Financial Highlights
-- Poker and casino software revenues of $31.7 million, in line with
expectations.
-- Active depositing poker players held steady quarter-over-quarter; new
depositing players grew slightly during the period.
-- Asian online games revenues of $12.7 million, up 33 percent quarter-
over-quarter on strong organic growth; FunTown and T2CN revenues
surged 27 percent and 43 percent, respectively, during the period.
Operational Highlights and Developments
-- Everest Poker sponsors Spanish Poker Tour.
-- Asian online games platform: FunTown begins open beta testing of new
MMORPG Warhammer Online in Taiwan and Hong Kong.
-- Asian online games platform: T2CN begins beta testing of Luna Online -
one of Asia's most successful MMO games; plans China launch in summer
2009.
HONG KONG, June 9 /PRNewswire-Asia-FirstCall/ -- GigaMedia Limited (Nasdaq: GIGM) today reported first-quarter revenues of $44.4 million, net income of $4.8 million, and earnings per share of $0.09 basic and $0.08 fully-diluted. First-quarter results were negatively affected by global economic conditions and continued weakness of the euro against the U.S. dollar.
First-quarter 2009 non-GAAP basic and diluted earnings per share were $0.11 and $0.10, respectively, which exclude result from discontinued operations and non-cash share-based compensation expenses.
The company also announced that it is final round discussions with two parties concerning a potential strategic partnership or sale involving its poker and casino software business. No additional details are available at this time.
"In the first quarter, our Everest software business faced greater than expected challenges from the macroeconomic downturn and the weakness of the euro - slowing our business in Europe," stated CEO Arthur Wang. "We have responded with a set of cost reductions and efficiencies which will protect the financial strength of the business, as well as prepare for a return to growth as a leaner, tighter organization."
"The good news: we believe we have hit bottom in this cyclical downturn and that the second half will see renewed strength in Europe. And in Asia, we are looking at our best year ever, with strong top and bottom-line growth," stated CEO Arthur Wang.
"We remain confident in the strategic position of our poker and casino software business, and are excited about the new games we are launching in Asia this year," stated President and COO Thomas Hui. "Our core businesses remain healthy and well positioned to deliver strong long-term growth."
Consolidated Financial Results
For the First Quarter
GIGAMEDIA 1Q09 CONSOLIDATED FINANCIAL RESULTS
(unaudited, 1Q09 1Q08 Change 1Q09 4Q08 Change
all (%) (%)
figures in US$
thousands,
except per
share
amounts)
Revenues (A) 44,417 51,190 -13 44,417 44,583 0
Gross
Profit(A) 35,118 42,153 -17 35,118 36,001 -2
Income from
Operations (A) 5,419 12,698 -57 5,419 7,912 -32
Income from
Continuing
Operations (A) 5,180 12,736 -59 5,180 8,522 -39
Net Income
Attributable
to GigaMedia 4,843 12,077 -60 4,843 9,075 -47
Net Income
Per Share,
Diluted .08 .20 -59 .08 0.15 -47
Non-GAAP
Income from
Operations(A)
(B) 6,385 13,445 -53 6,385 7,993 -20
Non-GAAP Net
Income (A) (B) 5,735 12,638 -55 5,735 8,214 -30
Non-GAAP Net
Income Per
Share, Diluted
(A) (B) 0.10 0.21 -54 0.10 0.14 -30
EBITDA (C) 7,185 13,929 -48 7,185 11,677 -38
Cash, Cash
Equivalents
and Marketable
Securities-
Current 97,461 79,923 22 97,461 99,372 -2
(A) Excludes results from discontinued operations.
(B) Non-GAAP income from operations, non-GAAP net income and non-GAAP net
income per share exclude results from discontinued operations, and
non-cash share-based compensation expenses. (See, "Use of Non-GAAP
Measures," for more details.)
(C) EBITDA (earnings before interest, taxes, depreciation, and
amortization) is provided as a supplement to results provided in
accordance with U.S. generally accepted accounting principles
("GAAP"). (See, "Use of Non-GAAP Measures," for more details.)
