SAN DIEGO, Feb. 4, 2008 (PRIME NEWSWIRE) -- Entropic Communications, Inc. (Nasdaq:ENTR), a leading provider of silicon solutions to enable connected home entertainment, today reported its fourth quarter and fiscal year results for the period ended December 31, 2007. Entropic reported fourth quarter net revenues of $40.2 million. In accordance with generally accepted accounting principles (GAAP), the company recorded a fourth quarter net loss of $0.5 million or $0.02 per share (basic and diluted). Non-GAAP net income in the fourth quarter was $3.2 million or $0.05 per diluted share.
"2007 was a tremendous year for the company. We executed on our business plans -- growing revenue and net income to record levels, acquiring two companies and completing our initial public offering" said Patrick Henry, Chairman and Chief Executive Officer of Entropic Communications. "We ended the year with a significant milestone of shipping our 10 millionth c.LINK(r) chipset. In 2008, we anticipate continued expansion of our customer base as we drive the adoption of our connected home entertainment technologies worldwide."
Non-GAAP Combined
results of Entropic
and RF Magic for
periods shown(1)
-------------------
Years ended Years ended
(In millions, Dec. 31, Dec. 31,
except per ----------- -------------------
share data) Q4 2007 Q3 2007 2007 2006 2007 2006
----------------------------------------------------------------------
Net revenues $40.2 $36.1 $122.5 $41.5 $137.6 $67.7
GAAP net loss ($0.5) ($6.7) ($32.1) ($7.2) n/a n/a
GAAP net loss
per share
(basic and ($0.02) ($0.53) ($2.47) ($1.66) n/a n/a
diluted)
Non-GAAP net
income
(loss)(2) $3.2 $2.3 $3.5 ($6.6) $1.6 ($7.9)
Non-GAAP net
income (loss)
per share(2) $0.05 $0.03 $0.06 ($0.18) $0.03 ($0.19)
1. The combined results of Entropic and RF Magic are presented as if
the companies were combined at the beginning of the periods shown.
The acquisition closed on June 30, 2007.
2. 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.
Fourth Quarter Highlights
Product and company highlights include:
* Announced the availability of the industry's first MoCA 1.1 enabled chipset and delivered a live demonstration of MoCA 1.1 functionality at the MoCA technical conference in Austin * Integrated our Channel Stacking Switch technology into DIRECTV's MFH2 product line to cost-effectively deliver high volumes of HD programming to multi-dwelling units over a single wire * Enhanced our c.LINK Access solution with robust new feature sets including multicast filtering, Internet Group Management Protocol, IP Type of Service mapping and virtual LAN support * Partnered with Hannet Telecom to deliver broadband solutions and enable triple-play services for Korean MSO deployments -- the first of which, with ABN, was announced in November * Announced the first European deployment of our c.LINK Access technology with CAIW in the Netherlands * Partnered with Browan to deliver enhanced broadband communication services to several cities and provinces in China * Released a joint reference design incorporating our silicon TV tuner with STMicroelectronics for digital video broadcasting over cable (DVB-C) set-top box applications * Expanded our international reach with the opening of Entropic Shenzhen in the People's Republic of China * Completed our initial public offering * Shipped our 10 millionth c.LINK chipset
For More Information
Entropic management will be holding a conference call today, February 4, 2008, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss the Company's results for the fourth quarter of fiscal 2007 and to provide guidance for the first quarter of fiscal 2008. You may access the conference call via any of the following:
Teleconference: 719-325-4848 Conference ID: 7314974 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 at http://www.primenewswire.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 the expansion of Entropic's customer base and the adoption of Entropic technology. 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, the effects of competition; Entropic's dependence on a limited number of customers and ultimately service providers; Entropic's ability to introduce new and enhanced products on a timely basis; the risk that the market for high-definition television-quality video and other multimedia content delivery solutions based on the MoCA standard may not develop as anticipated; the effect of intellectual property rights claims; risks related to Entropic's international operations; and other factors discussed in the "Risk Factors" section of Entropic's final prospectus filed with the SEC on December 6, 2007. 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, INC.
