SAN DIEGO, Oct. 28, 2008 (GLOBE NEWSWIRE) -- Entropic Communications, Inc. (Nasdaq:ENTR), a leading provider of silicon solutions to enable connected home entertainment, today reported its third quarter results for the period ended September 30, 2008. Entropic reported third quarter net revenues of $31.7 million, a decrease of 26% compared with $42.8 million in the second quarter of 2008 and 12% lower than in the third quarter of 2007.
In accordance with U.S. generally accepted accounting principles (GAAP), the company's third quarter net loss was $7.1 million, or ($0.11) per share (basic and diluted), on 67.7 million weighted average shares outstanding. This compares with GAAP net loss of $6.4 million, or ($0.10) per share (basic and diluted), on 67.2 million weighted average shares outstanding in the second quarter of 2008. Non-GAAP net loss in the third quarter was $1.2 million, or ($0.02) per share (basic and diluted), on 67.7 million average shares outstanding, compared to non-GAAP net income of $1.2 million, or $0.02 per diluted share, on 73.4 million average shares outstanding in the second quarter of 2008.
"Our Q3 results show upside to the guidance we provided last quarter. As expected, we saw softness in sales of our MoCA product line in the third quarter as a result of inventory build up in the supply chain. This softness was partially mitigated by the ramp in our DBS outdoor unit business," said Patrick Henry, chairman and chief executive officer. "During the third quarter, we adjusted our cost structure to lower our breakeven threshold and made continued progress on our product roadmaps. Looking forward, the management team believes in the growth opportunity in our served markets and remains focused on operational execution and driving our next set of service provider deployments."
Three months ended
---------------------------------------------
(In millions, except
per share data) Sept 30, 2008 June 30, 2008 Sept 30, 2007
Net revenues $31.7 $42.8 $36.1
GAAP net loss ($7.1) ($6.4) ($6.7)
GAAP net loss per share
(basic and diluted) ($0.11) ($0.10) ($0.53)
Non-GAAP net (loss)
income (1) ($1.2) $1.2 $2.3
Non-GAAP net (loss)
income per share (1) ($0.02) $0.02 $0.03
1. Please refer to the financial statements portion of this press
release for an explanation of the non-GAAP financial measures
contained in the table above and a reconciliation of such measures
to the comparable GAAP financial measures.
For More Information
Entropic management will be holding a conference call today, October 28, 2008, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss the company's results for the third quarter and to provide guidance for the fourth quarter. You may access the conference call via any of the following:
Teleconference: 719-325-4893 Conference ID: 1241580 Web Broadcast: http://ir.entropic.com/events.cfm Replay: 719-457-0820
About Entropic Communications
Entropic Communications, Inc. is a leading fabless semiconductor company that designs, develops and markets system solutions that enable connected home entertainment. The company's technologies significantly change the way high-definition television-quality video and other multimedia content such as movies, music, games and photos are brought into and delivered throughout the home. For more information please visit: www.entropic.com.
The Entropic Communications logo is available athttp://www.globenewswire.com/newsroom/prs/?pkgid=4255
Forward Looking Statements
Statements in this press release that are not strictly historical in nature constitute "forward-looking statements." Such statements include, but are not limited to, statements regarding our growth opportunities and our focus on operational execution and driving service provider deployments. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause Entropic's actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. These factors include, but are not limited to, our dependence on a limited number of customers for a substantial portion of our revenues; risks associated with adverse U.S. and international economic conditions; the ability of our customers or the service providers who purchase their products to successfully compete and continue to grow in their markets; the continued development of the market for HD video and other multi-media content delivery and networking solutions based on the MoCA standard; risks associated with competing against larger and more established companies and our ability to compete successfully in the market for MoCA-compliant chipsets; risks associated with timely development and introduction of new or enhanced products; risks related to international operations including political and economic conditions in foreign markets; and other factors discussed in the "Risk Factors" section of Entropic's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008. All forward-looking statements are qualified in their entirety by this cautionary statement. Entropic is providing this information as of the date of this release and does not undertake any obligation to update any forward-looking statements contained in this release as a result of new information, future events or otherwise.
Entropic Communications(r) and the stylized Entropic "curve" logo are either trademarks or registered trademarks of Entropic Communications, Inc. in the United States and/or other countries.