Consolidated revenues for the first quarter decreased 13 percent to $44.4 million from $51.2 million in the same period of 2008, and held steady compared with the fourth quarter of 2008. The year-period decrease was primarily due to lower contributions from the company's gaming software business reflecting the impact of the global economic downturn on player spending in the industry, with depreciation of the euro against the U.S. dollar increasing playing costs, resulting in decreased player spending. Quarter-over-quarter results reflected a strong increase in revenues in the Asian online games business, which offset an expected revenue decline in the gaming software business during the first quarter, with depreciation of the euro continuing during the period.
Consolidated gross profit for the first quarter decreased to $35.1 million from $42.2 million in the same period of 2008 and from $36.0 million in the fourth quarter of 2008. First-quarter consolidated gross profit margin decreased to 79.1 percent from 82.3 percent in the same period of 2008, and 80.7 percent in the fourth quarter of 2008 reflecting decreases in the proportions of contributions from the higher margin gaming software business during the periods, and the effect of revenue declines outpacing decreases in certain fixed costs.
Consolidated income from operations for the first quarter was $5.4 million compared to $12.7 million in the first quarter of 2008 and $7.9 million in the fourth quarter of 2008.
The year-over-year decrease in consolidated income from operations reflected the aforementioned revenue decrease and lower gross profit margin on changed revenue mix during the period, which despite flat operating expenses, yielded a decrease in the company's consolidated operating margin to 12.2 percent.
The quarter-over-quarter decrease in consolidated income from operations was primarily the result of lower gross profit, as well as an increase in operating expenses of approximately $1.6 million. The variation in operating expenses reflected comparison with exceptionally low expenses during the fourth quarter of 2008, which benefited from year-end adjustments of compensation related expenses.
Consolidated non-operating income during the first quarter of 2009 was $268 thousand, down from non-operating income of approximately $600 thousand in the first quarter of 2008 and $669 thousand recorded in the previous quarter. GigaMedia's first-quarter non-operating income included interest income and foreign exchange gains.
Net income for the quarter was $4.8 million compared to $12.1 million in the first quarter of 2008 and $9.1 million in the fourth quarter of 2008, reflecting the aforementioned factors affecting income from operations and non-operating income during the periods.
GigaMedia also reports non-GAAP financial measures, including non-GAAP consolidated operating income, non-GAAP consolidated net income, non-GAAP basic and fully-diluted earnings per share, and consolidated EBITDA. The company's first-quarter non-GAAP financial measures exclude results from discontinued operations and non-cash share-based compensation expenses. Results from discontinued operations represented income of approximately $39 thousand in the first quarter of 2009. First-quarter non-cash share-based compensation charges were $931 thousand, up from $715 thousand in the same period in 2008. Reconciliations of non-GAAP measures to the corresponding GAAP measures are included at the end of this release. (See, "Use of Non-GAAP Measures," and "About the Numbers in This Release - Non-GAAP figures," for more details.)
Non-GAAP consolidated income from operations was $6.4 million in the first quarter of 2009, down from $13.4 million in the first quarter of 2008 and $8.0 million in the fourth quarter of 2008. Non-GAAP consolidated net income in the first quarter was $5.7 million compared to $12.6 million in the same period last year and $8.2 million in the fourth quarter of 2008. Non-GAAP basic and fully-diluted earnings per share were $0.11 and $0.10, respectively.
Consolidated EBITDA for the first quarter of 2009 was $7.2 million, down from $13.9 million in the same period last year and $11.7 million in the fourth quarter of 2008. Operating cash flow for the first quarter of 2009 was $5.6 million. Capital expenditures totaled $3.3 million for the period.
GigaMedia continued to maintain a healthy balance sheet during the first quarter. Cash, cash equivalents and marketable securities-current were $97.5 million, down from $99.4 million in the fourth quarter of 2008. Total short-term borrowings decreased to $14.7 million at the end of the first quarter of 2009.
