SAN DIEGO, April 30, 2009 (GLOBE NEWSWIRE) -- Entropic Communications, Inc. (Nasdaq:ENTR), a leading provider of silicon solutions to enable connected home entertainment, today reported its first quarter results for the period ended March 31, 2009. Entropic reported first quarter net revenues of $24.1 million, a decrease of 18% compared with $29.5 million in the fourth quarter of 2008 and 43% lower than in the first quarter of 2008.
In accordance with U.S. generally accepted accounting principles (GAAP), the company's first quarter net loss was $8.7 million, or ($0.13) per share (basic and diluted). This compares with GAAP net loss of $118.9 million, or ($1.74) per share (basic and diluted) in the fourth quarter of 2008. Non-GAAP net loss in the first quarter was $4.2 million, or ($0.06) per share (basic and diluted), compared to non-GAAP net loss of $0.4 million, or ($0.01) per share (basic and diluted) in the fourth quarter of 2008.
"During the quarter, we saw strong momentum in support of the MoCA standard and our MoCA products," noted Patrick Henry, president and CEO of Entropic Communications. "Entropic's product positioning in our target markets is excellent, our end customers continue to show strength, and we have some solid new design wins and product cycles that we expect to ramp later this year."
Three months ended --------------------------- (In millions, except per share data) Mar. 31, Dec. 31, Mar. 31, 2009 2008 2008 Net revenues $24.1 $29.5 $42.0 GAAP net loss ($8.7) ($118.9) ($3.9) GAAP net loss per share (basic and diluted) ($0.13) ($1.74) ($0.06) Non-GAAP net (loss) income (1) ($4.2) ($0.4) $3.2 Non-GAAP net (loss) income per share (1) ($0.06) ($0.01) $0.04 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. Recent Highlights * Delivered samples of our third-generation (MoCA 1.1), 65nm, single-chip c.LINK solution for MoCA home networking providing higher performance, a smaller footprint and lower overall system costs to our customers * Conducted a live demonstration of our c.LINK MoCA solution working in conjunction with our Channel Stacking Switch (CSS) technology on a single cable network at the recently held ASTRA Industry Days * Extended our collaboration with Cavium Networks to align roadmaps and deliver second and third generation solutions with enhanced features and capabilities to meet the future needs of service provider customers * Partnered with Texas Instruments to create multiple DOCSIS 3.0 embedded media terminal adapter (eMTA) and gateway development platforms optimized for triple-play and next-generation IP services that utilize MoCA 1.1 for the home network * Confirmed that Time Warner Cable plans to deploy new MoCA-certified set-top boxes with Entropic's MoCA chipsets embedded to deliver multi-room DVR and other connected home entertainment services to its subscriber base later this year * Announced that Cox Communications will deploy new MoCA-certified set-top boxes with Entropic's MoCA chipsets embedded to deliver multi-room DVR and other connected home entertainment services to its subscriber base later this year
For More Information
Entropic management will be holding a conference call today, April 30, 2009, at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time to discuss the company's results for the first quarter and to provide guidance for the second quarter. You may access the conference call via any of the following:
Teleconference: 719-325-4803 Conference ID: 5444194 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.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 momentum for the MoCA standard and our MoCA products, our product positioning, the financial position of our end customers, and our expectations regarding design wins and product cycles. 