GAAP Consolidated Statements of Operations
(In thousands, except per share amounts)
Years Ended
Three Months Ended December 31,
---------------------------- ------------------
Dec. 31, Sept. 30, Dec. 31, 2007 2006
2007 2007 2006 ---- ----
-------- -------- --------
(un- (un- (un-
audited) audited) audited)
Net revenues $ 40,168 $ 36,144 $ 16,548 $122,545 $ 41,471
Cost of net revenues 21,705 21,999 12,713 76,196 31,099
-------- -------- -------- -------- --------
Gross profit 18,463 14,145 3,835 46,349 10,372
Operating expenses:
Research and
development 12,423 11,923 3,449 35,235 11,601
Sales and marketing 3,706 3,283 1,172 10,348 4,112
General and
administrative 3,625 2,706 678 8,729 2,192
Write-off of
in-process
research and
development -- -- -- 21,400 --
Amortization of
purchased
intangibles 1,296 1,296 -- 2,634 --
-------- -------- -------- -------- --------
Total operating
expenses 21,050 19,208 5,299 78,346 17,905
-------- -------- -------- -------- --------
Loss from operations (2,587) (5,063) (1,464) (31,997) (7,533)
Other income
(expense), net 2,101 (1,583) (9) 31 482
-------- -------- -------- -------- --------
Net loss before
accretion of
redeemable
convertible
preferred stock (486) (6,646) (1,473) (31,966) (7,051)
Accretion of
redeemable
convertible
preferred stock (23) (32) (31) (118) (126)
-------- -------- -------- -------- --------
Net loss
attributable to
common shareholders $ (509) $ (6,678) $ (1,504) $(32,084) $ (7,177)
======== ======== ======== ======== ========
Net loss per share
attributable to
common shareholders
(basic and diluted) $ (0.02) $ (0.53) $ (0.33) $ (2.47) $ (1.66)
======== ======== ======== ======== ========
Weighted average
shares (basic and
diluted) 27,494 12,506 4,601 13,011 4,325
======== ======== ======== ======== ========
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: non-GAAP net revenues, net income (loss) and net income (loss) 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 years ended 2006 and 2007 and three months ended December 31, 2006 non-GAAP net revenues, net income (loss) and net income (loss) per share include the corresponding items from RF Magic during such periods, as if the acquisition of RF Magic had occurred at the beginning of such periods. Additionally, our non-GAAP net income (loss) and net income (loss) per share exclude stock-based compensation expense, inventory step-up costs, amortization of developed technology and purchased intangible assets, and in-process research and development charges, and reflect certain additional non-GAAP adjustments detailed in the footnotes to the following table.
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
-------------------------------------------------
December 31, 2006
-----------------------------
Dec. 31,
2006 Dec. 31,
Non-GAAP 2006
Dec. 31, Sept, 30, Dec. 31, Combined Non-GAAP
2007 2007 2006 Adjustments Combined
-------- -------- -------- -------- ---------
Net revenues* $ 40,168 $ 36,144 $ 16,548 $ 8,910 $ 25,458
======== ======== ======== ======== ========
GAAP* net (loss)
income attributable
to common
shareholders $ (509) $ (6,678) $ (1,504) $ 366 $ (1,138)
Non-GAAP adjustments:
Stock-based
compensation:
Cost of net
revenues 71 85 -- 1 1
Research and
development 1,215 1,476 66 18 84
Sales and
marketing 489 475 35 8 43
General and
administrative 918 918 47 11 58
-------- -------- -------- -------- --------
Total stock-based
compensation 2,693 2,954 148 38 186
Acquisition-related
items:
Amortization of
inventory step-up
charges to cost
of net revenues 687 2,062 -- -- --
Amortization of
purchased
intangible assets:
Cost of net
revenues 1,240 1,240 -- -- --
Operating
expenses 1,296 1,296 -- -- --
In-process research
and development -- -- -- -- --
Loss (gain) on fair
value of preferred
stock warrant
liabilities (2,180) 1,395 227 -- 227
-------- -------- -------- -------- --------
Total of non-GAAP
adjustments 3,736 8,947 375 38 413
-------- -------- -------- -------- --------
Non-GAAP net income
(loss) $ 3,227 $ 2,269 $ (1,129) $ 404 $ (725)
======== ======== ======== ======== ========
GAAP* weighted
average shares
(basic and diluted) 27,494 12,506 4,601 5,898(b) 10,499
Non-GAAP adjustment
for dilutive
shares(a) 7,950 8,506 -- -- --
Non-GAAP adjustment
for assumed
conversion of
redeemable
convertible
preferred stock(c) 32,697 44,897 31,854 -- 31,854
-------- -------- -------- -------- --------
Non-GAAP weighted
average shares
(diluted) 68,141 65,909 36,455 5,898 42,353
======== ======== ======== ======== ========
GAAP* net income
(loss) per share
(basic and diluted) $ (0.02) $ (0.53) $ (0.33) $ (0.11)
Non-GAAP adjustments
detailed above
(a) (b) (c) 0.07 0.56 0.30 0.09
-------- -------- -------- --------
Non-GAAP net income
(loss) per share
(diluted) $ 0.05 $ 0.03 $ (0.03) $ (0.02)
======== ======== ======== ========
* Financial items are GAAP except to the extent indicated in the
headings in this table.
(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 represents the common shares outstanding for
RF Magic as if combined with Entropic Communications at the
beginning of the periods shown.
(c) 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.
