Fourth Quarter 2007 Financial Highlights: * Net sales increased 48% year-over-year to US$53.4 million, reaching a new record high and exceeding guidance * Gross margin excluding stock-based compensation decreased mildly from 3Q07 to 52.7%, the tenth consecutive quarter where gross margin was above 52% * GAAP gross margin declined slightly to 52.5%, also the tenth consecutive quarter where gross margin was above 52% * Operating margin excluding stock-based compensation, acquisition- related charges, and one-time items decreased slightly from 31.7% in 3Q07 to 31.5% * Net income excluding stock-based compensation, acquisition-related charges, and one-time items increased significantly, rising 35% year-over-year to US$16.4 million, a new record high * Diluted earnings per ADS excluding stock-based compensation, acquisition-related charges and one-time items were US$0.47, up 24% from US$0.38 in 4Q06 * GAAP diluted earnings per ADS were US$0.35, up 6% from US$0.33 in 4Q06 Business Highlights: * Total unit shipments increased 54% year-over-year and 23% sequentially to over 96 million units * Card controller shipments increased 25% quarter-over-quarter; card controller revenue increased 17% quarter-over-quarter * Full year card controller shipments increased 82% and market share increased from an estimated 31% in 2006 to 37% in 2007 * Full year mobile storage controller shipments increased 85% to 297 million units * SSD controller shipments reached 1.0 million units in the quarter, which is a new milestone for the Company * Mobile communications revenue increased 47% quarter-over-quarter and accounted for 22% of total revenue, up from 17% of total revenue in 3Q07
TAIPEI, Taiwan, Jan. 31, 2008 (PRIME NEWSWIRE) -- Silicon Motion Technology Corporation (Nasdaq:SIMO) ("the Company") today announced its fourth quarter 2007 financial results. Fourth quarter net sales increased 48% year-over-year to US$53.4 million and GAAP net income increased 16% year-over-year to US$11.9 million, or US$0.35 per diluted ADS, compared to US$0.33 per diluted ADS in the fourth quarter of 2006.
Non-GAAP net income, which excludes stock-based compensation, acquisition-related charges, and one-time items, increased 35% year-over-year to US$16.4 million, or US$0.47 per diluted ADS, compared to US$0.38 per diluted ADS in the fourth quarter of 2006.
Commenting on the results, Silicon Motion's President and CEO, Wallace Kou, said:
"We are delighted with the strength of our 4Q operating results. We delivered US$53.4 million in revenue for the quarter, which exceeded the upper end of our US$50 to 52 million guidance range. These results were largely a result of excellent performance from both our storage and communications businesses. For full year 2007, we delivered earnings per diluted ADS of US$1.64." "Our 4Q07 storage revenue grew 15% sequentially, which is an improvement from the 17% sequential growth that we achieved in 4Q06 and demonstrates that our solid execution in our flash controller business continues to deliver strong results. For full year 2007, we estimate that the flash card market volume increased almost 50% to 660 million units and that the share of cards in the overall market using our controllers increased from 31% in 2006 to 37% in 2007. We strongly believe that we continue to earn our leadership position in the market because of the competitiveness and reliability of our technology, our established product track record with the broadest set of customers in the industry, and our broad capabilities compared to our competitors for supporting storage device customers and NAND flash partners." "We are excited about the performance of FCI, the mobile communications business we acquired last year. Revenue from this business increased a considerable 47% quarter over quarter and sales of mobile TV silicon tuners in the second half of 2007 accounted for over 7% of our total revenue, which we believe puts us in a strong position with regard to the rapidly growing mobile TV market. In order to strengthen our technological capabilities in this area, we completed a smaller mobile TV related IC acquisition in Korea at the end of November 2007. We believe that this acquisition will foster our ability to bring new integrated mobile TV silicon solutions to the market faster." "FCI generated over US$31 million in net sales for calendar year 2007, which was largely in-line with our expectations. We are presently determining whether FCI met the 2007 product revenue and product margin targets required to trigger an earn-out payment as a part of the previously announced terms of the acquisition." "I am also delighted to note that our fourth quarter gross margin of 53% was our tenth consecutive quarter of 52% or higher -- despite the continued volatility of NAND flash prices."