Business Unit Results
GigaMedia Limited conducts its online entertainment business in two business segments. The gaming software segment develops and licenses online poker, casino, and sports betting gaming software solutions and application services, primarily targeting continental European markets. The Asian online games segment operates a suite of play-for-fun online games, mainly targeting online gamers in Greater China.
Gaming Software Business
(unaudited, in US$ 1Q09 1Q08 Change 1Q09 4Q08 Change
thousands) (%) (%)
Revenues 31,745 38,301 -17 31,745 35,060 -9
Gross Profit 26,134 32,754 -20 26,134 29,197 -10
Income from
Operations 4,871 11,515 -58 4,871 5,160 -6
EBITDA 6,198 11,913 -48 6,198 6,312 -2
Results of the gaming software business were in line with expectations in the first quarter of 2009. Revenues in the gaming software business are traditionally driven by an upturn in online gaming during the winter, which peaks in the fourth quarter. During the first quarter of 2009, trends in player activity reflected traditional seasonality but continued to be negatively impacted by the economic downturn in Europe and the depreciation of the euro against the U.S. dollar. Given the challenging operating environment, management is implementing appropriate measures to cut costs and improve efficiencies.
First-quarter revenues in the gaming software business decreased 17 percent year-over-year to $31.7 million from $38.3 million and decreased 9 percent quarter-over-quarter from $35.1 million.
GigaMedia's revenues from the gaming software business derived from providing poker and casino software and services to its master licensee were $14.6 million during the first quarter of 2009. This represented a decrease of 13 percent from $16.9 million in 2008 and a 9 percent decrease from the fourth quarter of 2008, which totaled $16.0 million. Such revenues are eliminated in consolidation.
Revenues in the poker software vertical were $21.6 million in the first quarter of 2009, down 27 percent from the same period of 2008 and 10 percent from the fourth quarter of 2008, reflecting the impact of the adverse economic climate in Europe and depreciation of the euro against the U.S. dollar, which has continued to increase playing costs, resulting in decreased player spending. First-quarter poker software revenues represented 68 percent of the business unit's total first-quarter 2009 revenues. Approximately 183,000 active depositing real-money customers played on the poker platform during the first quarter, comparable with the previous quarter. During the quarter, approximately 45,000 new depositing real-money poker players were added, up 3 percent quarter-over-quarter. Average monthly revenue per active paying account decreased approximately 10 percent quarter-over-quarter.
Revenues in the casino software vertical were $10.2 million during the first quarter of 2009, an 18 percent increase from the same period in 2008 and down 8 from the previous quarter. Enhancements to GigaMedia's platform software enabling strong cross-marketing to Everest Poker players contributed to the strong year-over-year revenue growth. Quarterly sequential results reflected the impact of the global economic downturn.
First-quarter gross profit was $26.1 million compared to $32.8 million in the same period last year and $29.2 in the fourth quarter of 2008, in line with revenues recorded during the periods. Gross profit margin decreased slightly year-over-year to 82.3 percent from 85.5 percent in 2008 and from 83.3 percent in the fourth quarter of 2008 as revenue decreases outpaced decreases in certain fixed costs.
Total first-quarter selling and marketing expenses were $15.1 million, down from $15.9 million in the same period of 2008 and $18.9 million in the fourth quarter of 2008. The year-over-year decrease was attributable to decreases in marketing initiatives. The quarter-over-quarter variation reflected implementation of cost controls and decreased affiliated marketing expenses in line with revenue trends, as well as comparison with strong marketing initiatives that traditionally peak during the fourth quarter.
Income from operations was $4.9 million in the first quarter of 2009 compared to $11.5 million in the same period of 2008 and $5.2 million in the fourth quarter of 2008. Operating margins declined year-over-year to 15.3 percent from 30.1 percent in 2008 and increased from 14.7 percent in the fourth quarter of 2008. The year-over year margin decrease was primarily due to lower gross profit and increased product development and engineering expenses, which more than offset lower sales and marketing expenses. The quarter-over-quarter increase in operating margin reflected decreased sales and marketing expenses which more than offset lower gross profit.
