)		(IRS Employer Identification No.)

1140 East Arques Ave., Sunnyvale, CA		94085
(Address of Principal Executive Offices)		(Zip Code)

[phone]

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

 

 

---

---

 

 

 

 

---

 

 

ITEM 2.02.

RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The information contained in this Item 2.02 and the exhibit hereto, are being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of, or otherwise regarded as filed under, the Securities and Exchange Act of 1934, as amended.  The information contained in this report shall not be incorporated by reference into any filing of Silicon Image, Inc. (the “Registrant”) with the Securities and Exchange Commission, whether made before or after the date hereof, regardless of any general incorporation language in such filings.

On February 5, 2015, the Registrant issued a press release announcing its financial results for the quarter ended December 31, 2014, a copy of which is attached hereto as Exhibit 99.01. Due to the pending acquisition of the Registrant by Lattice Semiconductor Corporation, as disclosed by the Registrant in its Current Report on Form 8-K dated January 27, 2015, the Registrant will not provide guidance for the first quarter 2015 and has canceled its customary earnings conference call. A supplemental financial information worksheet is available on the Registrant’s website.

 

ITEM 9.01.

FINANCIAL STATEMENTS AND EXHIBITS.

(d)  Exhibits

99.01

Press release dated February 5, 2015 announcing the Registrant’s financial results for the quarter ended December 31, 2014.

 

 

 

---

 

 

 

 

SIGNATURE

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 5, 2015		SILICON IMAGE, INC.
		By:	/s/ Raymond Cook
			Raymond Cook
			Chief Financial Officer

 

 

 

 

---

 

 

 

 

EXHIBIT INDEX

 

Exhibit Number		Description
99.01		Press release dated February 5, 2015 announcing the Registrant’s financial results for the quarter ended December 31, 2014.

 

 

 

 

 

---

 

 

 

---

 

 

 

Form 8-K

Exhibit 99-01

 

 

MEDIA CONTACT:

Sherrie Gutierrez

Silicon Image, Inc.

Phone: [phone]

[e-mail]

INVESTOR RELATIONS CONTACT:

Alex Chervet

Silicon Image, Inc.

408-616-4153

[e-mail]

SILICON IMAGE ANNOUNCES FOURTH QUARTER AND FULL YEAR FISCAL 2014 EARNINGS RESULTS

 

 

SUNNYVALE, Calif., February 5, 2015 – Silicon Image, Inc. (NASDAQ: SIMG), a leading provider of multimedia connectivity solutions and services, today reported financial results for its fourth quarter and full year 2014.

Revenue for the fourth quarter of 2014, ended December 31, 2014, was $66.6 million, compared with $70.3 million in the third quarter of 2014 and $61.4 million in the fourth quarter of 2013. Full year 2014 revenue was $258.1 million compared to $276.4 million for full year 2013.

GAAP net income for the fourth quarter of 2014 was $30.8 million, or $0.39 per diluted share, compared with a GAAP net income of $10.3 million, or $0.13 per diluted share, for the third quarter of 2014 and a GAAP net loss of $1.0 million, or ($0.01) per diluted share, for the fourth quarter of 2013.  Full year 2014 GAAP net income was $42.1 million or $0.53 per diluted share compared to $11.5 million or $0.15 per diluted share for full year 2013.

 

During the fourth quarter of 2014, we concluded that the valuation allowance for certain of our U.S. federal and state deferred tax assets, with the exception of the deferred tax assets related to R&D credits and foreign tax credits, as well as our California deferred tax assets, is no longer required. Accordingly, we recognized a non-recurring, non-cash tax benefit of $30.1 million related to the valuation allowance reversal.

 

Non-GAAP net income for the fourth quarter of 2014 was $6.9 million, or $0.09 per diluted share, compared with a non-GAAP net income of $8.8 million, or $0.11 per diluted share, for the third quarter of 2014, and a non-GAAP net income of $4.1 million, or $0.05 per diluted share, for the fourth quarter of 2013.  Full year 2014 non-GAAP net income was $23.3 million or $0.29 per diluted share compared to $22.9 million or $0.29 per diluted share for full year 2013. Non-GAAP net income for these periods excludes stock-based compensation expense, amortization of intangible assets, business acquisition related expenses, gain from business acquisition, gain from sale of a privately held company investment, restructuring expense, other than temporary impairment of a privately-held company investment, impairment of intangible assets, recovery related to previously written-down inventory, proceeds from a legal settlement, other income from prepaid royalty settlement and non-cash tax benefit related to the valuation allowance reversal.