ENTROPIC COMMUNICATIONS, INC.
GAAP Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
---------------------------- ------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2008 2008 2007 2008 2007
-------- -------- -------- -------- --------
Net revenues $ 31,678 $ 42,836 $ 36,144 $116,502 $ 82,377
Cost of net revenues 17,308 23,869 21,999 64,014 54,491
-------- -------- -------- -------- --------
Gross profit 14,370 18,967 14,145 52,488 27,886
Operating expenses:
Research and
development 13,902 15,678 11,923 42,892 22,812
Sales and marketing 3,991 4,455 3,283 12,590 6,642
General and
administrative 2,798 3,541 2,706 9,862 5,104
Write off of in-
process research
and development -- 1,300 -- 1,300 21,400
Amortization of
purchased
intangibles 713 713 1,296 2,022 1,338
Restructuring
charges
(benefit)(1) 209 (10) -- 1,278 --
-------- -------- -------- -------- --------
Total operating
expenses 21,613 25,677 19,208 69,944 57,296
-------- -------- -------- -------- --------
Loss from operations (7,243) (6,710) (5,063) (17,456) (29,410)
Other income
(expense), net 156 191 (1,583) 149 (2,070)
-------- -------- -------- -------- --------
Loss before income
taxes (7,087) (6,519) (6,646) (17,307) (31,480)
-------- -------- -------- -------- --------
Income tax provision
(benefit) 37 (72) -- 119 --
-------- -------- -------- -------- --------
Net loss before
accretion of
redeemable
convertible
preferred stock (7,124) (6,447) (6,646) (17,426) (31,480)
Accretion of
redeemable
convertible
preferred stock -- -- (32) -- (95)
-------- -------- -------- -------- --------
Net loss attributable
to common
stockholders $ (7,124) $ (6,447) $ (6,678) $(17,426) $(31,575)
======== ======== ======== ======== ========
Net loss per share
attributable to
common stockholders
(basic and diluted) $ (0.11) $ (0.10) $ (0.53) $ (0.26) $ (3.89)
======== ======== ======== ======== ========
Weighted average
shares (basic and
diluted) 67,669 67,215 12,506 67,378 8,113
======== ======== ======== ======== ========
(1) For the three months ending June 30 and March 31, 2008, the
Company recorded restructuring charges of $(10,000) and $1,079,000,
respectively, related to exiting the lease agreement for the company's
former headquarters in San Diego, California, as well as charges for
the impairment of property and equipment and other long-term assets.
For the three months ended September 30, 2008, the Company recorded a
restructuing charge of $209,000 related to the implementation of a
restructuring plan to improve its operating cost structure which
included a reduction-in-force.
ENTROPIC COMMUNICATIONS, INC.
GAAP Condensed Consolidated Balance Sheets
(In thousands)
Sept. 30, June 30, March 31, Dec. 31,
2008 2008 2008 2007
-----------------------------------------------
(unaudited) (unaudited) (unaudited)
ASSETS
Current assets:
Cash and cash
equivalents $ 25,244 $ 17,027 $ 16,545 $ 51,533
Marketable
securities 6,860 12,009 18,586 2,965
Accounts receivable,
net 19,691 35,588 37,852 24,489
Inventory 22,255 21,079 14,242 15,332
Prepaid expenses and
other current
assets 1,552 1,925 2,004 2,238
----------- ----------- ----------- -----------
Total current
assets 75,602 87,628 89,229 96,557
Property and
equipment, net 12,224 12,612 12,027 8,952
Intangible assets,
net 30,883 33,185 32,309 34,145
Goodwill 88,082 88,082 86,256 86,256
Other long-term
assets 281 283 389 416
----------- ----------- ----------- -----------
Total assets $ 207,072 $ 221,790 $ 220,210 $ 226,326
=========== =========== =========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
and accrued
expenses $ 12,680 $ 22,141 $ 19,053 $ 18,909
Accrued payroll and
benefits 4,080 5,490 4,314 4,253
Deferred revenues -- 187 303 303
Current portion of
line of credit and
loans payable -- -- -- 2,860
Current portion of
software licenses
and capital lease
obligations 60 119 268 384
----------- ----------- ----------- -----------
Total current
liabilities 16,820 27,937 23,938 26,709
Stock repurchase
liability 982 1,208 1,591 1,765
Lines of credit and
loans payable -- -- -- 5,547
Other long-term
liabilities 3,203 3,165 3,061 1,907
Stockholders' equity 186,067 189,480 191,620 190,398
----------- ----------- ----------- -----------
Total liabilities
and
stockholders'
equity $ 207,072 $ 221,790 $ 220,210 $ 226,326
=========== =========== =========== ===========
ENTROPIC COMMUNICATIONS, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(In thousands, except per share amounts)
This press release contains the following non-GAAP financial measures:
net (loss) income and net (loss) income per share. The presentation
of such measures is not intended to be considered in isolation or as
a substitute for, or superior to, the financial information prepared
and presented in accordance with GAAP. Our non-GAAP net (loss) income
and net (loss) income per share exclude the items listed below.