Fourth Quarter 2007 Financial Review(1)
Sales
Net sales in the fourth quarter totaled US$53.4 million, an increase of 48% from 4Q06 and an increase of 16% compared with 3Q07. Overall unit shipments increased 54% from 4Q06 and 23% from 3Q07.
Our key products, as percentages of net sales, are as follows:
-------------------------------------------------------------------- As % of Net Sales 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 -------------------------------------------------------------------- Mobile Storage 72% 85% 92% 90% 90% 79% 72% 71% -------------------------------------------------------------------- Mobile Communications(2) 9% 17% 22% -------------------------------------------------------------------- Multimedia SoCs 27% 14% 8% 9% 9% 12% 11% 7% -------------------------------------------------------------------- Others 1% 1% 0% 1% 1% 1% 0% 0% -------------------------------------------------------------------- Total 100% 100% 100% 100% 100% 100% 100% 100% --------------------------------------------------------------------
Our product mix changed with the acquisition of FCI at the end of April 2007. Mobile storage products, which were 90% of net sales in 4Q06, declined to 71% of net sales in 4Q07. Card controllers, which were almost 80% of our revenue in 4Q06, declined to under 60% in 4Q07. In 4Q07, FCI, now our mobile communications business, accounted for 22% of net sales.
Net sales from mobile storage products, which include flash memory card controllers, USB flash drive controllers, card reader controllers, SSD controllers, and embedded flash controllers, increased 17% from 4Q06 to
(1) Unless otherwise stated, all financial information used in this press release is unaudited, consolidated, prepared in accordance with U.S. GAAP and denominated in New Taiwan dollars. U.S. dollar amounts are translated for convenience only. Such financial information is generated internally and has not been subjected to the same review and scrutiny, including internal auditing procedures and audit by independent auditors, to which we subject our audited consolidated financial statements, and may vary materially from the audited consolidated financial information for the same period. Any evaluation of the financial information presented in this press release should also take into account our published audited consolidated financial statements and the notes to those statements. In addition, the financial information presented is not necessarily indicative of our results for any future period. (2) Revenues from Mobile Communications did not exist prior to the acquisition of Future Communications IC, Inc. ("FCI") in the second quarter of 2007.
US$38.0 million, and increased 15% from 3Q07. Unit shipments increased 44% from 4Q06 and increased 26% from 3Q07 to 89 million units as a result of favorable NAND flash market conditions and seasonal sales in the fourth quarter.
Net sales from mobile communication products, which include mobile TV tuners, CDMA RF ICs, and electronic toll collection (ETC) RF ICs, increased 46% from 3Q07 to US$11.5 million. Unit shipments of communication products increased 22% from 3Q07 to 6 million.
Net sales from multimedia SoC products, which include embedded graphics processors, MP3 SoCs, and PC camera SoCs, increased 15% from 4Q06, but declined 30% from 3Q07 to US$3.7 million. Unit shipments of multimedia SoC products increased 53% from 4Q06, but declined 68% from 3Q07, largely because of unfavorable MP3 SoC market conditions.
--------------------------------------------------------------------- Unit Shipment (million units) 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 --------------------------------------------------------------------- Mobile Storage 20.3 29.0 49.6 62.0 64.1 73.1 70.7 89.3 --------------------------------------------------------------------- Mobile Communications 3.2 5.0 6.1 --------------------------------------------------------------------- Multimedia SoCs 0.5 0.3 0.4 0.6 1.2 2.2 2.8 0.9 --------------------------------------------------------------------- Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 --------------------------------------------------------------------- Total 20.8 29.3 50.0 62.6 65.3 78.5 78.5 96.3 ---------------------------------------------------------------------
Margins
Gross margin excluding stock-based compensation was 52.7%, which was slightly lower than 53.2% in 3Q07. GAAP gross margin was 52.5%, also slightly lower than 53.0% in 3Q07.