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

 

Lattice Semiconductor Tender Offer

 

On January 26, 2015, we signed a definitive agreement, pursuant to which Lattice Semiconductor Corporation (NASDAQ: LSCC) will acquire Silicon Image in an all-cash tender offer of $7.30 per share. The transaction has been unanimously approved by the boards of directors of both companies and is expected to close by the end of March 2015. Closing of the tender offer is subject to customary closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and there being validly tendered and not withdrawn a number of shares of Silicon Image common stock equal to at least a majority of the total outstanding shares of Silicon Image common stock.

 

 

 

 

 

 

---

 

 

 

 

 

First Quarter 2015 Outlook and Conference Call

 

Due to the pending acquisition of Silicon Image by Lattice Semiconductor Corporation, Silicon Image will not provide guidance for the first quarter 2015 and has canceled its customary earnings conference call.

 

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 stock-based compensation expense, amortization of intangible assets, business acquisition related expenses, gain from business acquisition, gain from sale of a privately held company investment, restructuring expense, other than temporary impairment of a privately held company investment, impairment of intangible assets, recovery related to previously written-down inventory, proceeds from a legal settlement, other income from prepaid royalty settlement and non-cash tax benefit related to the valuation allowance reversal which do not reflect the cash operating results of the business. Silicon image also excludes certain items that are unusual and one-time events such as business acquisition related expenses, gain from sale of a privately held company investment and proceeds from a legal settlement. 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.

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.

 

 

 

 

 

---

 

 

 

 

 

SILICON IMAGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Unaudited
		Three Months Ended												Twelve Months Ended
		December 31, 2014				September 30, 2014				December 31, 2013				December 31, 2014				December 31, 2013
Revenue:
Product		$	44,421			$	56,003			$	46,949			$	198,128			$	227,308
Licensing			22,206				14,325				14,428				59,924				49,098
Total revenue			66,627				70,328				61,377				258,052				276,406
Cost of revenue and operating expenses:
Cost of product revenue (1)(2)(3)			23,093				27,760				22,897				100,462				112,940
Cost of licensing revenue			-				10				267				30				881
Research and development (4)			19,867				17,772				19,787				72,012				76,994
Selling, general and administrative (5)			16,534				15,101				16,046				63,666				64,736
Restructuring expense (6)			3,702				(463	)			1,307				3,481				1,783
Amortization and impairment of acquisition-related intangible assets			606				1,168				230				2,492				1,116
Total cost of revenue and operating expenses			63,802				61,348				60,534				242,143				258,450
Income from operations			2,825				8,980				843				15,909				17,956
Gain from sale of a privately held company investment			-				4,071				-				4,071				-
Proceeds from legal settlement			-				-				-				-				1,275
Other than temporary impairment of a privately-held company investment			-				-				-				-				(1,500	)
Interest income and other, net			(76	)			260				144				1,245				1,203
Income before provision for income taxes and equity in net loss of an unconsolidated affiliate			2,749				13,311				987				21,225				18,934
Income tax expense (benefit)			(28,034	)			3,013				1,837				(20,980	)			6,955
Equity in net loss of an unconsolidated affiliate			-				-				114				150				489
Net income (loss)			30,783				10,298				(964	)			42,055				11,490
Less: Net income (loss) attributable to noncontrolling interest			(51	)			-				-				(51	)			-
Net income (loss) attributable to the stockholders		$	30,834			$	10,298			$	(964	)		$	42,106			$	11,490
Net income (loss) per share – basic		$	0.40			$	0.13			$	(0.01	)		$	0.54			$	0.15
Net income (loss) per share – diluted		$	0.39			$	0.13			$	(0.01	)		$	0.53			$	0.15
Weighted average shares – basic			77,568				78,297				77,417				77,967				77,399
Weighted average shares – diluted			78,889				79,670				77,417				79,571				79,065
(1) Includes restructuring expense		$	343			$	-			$	284			$	343			$	284
(2) Includes amortization of acquisition-related intangible assets		$	225			$	225			$	225			$	900			$	975
(3) Includes stock-based compensation expense		$	159			$	154			$	152			$	634			$	603
(4) Includes stock-based compensation expense		$	807			$	845			$	852			$	3,357			$	3,576
(5) Includes stock-based compensation expense		$	1,172			$	1,355			$	1,687			$	5,822			$	6,336
(6) Includes stock-based compensation expense		$	67			$	52			$	-			$	193			$	-

 

 

 

 

 

---

 