EBITDA was $6.2 million in the first quarter of 2009, down from $11.9 million in the first quarter of 2008 and $6.3 million in the fourth quarter of 2008. Capital expenditures totaled approximately $1.3 million for the first quarter of 2009.
Asian Online Games Business
(unaudited, in US$ 1Q09 1Q08 Change 1Q09 4Q08 Change
thousands) (%) (%)
Revenues 12,673 12,890 -2 12,673 9,523 33
Gross Profit 8,984 9,395 -4 8,984 6,804 32
Income from
Operations 2,651 3,708 -29 2,651 3,260 -19
EBITDA 3,071 3,665 -16 3,071 3,972 -23
The Asian online games business surged in the first quarter on solid execution and continued strong organic growth across the platform's existing portfolio of games. With an exciting lineup of major new game titles scheduled for launch in China and Taiwan in summer 2009, the business is well positioned to deliver record growth.
First-quarter revenues in the Asian online games business decreased 2 percent to $12.7 million from $12.9 million a year ago and increased 33 percent from $9.5 million in the previous quarter. The year-over-year decrease primarily reflected decreased contributions from T2CN, which offset increased revenues in FunTown. The quarterly sequential improvement reflected strong organic growth in both FunTown and T2CN.
First-quarter revenues for FunTown increased 9 percent to a record $7.7 million from $7.0 million a year ago and increased 27 percent from $6.0 million in the previous quarter. Average monthly active paying accounts were approximately 105,000 during the first quarter of 2009, up 2 percent from the fourth quarter, and average monthly revenue per active paying account was a record $24.40 during the first quarter of 2009, up 25 percent quarter-over-quarter. Peak concurrent users were approximately 50,000, a 32 percent increase from the fourth quarter. Driving the quarter-over-quarter performance were successful promotions of FunTown's casual game offerings during the period.
Total revenues for T2CN in the first quarter of 2009 were $5.0 million, representing a 15 percent decrease from $5.9 million in the first quarter of 2008 and a 43 percent increase from $3.5 million in the fourth quarter. The year-over-year variation reflected comparison with exceptionally strong results in 2008, which benefited from a severe winter storm in China. The quarterly sequential increase was attributable to resolution of a hacking incident in the game FreeStyle. T2CN's average monthly active paying accounts were approximately 404,000 during the first quarter of 2009, up 20 percent from the fourth quarter, and average monthly revenue per active paying account was $4.08 during the first quarter of 2009, up 18 percent quarter-over-quarter. Peak concurrent users of FreeStyle were approximately 119,000 during the first quarter of 2009, an increase of 7 percent from the fourth quarter.
First-quarter gross profit was $9.0 million, down from $9.4 million in the first quarter of 2008 and up from $6.8 million in the fourth quarter of 2008, in line with the period revenue variations. Gross profit margin decreased year-over-year to 70.9 percent from 72.9 percent in 2008, largely attributable to fixed costs related to the launch of new games. Gross profit margin held steady quarter-over-quarter.
Total selling and marketing expenses in the first quarter of 2009 were $3.0 million compared to $2.6 million in the first quarter of 2008 and $1.9 million in the previous quarter. The year-over-year and quarter-over-quarter increases were primarily due to sequential increases in mass media promotional/advertising expenses during the period, with extensive marketing campaigns run during the Chinese New Year holiday and promotions supporting the launch of Holic.
Income from operations was $2.7 million during the first quarter of 2009, down from $3.7 million in the same period of 2008 and $3.3 million in the fourth quarter of 2008. The year-over-year decrease was due to lower gross profit, as well as increased marketing efforts and expenses related to build-up of the company's pan-Asian game platform and preparation for new game launches, which led to a decrease in operating margin to 20.9 percent from 28.8 percent in 2008. The quarter-over-quarter decrease was mainly attributable to increased sales and marketing and general and administrative expenses, which more than offset revenue growth during the period and led to a decline in operating margin from 34.2 percent in the fourth quarter of 2008.