Operating expense excluding stock-based compensation, acquisition-related charges, and one-time items was 21.2% of net sales, which was slightly lower than 21.5% in 3Q07. Research and development expenses, selling and marketing expenses, as well as general and administrative expenses as a percentage of net sales were largely unchanged compared to the previous quarter. Stock-based compensation was US$2.2 million, which was approximately the same as in 3Q07. Acquisition-related charges in 4Q07 were approximately US$1.9 million and included US$0.1 million from our November 2007 mobile TV acquisition.
Operating margin excluding stock-based compensation, acquisition-related charges, and one-time items was 31.5%, which was slightly lower than 31.7% in 3Q07. GAAP operating margin was 23.9%, which was higher than 23.1% in 3Q07.
Earnings
Net income excluding stock-based compensation, acquisition-related charges, and one-time items increased 35% year-over-year to US$16.4 million in 4Q07. Diluted earnings per ADS excluding stock-based compensation, acquisition-related charges, and one-time items were US$0.47, up 24% from US$0.38 in 4Q06.
GAAP net income increased 16% year-over-year to US$11.9 million in 4Q07. Diluted GAAP earnings per ADS were US$0.35, an increase of 6% from US$0.33 in 4Q06.
Business Outlook:
Silicon Motion's President and CEO, Wallace Kou, added:
"We are closely monitoring signs of a potential deterioration in U.S. macroeconomic conditions. Nevertheless, rapidly declining NAND flash prices continue to drive solid state product innovations, improve consumer affordability, and fuel storage device unit growth, as well as related demand for our controllers. Our concerns about U.S. economic slowdown are somewhat mitigated by the fact that a large part of our sales of card controllers and other products are used in devices that do not target US end markets. We expect our handset bundled card business, as well as sales to merchant card makers to continue to grow in 2008. Our card controller shipments to Samsung, for example, will probably increase at least 35% sequentially in the seasonally weak first quarter. We therefore remain cautiously optimistic about our storage business. We also expect to continue benefiting from the rapid growth of mobile TV in 2008, as growing interest in mobile TV by consumers in Asian markets leads to increasing adoption rates."
As a result, Management expects:
* 1Q08 corporate revenue of approximately US$44 - 46 million, which represents a year-over-year increase of 22 - 27% and a quarter- over-quarter decrease of 14 - 18%, mainly because of seasonal factors * 1Q08 storage revenue of approximately US$34 - 35 million, which represents a seasonal quarter-over-quarter decrease of 8 - 10% * 2008 full year corporate revenue of US$225 - 235 million, which represents a 25 - 31% year-over-year increase and is largely in- line with our long-term annual growth target of 25 - 35% * Non-GAAP gross margin to remain in the 52- 53% range and GAAP gross margin to also remain in the 52- 53% range * Non-GAAP earnings per ADS of approximately US$1.95 - 2.05 and GAAP earnings per ADS of approximately US$1.55 - 1.65
Conference Call & Webcast:
The Company's management team will conduct a conference call at 8:00am Eastern Time on February 1.
(Speakers) Wallace Kou, President and CEO Riyadh Lai, CFO PRE-REGISTRATION: https://www.theconferencingservice.com/prereg/key.process?key=PKWXWPCL4 CONFERENCE CALL ACCESS NUMBERS: USA (Toll Free): 1 888 679 8038 USA (Toll): 1 617 213 4850 Taiwan (Toll Free): 0080 144 4360 Participant Passcode: 3700 1501 REPLAY NUMBERS (for 7 days): USA (Toll Free): 1 888 286 8010 USA (Toll): 1 617 801 6888 Participant Passcode: 7694 5563
A webcast of the call will be available on the Company's website at www.siliconmotion.com.
Discussion of Non-GAAP Financial Measures
To supplement the Company's unaudited selected financial results calculated in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), the Company discloses certain non-GAAP financial measures that exclude stock-based compensation and acquisition-related charges, including, non-GAAP cost of sales, non-GAAP gross profit, non-GAAP selling, general, and administrative expenses, non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per diluted ADS. These non-GAAP measures are not in accordance with or an alternative for GAAP, and may be different from non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all the amounts associated with the Company's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measure. We compensate for the limitations of our non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.