SILICON IMAGE, INC.
GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME RECONCILIATION
(In thousands, except per share amounts)
Unaudited
		Three Months Ended												Twelve Months Ended
		December 31, 2014				September 30, 2014				December 31, 2013				December 31, 2014				December 31, 2013
GAAP net income (loss)		$	30,783			$	10,298			$	(964	)		$	42,055			$	11,490
Non-GAAP adjustments:
Stock-based compensation expense (1)			2,205				2,406				2,691				10,006				10,515
Amortization of intangible assets (2)			831				917				455				2,916				1,916
Amortization of intangible assets of an unconsolidated affiliate (2)			-				-				40				40				168
Strategic initiative and acquisition related expenses (2)			-				-				1,000				138				1,000
Gain from business acquisition (2)			-				-				-				(361	)			-
Gain from sale of a privately held company investment (2)			-				(4,071	)			-				(4,071	)			-
Restructuring expense (3)			3,978				(515	)			1,591				3,631				2,067
Other than temporary impairment of a privately-held company investment (3)			-				-				-				-				1,500
Impairment of intangible asset (3)			-				476				-				476				175
Recovery of certain unsalable inventory (3)			-				-				(825	)			-				(1,785	)
Proceeds from legal settlement (3)			-				-				-				-				(1,275	)
Other income from prepaid royalty settlement (3)			-				-				-				(639	)			-
Non-GAAP net income before tax adjustments			37,797				9,511				3,988				54,191				25,771
Tax adjustments (4)			(30,963	)			(744	)			89				(30,943	)			(2,864	)
Non-GAAP net income			6,834				8,767				4,077				23,248				22,907
Less: Net income (loss) attributable to noncontrolling interest			(51	)			-				-				(51	)			-
Net income attributable to the stockholders		$	6,885			$	8,767			$	4,077			$	23,299			$	22,907
Non-GAAP net income per share — basic		$	0.09			$	0.11			$	0.05			$	0.30			$	0.30
Non-GAAP net income per share — diluted		$	0.09			$	0.11			$	0.05			$	0.29			$	0.29
Weighted average shares — basic			77,568				78,297				77,417				77,967				77,399
Weighted average shares — diluted			78,889				79,670				78,990				79,571				79,065
Stock-based compensation expense is composed of the following:
Cost of revenue		$	159			$	154			$	152			$	634			$	603
Research and development			807				845				852				3,357				3,576
Selling, general and administrative			1,172				1,355				1,687				5,822				6,336
Restructuring expense			67				52				-				193				-
Total		$	2,205			$	2,406			$	2,691			$	10,006			$	10,515

 

 

 

 

 

---

 

 

 

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 expense provide investors with a basis to measure our core performance against the performance of other companies without the variability created by stock-based compensation expense 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)

Strategic Initiative and Acquisition Related Items: We exclude certain expense items resulting from our strategic initiative and acquisitions including the following, when applicable: (i) amortization of purchased intangible assets associated with our acquisitions; or relating to our unconsolidated affiliate, (ii) strategic initiative and acquisition-related charges, (iii) gain from business acquisition and (iv) gain from sale of a privately held company investment. 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 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. In the second quarter of fiscal 2014, we finalized the acquisition of the remaining ownership interest in UpdateLogic, Inc., resulting in acquisition-related charges and gain from business acquisition. In the third quarter of fiscal 2014, we finalized the sale of our minority interest in a privately held company to another entity resulting in a gain.  We do not expect expenses of similar nature to be paid or gain of similar nature to be received in our normal course of business and consider it infrequent and non-recurring. We believe that providing non-GAAP information for strategic initiatives and acquisition-related expense items, gain from business acquisition and gain from sale of a privately held company investment 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) restructuring and related costs, (ii) other than temporary impairment of a privately held company investment, (iii) impairment of intangible assets, (iv) recovery related to previously written-down inventory, (v) proceeds from a legal settlement and (vi) other income from prepaid royalty settlement. 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. Other than temporary impairment of a privately held company investment was recorded due to the conclusion that the possibility is remote that we will exercise our warrants to purchase the entity’s preferred stock or that we will realize any other value from these investments. We recognized impairment of an intangible asset because the sum of its estimated future undiscounted cash flows used to test for recoverability is less than its carrying value. We entered into a settlement with a vendor and received a recovery related to previously written-down inventory. Proceeds from a legal settlement relates to our acquisition of SiBEAM, Inc. on May 16, 2011. Other income from prepaid royalty settlement relates to the termination of an HDMI rebate agreement with one of the HDMI adopters. We do not expect other income or proceeds of similar nature to be recognized or received in our normal course of business and consider it infrequent and non-recurring. 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 and twelve months ended December 31, 2014 and 2013 and the three months ended September 30, 2014, 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. During the fourth quarter of 2014, we recognized a non-recurring, non-cash tax benefit of $30.1 million related to the valuation allowance reversal.