EBITDA decreased to $3.1 million in the first quarter of 2009 from $3.7 million a year ago and $4.0 million in the fourth quarter of 2008. Capital expenditures totaled approximately $1.8 million for the first quarter of 2009.
Business Outlook
The following forward-looking statements reflect GigaMedia's expectations as of June 9, 2009. Given potential changes in economic conditions and consumer spending, the evolving nature of gaming software, online games, and various other risk factors, including those discussed in the company's 2007 Annual Report or 20-F filing with the U.S. Securities and Exchange Commission referenced below, actual results may differ materially.
Gaming software business. The company expects continued revenue pressure through the summer months due to normal seasonality and the effects of the global economic downturn. The company notes that player metrics have begun to stabilize, and management expects improved operating results in the second half of 2009.
Asian online games business. The company expects very strong performance from this division in 2009 driving record top and bottom-line numbers for the year, the result of multiple major game launches.
Use of Non-GAAP Measures
To supplement GigaMedia's consolidated financial statements presented in accordance with GAAP, the company uses the following measures defined as non-GAAP by the SEC: EBITDA, and US GAAP income from operations, net income and basic and fully-diluted earnings per share data adjusted to exclude the impact of discontinued operations, share-based compensation, as well as certain non-cash items, including write-offs related to game licensing, gains and losses on the sale of businesses and discontinued operations, and write-offs recorded by equity method investees. GigaMedia may consider whether other significant items that arise in the future should also be excluded in calculating the non-GAAP financial measures it uses. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of Non-GAAP Results of Operations" set forth at the end of this release.
The company's management uses non-GAAP financial measures to gain an understanding of the company's comparative operating performance (when comparing such results with previous periods or forecasts) and future prospects. The company's non-GAAP financial measures exclude the aforementioned items from GigaMedia's internal financial statements for purposes of its internal budgets. Non-GAAP financial measures are used by the company's management in their financial and operational decision-making, because management believes they reflect the company's ongoing business in a manner that allows meaningful period-to-period comparisons. The company's management believes that these non-GAAP financial measures provide useful information to investors in the following ways: (1) in understanding and evaluating the company's current operating performance and future prospects in the same manner as management does, if they so choose, and (2) in comparing in a consistent manner the company's current financial results with the company's past financial results. GigaMedia further believes these non-GAAP financial measures provide useful and meaningful supplemental information to both management and investors regarding GigaMedia's performance by excluding certain expenses, expenditures, gains and losses (i) that are not expected to result in future cash payments or (ii) that may not be indicative of the company's core operating results and business outlook.
GigaMedia records the expensing of share-based compensation based on Statement of Financial Accounting Standards No. 123(R) ("SFAS 123(R)"). The company's management believes excluding share-based compensation from its non-GAAP financial measures is useful for itself and investors as such expense will not result in future cash payments and is otherwise unrelated to the company's core operating results. Non-GAAP financial measures that exclude stock-based compensation also enhance the comparability of results against prior periods.
The company's management believes excluding the non-cash write-off of loan receivables, game capitalized costs and investments is useful for itself and for investors as such write-off does not impact cash earnings and is not indicative of the company's core operating results and business outlook. The company's management believes excluding the results of discontinued operations from its non-GAAP financial measure of net income is useful for itself and for investors because such gains and losses are not indicative of the company's core operating results and are no longer associated with the company's continuing operations.
The company believes that the presentation of non-GAAP income from operations, net income, and basic and fully-diluted earnings per share enables more meaningful comparisons of performances across periods to be made by excluding the effect of SFAS 123(R), and that EBITDA is a measure of performance used by some investors, equity analysts and others to make informed investment decisions.