Our non-GAAP financial measures are provided to enhance the user's overall understanding of our current financial performance and our prospects for the future. Specifically, we believe the non-GAAP results provide useful information to both management and investors as these non-GAAP results exclude certain expenses, gains and losses that we believe are not indicative of our core operating results and because it is consistent with the financial models and estimates published by many analysts who follow the company. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with our forecasts, and for benchmarking our performance externally against our competitors. Also, when evaluating potential acquisitions, we exclude the items described below from our consideration of the target's performance and valuation. Since we find these measures to be useful, we believe that our investors benefit from seeing the results from management's perspective in addition to seeing our GAAP results. We believe that these non-GAAP measures, when read in conjunction with the Company's GAAP financials, provide useful information to investors by offering:
-- the ability to make more meaningful period-to-period comparisons of the Company's on-going operating results; -- the ability to better identify trends in the Company's underlying business and perform related trend analysis; -- a better understanding of how management plans and measures the Company's underlying business; and -- an easier way to compare the Company's operating results against analyst financial models and operating results of our competitors that supplement their GAAP results with non-GAAP financial measures.
The following are explanations of each of the adjustments that we incorporate into our non-GAAP measures, as well as the reasons for excluding each or these individual items in our reconciliation of these non-GAAP financial measures:
Stock-based compensation expense consists of non-cash charges incurred as a result of the Company's adoption of SFAS 123R relating to the fair value of stock options and restricted stock units awarded to employees. The Company believes that the exclusion of these non-cash charges provides for more accurate comparisons of our operating results to our peer companies due to the varying available valuation methodologies, subjective assumptions and the variety of award types. In addition, the Company believes it is useful to investors to understand the specific impact the application of SFAS 123R has on its operating results.
Intangible amortization consists of non-cash charges that can be impacted by the timing and magnitude of our acquisitions. The Company considers its operating results without these charges when evaluating its ongoing performance and forecasting its earnings trends, and therefore excludes such charges when presenting non-GAAP financial measures. The Company believes that the assessment of its operations excluding these costs is relevant to its assessment of internal operations and comparisons to the performance of its competitors.In-process research and development consists of one-time charges incurred in connection with the acquisition of FCI in 2Q 2007 that otherwise would not have been incurred and therefore we have excluded the effects of these charges from our non-GAAP operating income and non-GAAP net income. In-process research and development consists of technology projects which, as of acquisition date, had not yet reached technological feasibility and there are no future alternative uses that exist. We believe it is useful for investors to understand the effect of this expense on our statement of operations. This non-GAAP adjustment is intended to reflect acquisition-related expense incurred that is not directly associated with our continuing operations.
Impairment of long-term marketable securities relates to the other-than-temporary, non-operating write down of the Company's investments in Spright Co., Ltd. (formerly known as Flash Media Corporation) in 2006 and 2005. As the performance of Spright deteriorated in 2007, the Company determined that these shares have been other-than-temporarily impaired and therefore they were written down in the fourth quarter of 2007. These charges are not factored into the Company's internal evaluation of net income as it believes they are non-operating charges that do not impact the Company's core operating performance.
Gain from litigation settlement consists of a one-time payment in September 2006 by Phison Electronics Corporation to the Company for settlement of legal action filed by the Company in August 2002 against Phison for infringement of certain intellectual property rights to compact flash controller IC owned by the Company.
Write-off of other receivables consists of a one-time write-off in December 2006 of a US$1.2 million non-trade receivable, the collection of which we believed was doubtful. The Company did not have a similar write-off for the year ended December 31, 2007.