ENTROPIC COMMUNICATIONS, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(In thousands, except per share amounts)
Years Ended
----------------------------------------------------------
2007 2006
---------------------------- ----------------------------
2007 Non-GAAP 2007 2006 Non-GAAP 2006
without Combined Non-GAAP without Combined Non-GAAP
RF Magic Adjustments Combined RF Magic Adjustments Combined
-------- -------- -------- -------- -------- --------
Net
revenues* $122,545 $ 15,024 $137,569 $ 41,471 $ 26,183 $ 67,654
======== ======== ======== ======== ======== ========
GAAP* net
(loss)
income
attribut-
able
to common
share-
holders $(32,084) $ (2,272) $(34,356) $ (7,177) $ (1,477) $ (8,654)
Non-GAAP
adjust-
ments:
Stock-
based
compen-
sation:
Cost of
net
revenues 159 13 172 -- 2 2
Research
and
develop-
ment 3,141 105 3,246 114 37 151
Sales and
marketing 1,174 78 1,252 56 16 72
General
and
admini-
strative 2,044 121 2,165 52 37 89
-------- -------- -------- -------- -------- --------
Total
stock-
based
compen-
sation 6,518 317 6,835 222 92 314
Acquisi-
tion-
related
items:
Amorti-
zation of
inventory
step-up
charges
to cost
of net
revenues 2,749 -- 2,749 -- -- --
Amorti-
zation of
purchased
intangible
assets: -- --
Cost of
net
revenues 2,480 -- 2,480 -- -- --
Operating
expenses 2,635 -- 2,635 -- -- --
In-process
research
and
develop-
ment 21,400 -- 21,400 -- -- --
Loss (gain)
on fair
value of
preferred
stock
warrant
liabilities (173) -- (173) 401 -- 401
-------- -------- -------- -------- -------- --------
Total of
non-GAAP
adjust-
ments 35,609 317 35,926 623 92 715
-------- -------- -------- -------- -------- --------
Non-GAAP
net income
(loss) $ 3,525 $ (1,955) $ 1,570 $ (6,554) (1,385) $ (7,939)
======== ======== ======== ======== ======== ========
GAAP*
weighted
average
shares
(basic and
diluted) 13,011 2,949(b) 15,960 4,325 5,898(b) 10,223
Non-GAAP
adjustment
for
dilutive
shares(a) 7,731 -- 7,731 -- -- --
Non-GAAP
adjustment
for
assumed
conversion
of
redeemable
convertible
preferred
stock(c) 35,354 -- 35,354 31,561 -- 31,561
-------- -------- -------- -------- -------- --------
Non-GAAP
weighted
average
shares
(diluted) 56,096 2,949 59,045 35,886 5,898 41,784
======== ======== ======== ======== ======== ========
GAAP* net
income
(loss)
per share
(basic and
diluted) $ (2.47) $ (2.15) $ (1.66) $ (0.85)
Non-GAAP
adjust-
ments
detailed
above
(a)(b)(c) 2.53 2.18 1.48 0.66
-------- -------- -------- --------
Non-GAAP
net income
(loss) per
share
(diluted) $ 0.06 $ 0.03 $ (0.18) $ (0.19)
======== ======== ======== ========
* Financial items are GAAP except to the extent indicated in the
headings in this table.
(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 represents the common shares outstanding for
RF Magic as if combined with Entropic Communications at the
beginning of the periods shown.
(c) 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.
ENTROPIC COMMUNICATIONS, INC.
GAAP Condensed Consolidated Balance Sheets
(in thousands)
December 31, December 31,
2007 2006
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 51,533 $ 5,928
Marketable securities 2,965 7,746
Accounts receivable, net 24,489 7,453
Inventory 15,332 5,972
Prepaid expenses and other current assets 2,238 453
----------- -----------
Total current assets 96,557 27,552
Property and equipment, net 8,952 2,975
Intangible assets, net 34,145 --
Goodwill 86,256 --
Other long-term assets 416 697
----------- -----------
Total assets $ 226,326 $ 31,224
=========== ===========
LIABILITIES, REDEEMABLE CONVERTIBLE
PREFERRED STOCK, AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable and accrued expenses 18,909 6,814
Accrued payroll and benefits 4,253 864
Deferred revenues 303 300
Current portion of line of credit and
loans payable 2,860 --
Current portion of software licenses and
capital lease obligations 384 709
----------- -----------
Total current liabilities 26,709 8,687
Stock repurchase liability 1,765 282
Lines of credit and loans payable 5,547 --
Software licenses and capital
obligations, less current portion -- 380
Preferred stock warrant liabilities -- 811
Other long-term liabilities 1,907 --
Commitments and contingencies
Redeemable convertible preferred stock -- 80,379
Stockholders' equity (deficit) 190,398 (59,315)
----------- -----------
Total liabilities, redeemable convertible
preferred stock and stockholders' equity
(deficit) $ 226,326 $ 31,224
=========== ===========