The non-GAAP financial measures have limitations. They do not include all items of income and expense that affect the company's operations. Specifically, these non-GAAP financial measures are not prepared in accordance with GAAP, may not be comparable to non-GAAP financial measures used by other companies and, with respect to the non-GAAP financial measures that exclude certain items under GAAP, do not reflect any benefit that such items may confer to the company. A limitation of using non-GAAP income from operations excluding share-based compensation expenses and other non-cash items and adjustments, net income excluding share-based compensation expenses and other non-cash items and adjustments, and basic and fully-diluted earnings per share excluding share-based compensation expenses and other non-cash items and adjustments is that these non-GAAP measures exclude share-based compensation expenses and may exclude other items that have been and will continue to be for the foreseeable future a recurring expense in the company's business. A limitation of using EBITDA is that it does not include all items that impact the company's net income for the period. Management compensates for these limitations by also considering the company's financial results as determined in accordance with GAAP and by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. Reconciliations of the adjusted income statement data to GigaMedia's US GAAP income statement data are provided on the attached unaudited financial statements.
About the Numbers in This Release
Quarterly figures
All quarterly figures referred to in the text, tables and attachments to this release are unaudited. The financial statements from which the financial results reported in this press release are derived have been prepared in accordance with U.S. GAAP, unless otherwise noted as "non-GAAP," and are presented in U.S. dollars.
Segmental results
GigaMedia's segmental financial results are based on the company's method of internal reporting and are not necessarily in conformity with accounting principles generally accepted in the United States. Consolidated quarterly and/or annual financial results of the company may differ from totals of the company's segmental financial results for the same period due to (1) the impact of certain of the company's headquarters costs and expenses, which are not reflected in the business segment results, (2) the impact of certain non-operating subsidiaries of GigaMedia on the company's consolidated financial results, and (3) certain inter-company eliminations.
Results from continuing operations
On September 3, 2008, the company sold its legacy cable and corporate Internet service provider ("ISP") business. In accordance with reporting guidelines (SFAS No. 144: Accounting for the Impairment or Disposal of Long-Lived Assets) and to allow for meaningful comparisons, the company has recast the current and past quarterly financial results presented herein to reflect this sale, unless otherwise noted. Results of the legacy cable and corporate ISP business are reported separately as discontinued operations in the consolidated financial statements.
SFAS No. 160
In January 2009, the company adopted SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements, which required certain reclassifications of non-controlling interests. Unless stated otherwise, all references to "net income" contained in this press release refer to the income statement line item titled "Net income attributable to GigaMedia."
Non-GAAP figures
GigaMedia's management has presented herein non-GAAP financial measures that exclude certain expenses, gains and losses that (a) are not expected to result in future cash payments, and/or (b) that may not be indicative of GigaMedia's core operating results and business outlook. The company's first-quarter non-GAAP financial measures exclude results from discontinued operations representing income of approximately $39 thousand and non-cash share-based compensation expenses of approximately $931 thousand.
The company's non-GAAP financial measures reported herein include non-GAAP consolidated operating income, non-GAAP consolidated net income, non-GAAP basic and fully-diluted earnings per share, and consolidated EBITDA. The non-GAAP measures are described above and reconciliations to the corresponding GAAP measures are included at the end of this release.
Conference Call and Webcast
GigaMedia will hold a conference call at 8:00 p.m. Taipei/Hong Kong Time on June 9, 2009, which is 8:00 a.m. Eastern Daylight Time on June 9, 2009 in the United States, to discuss the company's first-quarter 2009 performance. Individual investors can listen to a webcast of the call at http://ir.giga.net.tw, through CCBN's individual investor center at http://www.fulldisclosure.com, or by visiting any of the investor sites in CCBN's Individual Investor Network. Institutional investors can access the call via CCBN's password-protected event management site, StreetEvents (http://www.streetevents.com). The webcast will be available for replay.
About GigaMedia
GigaMedia Limited (Singapore registration number: 199905474H) is a major provider of online entertainment software and services. GigaMedia develops and licenses software for online gaming. GigaMedia also operates online games businesses including FunTown, a leading Asian casual games operator and one of Taiwan's largest online MahJong game sites, and T2CN, a leading online sports game operator in China. More information on GigaMedia can be obtained from http://www.gigamedia.com.tw.