Silicon Motion Technology Corporation Consolidated Statements of Income (in thousands, except percentages and per share data, unaudited) For the Three Months Ended -------------------------------------------------------- Dec. 31, Sep. 30, Dec. 31, Dec. 31, Sep. 30, Dec. 31, 2006 2007 2007 2006 2007 2007 (NT$) (NT$) (NT$) (US$) (US$) (US$) --------- --------- --------- ------ ------ -------- Net Sales 1,170,679 1,497,494 1,732,115 36,099 46,176 53,411 Cost of sales 544,336 704,289 822,623 16,785 21,717 25,366 --------- --------- --------- ------ ------ ------- Gross profit 626,343 793,205 909,492 19,314 24,459 28,045 Operating expenses Research & develop- ment 152,811 207,997 239,991 4,712 6,414 7,400 Sales & marketing 61,446 75,839 82,365 1,895 2,339 2,540 General & administra- tive 71,456 107,286 112,324 2,203 3,308 3,464 In-process research and development -- -- 7,188 -- -- 222 Amortization of intangibles assets -- 55,994 53,237 -- 1,727 1,642 Gain from settlement on litiga- tion (3,000) -- -- (93) Write-Off of Other Receivable 40,039 -- -- 1,236 -- -- --------- --------- --------- ------ ------ ------- Operating income 303,591 346,089 414,387 9,361 10,671 12,777 Non-operating income (expense) Gain on sale of invest- ments 5,268 10,545 6,108 162 325 188 Interest income (net) 18,850 9,076 9,333 581 280 288 Foreign exchange gain (loss) (3,264) (7,194) (5,164) (101) (221) (159) Impairment on long- term investment -- -- (14,447) -- -- (445) Others (3,096) 10 775 (94) -- 24 --------- --------- --------- ------ ------ ------- Subtotal 17,758 12,437 (3,395) 548 384 (104) --------- --------- --------- ------ ------ ------- Income before tax 321,349 358,526 410,992 9,909 11,055 12,673 Income tax expense (13,371) 30,523 24,603 (412) 941 759 --------- --------- --------- ------ ------ ------- Net income 334,720 328,003 386,389 10,321 10,114 11,914 ========= ========= ========= ====== ====== ====== Basic earnings per ADS NT$10.82 $10.00 $11.73 $0.33 $0.31 $0.36 Diluted earnings per ADS NT$10.60 $ 9.66 $11.39 $0.33 $0.30 $0.35 Margin Analysis: Gross margin 53.5% 53.0% 52.5% 53.5% 53.0% 52.5% Operating margin 25.9% 23.1% 23.9% 25.9% 23.1% 23.9% Net margin 28.6% 21.9% 22.3% 28.6% 21.9% 22.3% Additional Data: Weighted avg. ADS equiv- alents(3) 30,941 32,815 32,934 30,941 32,815 32,934 Diluted ADS equivalents 31,592 33,942 33,927 31,592 33,942 33,927 (3) Assumes all outstanding ordinary shares are represented by ADSs. Each ADS represents four ordinary shares. Silicon Motion Technology Corporation Reconciliation of GAAP to Non-GAAP Operating Results (in thousands, except percentages and per share data, unaudited) For the Three Months Ended -------------------------------------------------------- Dec. 31, Sep. 30, Dec. 31, Dec. 31, Sep. 30, Dec. 31, 2006 2007 2007 2006 2007 2007 (NT$) (NT$) (NT$) (US$) (US$) (US$) --------- --------- --------- ------ ------ -------- GAAP cost of sales 544,336 704,289 822,623 16,785 21,717 25,366 Adjustment for share- based compensa- tion (940) (3,693) (3,530) (29) (114) (109) ------- ------- -------- ------- ------ ------- Non GAAP cost of sales 543,396 700,596 819,093 16,756 21,603 25,257 ======= ======= ======== ======= ====== ====== GAAP operating income 303,591 346,089 414,387 9,361 10,671 12,777 Adjustment for share- based compensa- tion within: Cost of sales 940 3,693 3,530 29 114 109 Research & develop- ment 9,830 35,646 34,900 303 1,099 1,076 Sales & marketing 4,186 13,584 13,540 129 419 418 General & admini- strative 7,963 19,642 19,314 245 606 596 In-process research and development -- -- 7,188 -- -- 222 Amortization of intangibles assets -- 55,994 53,237 -- 1,727 1,642 Gain from settlement on litigation (3,000) -- -- (93) -- -- Write-Off of Other Receivable 40,039 -- -- 1,236 -- -- ------- ------- -------- ------- ------ ------- Non-GAAP operating income 363,549 474,648 546,096 11,210 14,636 16,840 ======= ======= ======== ======= ====== ====== GAAP Net income 334,720 328,003 386,389 