The following table sets forth such non-GAAP measures for the
applicable periods as well as the reconciliation of such measures to
the directly comparable GAAP measures for the periods shown.
Three Months Ended Nine Months Ended
---------------------------- ------------------
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2008 2008 2007 2008 2007
-------- -------- -------- -------- --------
GAAP net loss
attributable to
common shareholders $ (7,124) $ (6,447) $ (6,678) $(17,426) $(31,575)
Non-GAAP adjustments:
Stock-based
compensation:
Cost of net
revenues 63 64 85 173 88
Research and
development 1,834 1,829 1,476 5,421 1,927
Sales and
marketing 647 611 475 1,881 685
General and
administrative 914 868 918 2,979 1,125
-------- -------- -------- -------- --------
Total stock-
based
compensation 3,458 3,372 2,954 10,454 3,825
Acquisition-
related items:
Amortization of
inventory
step-up
charges to
cost of net
revenues -- -- 2,062 -- 2,062
Amortization of
purchased
intangible
assets:
Cost of net
revenues 1,590 1,590 1,240 4,420 1,240
Operating
expenses 713 713 1,296 2,022 1,338
Write off of in-
process research
and development -- 1,300 -- 1,300 21,400
Vativ retention
bonuses -- 698 -- 698 --
Restructuring
charges 209 (10) -- 1,278 --
Accretion of
redeemable
convertible
preferred stock -- -- 32 -- 95
Write off of debt
issuance costs -- -- -- 476 --
Loss on fair value
of preferred stock
warrant
liabilities -- -- 1,395 -- 2,007
-------- -------- -------- -------- --------
Total of non-GAAP
adjustments 5,970 7,663 8,979 20,648 31,967
-------- -------- -------- -------- --------
Non-GAAP net (loss)
income $ (1,154) $ 1,216 $ 2,301 $ 3,222 $ 392
======== ======== ======== ======== ========
GAAP weighted average
shares (basic) 67,669 67,215 12,506 67,378 8,113
Non-GAAP adjustment
for dilutive
shares (a) -- 6,146 8,506 5,834 5,512
Non-GAAP adjustment
for assumed
conversion of
redeemable
convertible-
preferred stock (b) -- -- 44,897 -- 36,250
-------- -------- -------- -------- --------
Non-GAAP weighted
average shares
(diluted) 67,669 73,361 65,909 73,212 49,875
======== ======== ======== ======== ========
GAAP net loss per
share (basic and
diluted) $ (0.11) $ (0.10) $ (0.53) $ (0.26) $ (3.89)
Non-GAAP
adjustments
detailed
above (a)(b) 0.09 0.12 0.56 0.30 3.90
-------- -------- -------- -------- --------
Non-GAAP net (loss)
income per share
(diluted) $ (0.02) $ 0.02 $ 0.03 $ 0.04 $ 0.01
======== ======== ======== ======== ========
(a) Shares included for calculating diluted earnings per share for
periods with non-GAAP net income. For the periods shown with a net
loss, no shares were included for the diluted earnings per share
calculation, as including such shares would be antidilutive.
(b) Non-GAAP adjustment to weighted average shares represents the
assumed conversion of redeemable convertible preferred stock into
common stock as of the later of their issuance or the beginning of
their respective periods for the periods presented.