The statements included above and elsewhere in this press release that are not historical in nature are "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding expected financial performance (as described without limitation in the "Business Outlook" section and in quotations from management in this press release) and GigaMedia's strategic and operational plans. These statements are based on management's current expectations and are subject to risks and uncertainties and changes in circumstances. There are important factors that could cause actual results to differ materially from those anticipated in the forward looking statements, including but not limited to, our ability to integrate our poker offering and casino to better monetize our player base, our ability to successfully launch sport betting services, our ability to retain existing online gaming and online game players and attract new players, our ability to license, develop or acquire additional online games that are appealing to users, and our ability to launch online games in a timely manner and pursuant to our anticipated schedule. Further information on risks or other factors that could cause results to differ is detailed in GigaMedia's Annual Report on Form 20-F filed in June 2008 and its other filings with the United States Securities and Exchange Commission.
- Tables to follow -
GIGAMEDIA LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended
3/31/2009 12/31/2008 3/31/2008
unaudited unaudited unaudited
USD USD USD
Operating revenues
Gaming software and service revenues 31,744,732 35,060,369 38,300,753
Online game and service revenues 12,672,652 9,522,810 12,889,501
44,417,384 44,583,179 51,190,254
Operating costs
Cost of gaming software and service
revenues 5,610,919 5,863,314 5,546,637
Cost of online game and service
revenues (includes share-based
compensation expenses under SFAS
123(R) of $28,591, ($12,909),
and $12,919, respectively) 3,688,723 2,719,116 3,490,688
9,299,642 8,582,430 9,037,325
Gross profit 35,117,742 36,000,749 42,152,929
Operating expenses
Product development and engineering
expenses (includes share-based
compensation expenses under SFAS
123(R) of $27,038, $134,589, and
$95,712, respectively) 3,943,713 2,617,280 3,242,710
Selling and marketing expenses
(includes share-based
compensation expenses under SFAS
123(R) of $66,295, $82,730, and
$44,176, respectively) 18,136,963 20,804,537 18,556,538
General and administrative expenses
(includes share-based
compensation expenses under SFAS
123(R) of $844,360, ($123,567),
and $594,205, respectively) 7,544,381 4,426,403 7,587,877
Bad debt expenses 43,760 65,110 67,403
Impairment loss 29,932 175,087 0
29,698,749 28,088,417 29,454,528
Income from operations 5,418,993 7,912,332 12,698,401
Non-operating income (expense)
Interest income 103,140 396,424 599,749
Gain on sales of marketable securities 0 30,119 342,576
Interest expense (93,144) (178,285) (277,120)
Foreign exchange gain (loss) - net 183,977 184,357 (127,204)
Loss on disposal of property, plant
and equipment (2,218) (213,412) (33,565)
Loss on equity method investments (18,887) (124,765) 0
Other 95,315 574,326 95,330
268,183 668,764 599,766
Income from continuing operations
before income taxes 5,687,176 8,581,096 13,298,167
Income tax expense (507,098) (59,095) (562,123)
Income from continuing operations 5,180,078 8,522,001 12,736,044
Income from discontinued operations 39,117 989,017 154,071
Net income 5,219,195 9,511,018 12,890,115
Less: Net income attributable to
noncontrolling interest (376,120) (436,428) (813,036)