10,321 10,114 11,914 Adjustment for share- based compensation within: Cost of sales 940 3,693 3,530 29 114 109 Research & development 9,830 35,646 34,900 303 1,099 1,076 Sales & marketing 4,186 13,584 13,540 129 419 418 General & administra- tive 7,963 19,642 19,314 245 606 596 In-process research and development -- -- 7,188 -- -- 222 Amortization of intangibles assets -- 55,994 53,237 -- 1,727 1,642 Gain from settlement on litigation (3,000) -- -- (93) -- -- Write-Off of Other Receivable 40,039 -- -- 1,236 -- -- Impairment loss of investment -- -- 14,447 -- -- 445 ------- ------- -------- ------- ------ ------- For the Three Months Ended ----------------------------------------------------- Dec. 31, Sep. 30, Dec. 31, Dec. 31, Sep. 30, Dec. 31, 2006 2007 2007 2006 2007 2007 (NT$) (NT$) (NT$) (US$) (US$) (US$) --------- --------- --------- ------ ------ -------- Non-GAAP Net income 394,678 456,562 532,545 12,170 14,079 16,422 ======= ======= ======= ======= ======= ======= Diluted earnings per ADS: GAAP $10.6 $9.66 $11.39 $0.33 $0.30 $0.35 Non-GAAP $12.3 $13.03 $15.27 $0.38 $0.40 $0.47 Shares used in computing diluted net income per share: GAAP 31,592 33,942 33,927 31,592 33,942 33,927 Non-GAAP 32,075 35,028 34,865 32,075 35,028 34,865 Gross margin GAAP 53.5% 53.0% 52.5% 53.5% 53.0% 52.5% Non-GAAP 53.6% 53.2% 52.7% 53.5% 53.2% 52.7% Operating margin GAAP 25.4% 23.1% 23.9% 25.4% 23.1% 23.9% Non-GAAP 27.3% 31.7% 31.5% 27.3% 31.7% 31.5% Silicon Motion Technology Corporation Consolidated Statements of Income (in thousands, except percentages, and per share data, unaudited) For the Year Ended -------------------------------------- Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2006 2007 2006 2007 (NT$) (NT$) (US$) (US$) --------- --------- ------- ------- Net Sales 3,460,459 5,847,329 106,705 180,306 Cost of sales 1,612,019 2,757,101 49,708 85,017 --------- --------- ------- ------- Gross profit 1,848,440 3,090,228 56,997 95,289 Operating expenses Research & development 502,225 822,746 15,486 25,370 Sales & marketing 200,526 298,199 6,183 9,195 General & administrative 219,395 381,749 6,765 11,771 In-process research and development -- 76,378 -- 2,355 Amortization of intangible assets -- 163,704 -- 5,048 Gain from settlement on litigation (3,000) -- (93) -- Write-Off of Other Receivable 40,039 -- 1,234 -- --------- --------- ------- ------- Subtotal 959,185 1,742,776 29,577 53,739 --------- --------- ------- ------- Operating income 889,255 1,347,452 27,421 41,550 Non-operating expense (income) Gain on sale of investments 17,857 26,886 551 829 Interest income (net) 65,187 51,320 2,010 1,583 Dividend income -- 772 -- 24 Foreign exchange gain (loss) (5,174) (18,702) (160) (577) Impairment on long-term investment -- (14,448) -- (446) Others 1,398 803 43 25 --------- --------- ------- ------- Subtotal 79,268 46,631 2,444 1,438 --------- --------- ------- ------- Income before tax 968,524 1,394,083 29,865 42,988 Income tax expense 21,032 81,578 649 2,516 --------- --------- ------- ------- Net income 947,491 1,312,505 29,216 40,472 ========= ========= ======= ======= Basic earnings per ADS NT$30.75 NT$40.67 US$0.95 US$1.25 Diluted earnings per ADS NT$30.20 NT$39.38 US$0.93 US$1.21 Margin Analysis: Gross margin 53.4% 52.9% 53.4% 52.9% Operating margin 25.7% 23.0% 25.7% 23.0% Net margin 27.4% 22.5% 27.4% 22.5% Additional Data: Weighted average ADS equivalents 30,813 32,270 30,813 32,270 Diluted ADS equivalents 31,372 33,325 31,372 33,325 Silicon Motion Technology Corporation Reconciliation of GAAP to Non-GAAP Operating Results (in thousands, except percentages and per share data, unaudited) For the Year Ended -------------------------------------- Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2006 2007 2006 2007 (NT$) (NT$) (US$) (US$) --------- --------- ------- ------- GAAP cost of sales 1,612,019 2,757,101 49,708 85,017 Adjustment for share-based compensation (3,388) (12,858) (104) (396) --------- --------- ------- ------- Non