 

 

 

 

 

---

 

 

 

 

 

SILICON IMAGE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Unaudited
		December 31, 2014				December 31, 2013
ASSETS
Current Assets:
Cash and cash equivalents		$	116,219			$	82,220
Short-term investments			48,116				56,003
Accounts receivable, net			23,693				34,729
Inventories			17,146				11,727
Prepaid expenses and other current assets			6,912				7,733
Deferred income taxes			2,095				191
Total current assets			214,181				192,603
Property and equipment, net			15,295				14,676
Deferred income taxes, non-current			28,106				4,368
Intangible assets, net			15,729				10,348
Goodwill			30,333				21,646
Other assets			1,644				8,498
Total assets		$	305,288			$	252,139
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable		$	13,461			$	12,894
Accrued and other current liabilities			25,473				20,622
Deferred margin on sales to distributors			8,663				9,634
Deferred license revenue			2,254				2,742
Total current liabilities			49,851				45,892
Other long-term liabilities			13,905				16,522
Total liabilities			63,756				62,414
Redeemable noncontrolling interest			7,000				-
Stockholders’ equity			234,532				189,725
Total liabilities, redeemable noncontrolling interest and stockholders’ equity		$	305,288			$	252,139

 

 

 

 

---

 

 

 

 

 

SILICON IMAGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Unaudited
		Year Ended December 31,
		2014				2013
Cash flows from operating activities:
Net income		$	42,055			$	11,490
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation			6,477				6,270
Stock-based compensation expense			10,006				10,515
Amortization of investment premium			876				1,048
Tax benefits from employee stock-based transactions			130				354
Amortization and impairment of intangible assets			5,119				3,124
Gain from business acquisition			(361	)			-
Deferred income taxes			(31,166	)			426
Excess tax benefits from employee stock-based transactions			(130	)			(354	)
Non-operating proceeds from legal settlement			-				(1,275	)
Other than temporary impairment of a privately-held company investment			-				1,500
Equity in net loss of unconsolidated affiliate			150				489
Others			270				152
Changes in assets and liabilities:
Accounts receivable			11,248				2,818
Inventories			(5,419	)			(459	)
Prepaid expenses and other assets			(1,791	)			94
Accounts payable			895				2,208
Accrued and other liabilities			4,645				941
Deferred margin on sales to distributors			(971	)			557
Deferred license revenue			(1,468	)			(706	)
Cash provided by operating activities			40,565				39,192
Cash flows from investing activities:
Proceeds from sales of short-term investments			27,192				62,699
Purchases of short-term investments			(20,263	)			(41,053	)
Cash used in business acquisition, net of cash acquired			(13,464	)			-
Purchases of property and equipment			(7,739	)			(5,761	)
Proceeds from sale of a privately held company investment			7,571				-
Proceeds from legal settlement			-				1,275
Investment in privately-held companies			-				(1,500	)
Cash paid for assets purchased from a privately-held company			-				(300	)
Advances for intellectual properties			(915	)			(2,031	)
Other			-				103
Cash  provided by (used in) investing activities			(7,618	)			13,432
Cash flows from financing activities:
Proceeds from employee stock program			6,467				5,545
Excess tax benefits from employee stock-based transactions			130				354
Repurchase of restricted stock units for income tax withholding			(1,645	)			(1,981	)
Payment to acquire treasure shares			(10,832	)			(3,005	)
Proceeds from redeemable noncontrolling interest			7,000				-
Cash paid to settle contingent consideration liabilities			(27	)			(81	)
Cash provided by financing activities			1,093				832
Effect of exchange rate changes on cash and cash equivalents			(41	)			(305	)
Net increase in cash and cash equivalents			33,999				53,151
Cash and cash equivalents — beginning of year			82,220				29,069
Cash and cash equivalents — end of year		$	116,219			$	82,220
Supplemental cash flow information:
Cash payment for income taxes		$	(7,420	)		$	(6,476	)
Restricted stock units vested		$	4,992			$	5,617
Property and equipment and other assets purchased but not paid for		$	348			$	668
Unrealized loss on available-for-sale securities		$	(36	)		$	(223	)

 

 

---