Net income attributable to GigaMedia 4,843,075 9,074,590 12,077,079
Earnings per share attributable to
GigaMedia
Basic:
Income from continuing operations 0.09 0.15 0.22
Income from discontinued operations 0.00 0.02 0.00
0.09 0.17 0.22
Fully-diluted:
Income from continuing operations 0.08 0.13 0.20
Income from discontinued operations 0.00 0.02 0.00
0.08 0.15 0.20
Weighted average shares outstanding:
Basic 54,402,284 54,349,726 53,817,644
Diluted 59,714,969 59,488,973 60,445,440
GIGAMEDIA LIMITED
CONSOLIDATED BALANCE SHEETS
3/31/2009 12/31/2008 3/31/2008
unaudited unaudited unaduited
USD USD USD
Assets
Current assets
Cash and cash equivalents 94,032,238 95,953,250 75,372,555
Marketable securities - current 3,428,756 3,419,200 4,550,637
Accounts receivable - net 13,910,232 15,187,668 20,532,896
Prepaid expenses 14,603,575 9,906,699 14,192,730
Restricted cash 973,460 0 6,615,992
Other receivables 3,057,764 3,165,985 4,070,840
Other current assets 1,273,069 1,166,166 2,909,000
Total current assets 131,279,094 128,798,968 128,244,650
Marketable securities - noncurrent 26,720,241 26,041,364 24,017,482
Investments 1,823,304 1,904,591 5,043,466
Property, plant & equipment - net 13,538,685 13,467,974 14,336,714
Goodwill 86,239,127 87,098,458 87,056,365
Intangible assets - net 29,103,405 28,930,122 27,531,011
Restricted cash 0 2,125,122 0
Prepaid licensing and royalty fees 21,323,534 20,540,351 18,240,842
Other assets 11,139,691 7,886,097 2,047,466
Total assets 321,167,081 316,793,047 306,517,996
Liabilities & equity
Short-term borrowings 14,743,132 15,242,558 32,231,080
Accounts payable 1,510,865 899,274 1,817,471
Accrued compensation 2,218,405 3,503,266 4,717,482
Accrued expenses 11,712,399 11,344,605 10,010,213
Player account balances 33,174,930 32,827,534 32,244,664
Other current liabilities 11,895,575 12,385,881 17,416,758
Total current liabilities 75,255,306 76,203,118 98,437,668
Other liabilities 3,993,293 3,513,553 1,491,673
Total liabilities 79,248,599 79,716,671 99,929,341
GigaMedia's shareholders' equity 233,059,841 228,455,721 195,839,387
Noncontrolling interest 8,858,641 8,620,655 10,749,268
Total equity 241,918,482 237,076,376 206,588,655
Total liabilities & equity 321,167,081 316,793,047 306,517,996
GIGAMEDIA LIMITED
Reconciliations of Non-GAAP Results of Operations
Three months ended
3/31/2009 12/31/2008 3/31/2008
unaudited unaudited unaudited
USD USD USD
I. Income from operations
GAAP result 5,418,993 7,912,332 12,698,401
Adjustment: share-based
compensation 966,284 80,843 747,012
Non-GAAP result 6,385,277 7,993,175 13,445,413
II. Net income attributable to
GigaMedia
GAAP result 4,843,075 9,074,590 12,077,079
Adjustments:
(a) share-based compensation 931,078 128,901 715,163
(b) income from discontinued
operations (39,117) (989,017) (154,071)
Non-GAAP result 5,735,036 8,214,474 12,638,171
III. Basic earnings per share
attributable to GigaMedia
GAAP result 0.09 0.17 0.22
Adjustments 0.02 (0.02) 0.01
Non-GAAP result 0.11 0.15 0.23
IV. Diluted earnings per share
attributable to GigaMedia
GAAP result 0.08 0.15 0.20
Adjustments 0.02 (0.01) 0.01
Non-GAAP result 0.10 0.14 0.21
V.Reconciliation of Net Income to
EBITDA
Net income attributable to GigaMedia 4,843,075 9,074,590 12,077,079
Depreciation 718,147 629,715 571,939
Amortization 1,179,962 1,035,569 960,721
Interest expense (income) 24,724 27,572 (97,960)
Tax expense 419,228 909,910 416,982
EBITDA 7,185,136 11,677,356 13,928,761
For further information contact:
Brad Miller
Investor Relations Director
Tel: +886-2-2656-8016
Email: brad.miller@gigamedia.com.tw