GAAP cost of sales 1,608,631 2,744,243 49,604 84,621 ========= ========= ======= ======= GAAP operating income 889,255 1,347,452 27,421 41,550 Adjustment for share-based compensation within: Cost of sales 3,388 12,858 104 396 Research & development 37,743 129,750 1,164 4,001 Sales & marketing 13,522 48,703 417 1,502 General & administrative 31,046 70,039 957 2,160 In-process research and development -- 76,378 -- 2,355 Amortization of intangibles assets -- 163,704 -- 5,048 Gain from settlement on litigation (3,000) -- (93) -- Write-Off of Other Receivable 40,039 -- 1,234 -- --------- --------- ------- ------- Non-GAAP operating income 1,011,993 1,848,884 31,204 57,012 ========= ========= ======= ======= GAAP Net income 947,491 1,312,505 29,216 40,472 Adjustment for share-based compensation within: Cost of sales 3,388 12,858 104 396 Research & development 37,743 129,750 1,164 4,001 Sales & marketing 13,522 48,703 417 1,502 General & administrative 31,046 70,039 957 2,160 In-process research and development -- 76,378 -- 2,355 Amortization of intangibles assets -- 163,704 -- 5,048 Gain from settlement on litigation (3,000) -- (93) -- Write-Off of Other Receivable 40,039 -- 1,234 -- Impairment loss of investment -- 14,448 -- 446 --------- --------- ------- ------- Non-GAAP Net income 1,070,229 1,828,385 32,999 56,380 ========= ========= ======= ======= Diluted earnings per ADS: GAAP 30.20 39.38 0.93 1.21 Non-GAAP 33.77 53.20 1.04 1.64 Shares used in computing diluted net income per share: GAAP 31,372 33,325 31,372 33,325 Non-GAAP 31,689 34,368 31,689 34,368 Gross margin GAAP 53.4% 52.9% 53.4% 52.9% Non-GAAP 53.5% 53.1% 53.5% 53.1% Operating margin GAAP 25.7% 23.0% 25.7% 23.0% Non-GAAP 29.2% 31.6% 29.2% 31.6% Note: The Company maintains its accounts and expresses its financial statements in New Taiwan dollars.For convenience only, U.S. dollar amounts presented in the income statement have been translated from New Taiwan dollars, using an average exchange rate of NT$32.43 to US$1 on Dec. 31, 2007. Silicon Motion Technology Corporation Consolidated Balance Sheet (In thousands) (unaudited) Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2006 2007 2006 2007 (NT$) (NT$) (US$) (US$) ---------- ---------- -------- -------- Cash and cash equivalents 1,808,042 1,608,272 55,752 49,592 Short-term investments 1,458,847 1,751,113 44,984 53,997 Accounts receivable, net 841,764 1,007,384 25,956 31,063 Inventories 427,116 547,400 13,170 16,879 Refundable deposits - current 65,000 127,466 2,004 3,931 Deferred income tax assets, net 103,603 88,313 3,195 2,723 Prepaid expenses and other current assets 244,832 227,043 7,550 7,001 ---------- ---------- -------- -------- Total current assets 4,949,204 5,356,991 152,612 165,186 Long-term investments 170,942 119,535 5,271 3,686 Property and equipment (net) 319,356 519,189 9,848 16,010 Goodwill and intangible assets(net) -- 2,460,277 -- 75,864 Other assets 89,182 275,078 2,750 8,482 ---------- ---------- -------- -------- Total assets $5,528,684 $8,731,070 $170,481 $269,228 ========== ========== ======== ======== Accounts payable 525,173 444,440 16,194 13,705 Income tax payable 139,268 227,356 4,294 7,011 Accrued expenses and other current liabilities 294,061 396,433 9,069 12,224 ---------- ---------- -------- -------- Total current liabilities 958,502 1,068,229 29,557 32,940 Accrued pension cost 1,018 -- 31 -- Other long-term liabilities 1,040 78,611 32 2,424 ---------- ---------- -------- -------- Total liabilities 960,560 1,146,840 29,620 35,364 Shareholders' equity 4,568,124 7,584,230 140,861 233,864 ---------- ---------- -------- -------- Total liabilities & shareholders' equity $5,528,684 $8,731,070 $170,481 $269,228 ========== ========== ======== ======== ---------------------------------------------------------------------
About Silicon Motion:
