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 =========== ===========