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 Annual Report on Form 10-K for the year ended December 31, 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 for share information and footnote disclosures) Three Months Ended ------------------------------- March 31, Dec 31, March 31, 2009 2008 2008 --------- --------- --------- (unaudited)(unaudited)(unaudited) Net revenues $ 24,123 $ 29,531 $ 41,988 Cost of net revenues 11,904 15,397 22,837 --------- --------- --------- Gross profit 12,219 14,134 19,151 Operating expenses: Research and development 13,323 12,876 13,313 Sales and marketing 3,637 3,672 4,144 General and administrative 2,689 2,890 3,523 Amortization of purchased intangibles 16 713 596 Restructuring charge (benefit) (1) 1,124 (19) 1,079 Impairment of goodwill and intangible assets (2) 208 113,193 -- --------- --------- --------- Total operating expenses 20,997 133,325 22,655 --------- --------- --------- Loss from operations (8,778) (119,191) (3,504) Other income (expense), net 59 80 (198) --------- --------- --------- Loss before income taxes (8,719) (119,111) (3,702) --------- --------- --------- Income tax provision (benefit) 17 (168) 154 --------- --------- --------- Net loss attributable to common stockholders $ (8,736) $(118,943) $ (3,856) ========= ========= ========= Net loss per share attributable to common stockholders (basic and diluted) $ (0.13) $ (1.74) $ (0.06) ========= ========= ========= Weighted average shares (basic and diluted) 68,799 68,239 66,662 ========= ========= ========= (1) During the three months ended March 31, 2009, the Company recorded restructuring charges of $1,124,000 related to a restructuring plan implemented in March 2009 to improve its operating cost structure which included a reduction-in-force and the closing of its France location and one of its Israel locations. Additional costs are expected to be recorded in the second quarter as the Company completes the plan. During the three months ended December 31, 2008, the Company recorded a restructuring charge adjustment of $19,000 related to the August 2008 restructuring plan to improve its operating cost structure which included a reduction-in-force. During the three months ended March 31, 2008, the Company recorded restructuring charges of $1,079,000 related to exiting the lease agreement for the Company's former headquarters in San Diego, California, as well as related charges for the impairment of property and equipment and other long term assets. (2) During the three months ended March 31, 2009, the Company recorded an impairment charge on intangible assets of $208,000. The Company determined that the intangible assets associated with the acquisition of Arabella were fully impaired as the developed technology acquired would no longer be used in the ongoing business operations. During the three months ended December 31, 2008, the Company performed an impairment analysis on goodwill and purchased intangible assets and recorded an impairment charge of $88,081,000 and $25,112,000, respectively, as the carrying value of these assets exceeded the fair value at December 31, 2008. ENTROPIC COMMUNICATIONS, INC. GAAP Condensed Consolidated Balance Sheets (In thousands) March 31, Dec 31, 2009 2008 --------- --------- (unaudited) ASSETS Current assets: Cash and cash equivalents $ 30,602 $ 30,071 Marketable securities 849 4,339 Accounts receivable, net 17,181 13,915 Inventory 14,979 18,693 Prepaid expenses and other current assets 3,345 2,785 --------- --------- Total current assets 66,956 69,803 Property and equipment, net 12,802 13,046 Intangible assets, net 2,839 3,469 Other long-term assets 262 284 --------- --------- Total assets $ 82,859 $ 86,602 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 10,440 $ 7,873 Accrued payroll and benefits 3,559 3,498 Deferred revenues 185 467 --------- --------- Total current liabilities 14,184 11,838 Long-term liabilities: Stock repurchase liability 677 784 Other long-term liabilities 3,088 3,231 --------- --------- Total long-term liabilities 3,765 4,015 Stockholders' equity 64,910 70,749 --------- --------- Total liabilities and stockholders' equity $ 82,859 $ 86,602 ========= ========= ENTROPIC COMMUNICATIONS, INC. Unaudited Reconciliation of Non-GAAP Adjustments (In thousands, except for share information and footnote disclosures) 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 ------------------------------- March 31, Dec 31, March 31, 2009 2008 2008 --------- --------- --------- GAAP net loss attributable to common shareholders $ (8,736) $(118,943) $ (3,856) Non-GAAP adjustments: Stock-based compensation: Cost of net revenues 16 78 46 Research and development 1,522 1,627 1,758 Sales and marketing 368 453 623 General and administrative 902 875 1,197 --------- --------- --------- Total stock-based compensation 2,808 3,033 3,624 Acquisition-related items: Amortization of purchased intangible assets: Cost of net revenues 406 1,590 1,240 Operating expenses 16 713 596 Impairment of goodwill & intangible assets 208 113,193 -- Restructuring charge (benefit) 1,124 (19) 1,079 Write off of debt issuance costs -- -- 476 --------- --------- --------- Total of non-GAAP adjustments 4,562 118,510 7,015 --------- --------- --------- Non-GAAP net (loss) income $ (4,174) $ (433) $ 3,159 ========= ========= ========= GAAP weighted average shares (basic) 68,799 68,239 66,662 Non-GAAP adjustment for dilutive shares (a) -- -- 6,980 --------- --------- --------- Non-GAAP weighted average shares (diluted) 68,799 68,239 73,642 ========= ========= ========= GAAP net loss per share (basic and diluted) $ (0.13) $ (1.74) $ (0.06) Non-GAAP adjustments detailed above (a) 0.07 1.73 0.10 --------- --------- --------- Non-GAAP net (loss) income per share (diluted) $ (0.06) $ (0.01) $ 0.04 ========= ========= ========= (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. ENTROPIC COMMUNICATIONS, INC. Unaudited Non-GAAP Supplemental Financial Information (In thousands, except percentage data) The following table sets forth certain non-GAAP financial measures used in calculating Entropic's non-GAAP net (loss) income for the periods presented. Such non-GAAP financial measures are based upon Entropic's unaudited consolidated statements of operations for the periods presented and give effect to certain adjustments identified in the table. The presentation of such non-GAAP financial 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. In addition, investors should not rely on the results of prior periods as an indication of Entropic's future performance. Three Months Ended ------------------------------- March 31, Dec 31, March 31, 2009 2008 2008 --------- --------- --------- NET REVENUES $ 24,123 $ 29,531 $ 41,988 COST OF NET REVENUES: GAAP cost of net revenues $ 11,904 $ 15,397 $ 22,837 Less: Stock-based compensation expense 16 78 46 Amortization of developed technology 406 1,590 1,240 --------- --------- --------- Non-GAAP cost of net revenues $ 11,482 $ 13,729 $ 21,551 ========= ========= ========= GROSS PROFIT: GAAP gross profit $ 12,219 $ 14,134 $ 19,151 Add: Stock-based compensation expense 16 78 46 Amortization of developed technology 406 1,590 1,240 --------- --------- --------- Non-GAAP gross profit $ 12,641 $ 15,802 $ 20,437 ========= ========= ========= GAAP gross margin 50.7% 47.9% 45.6% Non-GAAP gross margin 52.4% 53.5% 48.7% OPERATING EXPENSES: GAAP operating expenses $ 20,997 $ 133,325 $ 22,655 Less: Stock-based compensation expense 2,792 2,955 3,578 Amortization of purchased intangibles 16 713 596 Restructuring charge (benefit) 1,124 (19) 1,079 Impairment of goodwill & intangible assets 208 113,193 -- --------- --------- --------- Non-GAAP operating expenses $ 16,857 $ 16,483 $ 17,402 ========= ========= ========= OTHER INCOME (EXPENSE), NET: GAAP other income (expense), net $ 59 $ 80 $ (198) Add: Write off of debt issuance costs -- -- 476 --------- --------- --------- Non-GAAP other income, net $ 59 $ 80 $ 278 ========= ========= ========= INCOME TAX (PROVISION) BENEFIT $ (17) $ 168 $ (154) RESEARCH AND DEVELOPMENT EXPENSE: GAAP research and development $ 13,323 $ 12,876 $ 13,313 Less: Stock-based compensation expense 1,522 1,627 1,758 --------- --------- --------- Non-GAAP research and development $ 11,801 $ 11,249 $ 11,555 ========= ========= ========= SALES AND MARKETING EXPENSE: GAAP sales and marketing $ 3,637 $ 3,672 $ 4,144 Less: Stock-based compensation expense 368 453 623 --------- --------- --------- Non-GAAP sales and marketing $ 3,269 $ 3,219 $ 3,521 ========= ========= ========= GENERAL AND ADMINISTRATIVE EXPENSE: GAAP general and administrative $ 2,689 $ 2,890 $ 3,523 Less: Stock-based compensation expense 902 875 1,197 --------- --------- --------- Non-GAAP general and administrative $ 1,787 $ 2,015 $ 2,326 ========= ========= =========