We are a fabless semiconductor company that designs, develops and markets universally compatible, high performance, low-power semiconductor solutions for the multimedia consumer electronics market. We have three major product lines: our mobile storage business, multimedia SoC business, and mobile communications business. Our mobile storage business is our significantly larger business and is composed of microcontrollers, also commonly known as controllers, used in NAND flash memory storage products such as flash memory cards, USB flash drives and card readers. These flash memory storage products are widely used by consumers to store data on multimedia consumer electronics devices such as mobile phones, digital still cameras, personal digital assistants, personal navigation devices and personal multimedia players, and notebook and desktop personal computers. Our multimedia SoC business is composed of products that support MP3 and personal multimedia players, PC cameras and embedded graphics applications. Our mobile communications business is composed of mobile TV tuners, CDMA RF ICs and electronics toll collection RF ICs, which became our new product line as a result of our recent acquisition of FCI.
Forward-Looking Statements:
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation, statements about Silicon Motion's expected fourth quarter 2007 revenue, gross margin and operating margin and full fiscal year 2007 diluted earnings per ADS, all of which reflect management's estimates based on information available at this time of this press release. While Silicon Motion believes these estimates to be meaningful, these amounts could differ materially from actual reported amounts for the fourth quarter and the full fiscal year. Forward-looking statements also include, without limitation, statements regarding trends in the multimedia consumer electronics market and our future results of operations, financial condition and business prospects. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue," or the negative of these terms or other comparable terminology. Although such statements are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on them. These statements involve risks and uncertainties, and actual market trends or our actual results of operations, financial condition or business prospects may differ materially from those expressed or implied in these forward looking statements for a variety of reasons. Potential risks and uncertainties include, but are not limited to, our belief in the outcome of any claim or lawsuit, including those uncertainties relating to litigation filed against the Company relating to whether its products are covered by patents not owned by the Company; unpredictable volume and timing of customer orders, which are not fixed by contract but vary on a purchase order basis; the loss of one or more key customers or the significant reduction, postponement, rescheduling or cancellation of orders from these customers; integration of our recently announced acquisitions general economic conditions or conditions in the semiconductor or multimedia consumer electronics markets; decreases in the overall average selling prices of our products; changes in the relative sales mix of our products; changes in our cost of finished goods; the availability, pricing, and timeliness of delivery of other components and raw materials used in our customers' products; our customers' sales outlook, purchasing patterns, and inventory adjustments based on consumer demands and general economic conditions; our ability to successfully develop, introduce, and sell new or enhanced products in a timely manner; and the timing of new product announcements or introductions by us or by our competitors. For additional discussion of these risks and uncertainties and other factors, please see the documents we file from time to time with the Securities and Exchange Commission, including our Annual Report on Form 20-F filed on July 2, 2007. We assume no obligation to update any forward-looking statements, which apply only as of the date of this press release.