Pixelworks Reports First Quarter 2016 Financial Results; Names

Pixelworks Reports First Quarter 2016 Financial Results; Names Todd DeBonis Chief Executive Officer

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
	March 31,			December 31,			March 31,
	2016			2015			2015
Revenue, net	$	11,167		$	13,477		$	14,392
Cost of revenue (1)		7,575			6,663			7,425
Gross profit		3,592			6,814			6,967
Operating expenses:
Research and development (2)		5,675			6,076			6,318
Selling, general and administrative (3)		3,865			3,648			3,887
Restructuring		2,538			—			—
Total operating expenses		12,078			9,724			10,205
Loss from operations		(8,486	)		(2,910	)		(3,238	)
Interest expense and other, net		(99	)		(129	)		(107	)
Loss before income taxes		(8,585	)		(3,039	)		(3,345	)
Provision for income taxes		57			128			19
Net loss	$	(8,642	)	$	(3,167	)	$	(3,364	)
Net loss per share - basic and diluted	$	(0.31	)	$	(0.11	)	$	(0.14	)
Weighted average shares outstanding - basic and diluted		27,936			27,697			23,328
——————
(1) Includes:
Restructuring	$	1,723		$	—		$	—
Stock-based compensation		44			49			53
(2) Includes stock-based compensation		429			485			489
(3) Includes stock-based compensation		(107	)		397			536



PIXELWORKS, INC.
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL INFORMATION *
(In thousands, except per share data)
(Unaudited)

	Three Months Ended
	March 31,			December 31,			March 31,
	2016			2015			2015
Reconciliation of GAAP and non-GAAP gross profit
GAAP gross profit	$	3,592		$	6,814		$	6,967
Restructuring		1,723			—			—
Stock-based compensation		44			49			53
Total reconciling items included in cost of revenue		1,767			49			53
Non-GAAP gross profit	$	5,359		$	6,863		$	7,020
Non-GAAP gross profit margin		48.0	%		50.9	%		48.8	%

Reconciliation of GAAP and non-GAAP operating expenses
GAAP operating expenses	$	12,078		$	9,724		$	10,205
Reconciling item included in research and development:
Stock-based compensation		429			485			489
Reconciling item included in selling, general and administrative:
Stock-based compensation		(107	)		397			536
Restructuring		2,538			—			—
Total reconciling items included in operating expenses		2,860			882			1,025
Non-GAAP operating expenses	$	9,218		$	8,842		$	9,180

Reconciliation of GAAP and non-GAAP net loss
GAAP net loss	$	(8,642	)	$	(3,167	)	$	(3,364	)
Reconciling items included in cost of revenue		1,767			49			53
Reconciling items included in operating expenses		2,860			882			1,025
Tax effect of non-GAAP adjustments		(2	)		—			(20	)
Non-GAAP net loss	$	(4,017	)	$	(2,236	)	$	(2,306	)
Non-GAAP net loss per share - basic and diluted	$	(0.14	)	$	(0.08	)	$	(0.10	)
Non-GAAP weighted average shares outstanding - basic and diluted		27,936			27,697			23,328

* Our non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP operating expenses, non-GAAP net loss and non-GAAP net loss per share differs from GAAP gross profit, GAAP operating expenses, GAAP net loss and GAAP net loss per share due to the exclusion of restructuring charges and stock-based compensation expense. Pixelworks' management believes the presentation of non-GAAP gross profit, non-GAAP operating expenses, non-GAAP net loss and non-GAAP net loss per share provides useful information to investors regarding Pixelworks' results of operations by allowing investors to better evaluate underlying cash flow dynamics. Pixelworks' management also uses each of these non-GAAP measures internally to better evaluate underlying cash flow dynamics. Pixelworks, however, cautions investors to consider these non-GAAP financial measures in addition to, and not as a substitute for, our GAAP financial measures.



PIXELWORKS, INC.
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL INFORMATION *
(In thousands)
(Unaudited)

	Three Months Ended
	March 31,			December 31,			March 31,
	2016			2015			2015
Reconciliation of GAAP net loss and adjusted EBITDA
GAAP net loss	$	(8,642	)	$	(3,167	)	$	(3,364	)
Restructuring		4,261			—			—
Stock-based compensation		366			931			1,078
Tax effect of non-GAAP adjustments		(2	)		—			(20	)
Non-GAAP net loss	$	(4,017	)	$	(2,236	)	$	(2,306	)
EBITDA adjustments:
Depreciation and amortization	$	990		$	1,038		$	1,098
Interest expense and other, net		99			129			107
Non-GAAP provision for income taxes		59			128			39
Adjusted EBITDA	$	(2,869	)	$	(941	)	$	(1,062	)

* Adjusted EBITDA differs from GAAP net loss due to the exclusion of restructuring charges, stock-based compensation expense, interest expense and other, net, income tax provision and depreciation and amortization. Pixelworks' management believes the presentation of adjusted EBITDA provides useful information to investors regarding Pixelworks' results of operations by allowing investors to better evaluate underlying cash flow dynamics and core operating results and are used by Pixelworks' management for these purposes. Pixelworks, however, cautions investors to consider these non-GAAP financial measures in addition to, and not as a substitute for, our GAAP financial measures.



PIXELWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

	March 31, 2016		December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	22,935	$	26,591
Accounts receivable, net		5,694		5,988
Inventories		2,197		3,266
Prepaid expenses and other current assets		681		644
Total current assets		31,507		36,489
Property and equipment, net		4,320		6,543
Other assets, net		756		810
Total assets	$	36,583	$	43,842
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,179	$	2,944
Accrued liabilities and current portion of long-term liabilities		11,471		8,528
Current portion of income taxes payable		164		221
Short-term line of credit		3,000		3,000
Total current liabilities		15,814		14,693
Long-term liabilities, net of current portion		629		831
Income taxes payable, net of current portion		1,860		1,942
Total liabilities		18,303		17,466
Shareholders’ equity		18,280		26,376
Total liabilities and shareholders’ equity	$	36,583	$	43,842

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