HONG KONG, Aug. 12 /Xinhua-PRNewswire-FirstCall/ --
Financial Highlights for the Second Quarter of 2008
-- Consolidated revenues increased 31 percent to US$52.5 million from
US$40.1 million in the same quarter in 2007 and decreased 4
percent from the previous quarter.
-- Consolidated operating income climbed 18 percent to US$11.9 million
from US$10.1 million in the same quarter in 2007 and decreased
8 percent from the previous quarter.
-- Consolidated net income increased 11 percent to US$11.2 million from
US$10.1 million in the same quarter in 2007 and decreased 7 percent
from the previous quarter. GAAP basic and fully-diluted earnings per
share were US$0.21 and US$0.19, respectively.
-- Non-GAAP net income was US$12.1 million. Non-GAAP basic and fully-
diluted earnings per share were US$0.22 and US$0.20, respectively,
which exclude non-cash share-based compensation expenses.
Operational Highlights
-- Solid poker software results despite seasonal slowdown and European
soccer championship.
-- Casino software revenues hit record levels driven by ongoing platform
integration with Everest Poker.
-- Asian online games platform prepares for exciting game launches in
second half of 2008.
Recent Developments
-- World Series of Poker: Everest Poker celebrates record participation
in first year of sponsorship; ESPN broadcasts to give strong boost to
Everest Poker in Q4 and into 2009.
-- NBA STREET Online: GigaMedia partners with EA in China - hot game
licensed for Q4 launch in market where basketball is #1 sport.
GigaMedia Limited (Nasdaq: GIGM) announced today strong second-quarter results with revenues rising 31 percent to $52.5 million, and operating income growing 18 percent to $11.9 million, both in comparison to second quarter 2007, driven by sharply increased contributions from its online games business in China and continued solid growth in its poker software business in continental Europe.
Net income was US$11.2 million, up 11 percent year-over-year and down 7 percent sequentially over the first quarter of 2008 on seasonality. Second-quarter 2008 non-GAAP basic and diluted earnings per share were $0.22 and $0.20, respectively, which exclude non-cash share-based compensation expenses.
"We delivered solid results in the second quarter despite a difficult operating environment," stated GigaMedia Limited Chief Executive Officer Arthur Wang. "Looking forward, Everest Poker’s sponsorship of the World Series of Poker, ever stronger casino software results, and new game launches in Asia should ensure strong growth and momentum in the second half."
"In addition, our new Everest Sports-betting offering will launch in Q4 and drive growth from the strong crossover and tie between poker players and sports bettors," stated CEO Arthur Wang.
"Our new partnership with EA to run NBA STREET Online in China consolidates our position as the top sports game operator," stated President Thomas Hui. "We plan to make NBA STREET Online the No. 1 sports game in China, drawing from the country’s 300 million basketball fans."
Consolidated Financial Results
GIGAMEDIA 2Q08 CONSOLIDATED FINANCIAL RESULTS
(unaudited, 2Q08 2Q07 Change 2Q08 1Q08 Change
all figures (%) (%)
in US$
thousands,
except per
share amounts)
Revenues 52,468 40,063 31 52,468 54,629 -4
Gross Profit 40,845 31,798 28 40,845 43,149 -5
Operating
Income 11,912 10,091 18 11,912 12,907 -8
GAAP Net
Income 11,200 10,078 11 11,200 12,077 -7
GAAP Net
Income Per
Share, Diluted 0.19 0.17 10 0.19 0.20 -7
Non-GAAP
Net Income (A) 12,139 10,332 17 12,139 12,813 -5
Non-GAAP
Net Income
Per Share,
Diluted (A) 0.20 0.17 17 0.20 0.21 -5
EBITDA (B) 13,037 11,326 15 13,037 13,929 -6
Cash, Cash
Equivalents
and Marketable
Securities-
Current 81,655 72,373 13 81,655 79,923 2
(A) Non-GAAP net income and non-GAAP net income per share exclude non-
cash share-based compensation expenses. (See, "Use of Non-
GAAP Measures," for more details.)
(B) 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 second quarter increased 31 percent to $52.5 million from $40.1 million in the same period of 2007, and decreased 4 percent from a record $54.6 million in the first quarter of 2008. Year-over-year results reflected strong organic growth in the company’s core businesses, led by a 26 percent increase in Gigamedia’s gaming software business and a 67 percent revenue increase in the company’s Asian online games business. Quarter-over-quarter revenue variation reflected the impact of a seasonal downturn in the gaming software business combined with a reduction in player activity due to the popularity of the 2008 European Football Championship in the second quarter of 2008, as well as comparison with exceptionally strong results in the first quarter in the company’s Asian online games business which surged on heavy player activity in the period related to product promotions, the Chinese New Year holiday, and poor weather.
Consolidated gross profit for the second quarter increased 28 percent to $40.8 million from $31.8 million in 2007 and decreased 5 percent quarter-over-quarter from $43.1 million. The year-over-year improvement was driven by accelerating contributions from the Asian online games business, whose gross profit grew 58 percent from the same period in 2007, and continued solid gross profit growth in the gaming software business. The quarter-over-quarter decrease in gross profit was due to quarterly sequential gross profit decreases in the company’s core businesses. Second-quarter consolidated gross profit margin was 77.8 percent, down slightly from 79.4 percent a year ago and 79.0 percent in the previous quarter.
Consolidated operating income for the second quarter grew 18 percent year-over-year to $11.9 million from $10.1 million in the second quarter of 2007 and decreased 8 percent quarter-over-quarter from a record $12.9 million in the first quarter of 2008.
Driving the year-over-year increase in consolidated operating income was a strong 37 percent increase in operating income in the Asian online games business, combined with an 8 percent increase in operating income in the gaming software business. GigaMedia’s consolidated operating margin in the second quarter of 2008 was 22.7 percent compared with 25.2 percent in the same period in 2007. Second-quarter 2008 consolidated operating margin was affected by lower operating margins in the gaming software and Asian online games businesses versus the same year-ago period.
Quarter-over-quarter consolidated operating income results reflected the impact of seasonality on the company’s core businesses with expected modest decreases in operating margins in the second quarter of 2008 from 23.6 percent in the first quarter. Second-quarter consolidated operating margin was impacted by lower consolidated revenues and gross margin and higher product development and engineering expenses.
Consolidated non-operating income during the second quarter of 2008 totaled approximately $165 thousand, down from non-operating income of approximately $510 thousand a year ago and $501 thousand recorded in the previous quarter.
Consolidated net income for the quarter increased 11 percent to $11.2 million from $10.1 million in 2007, and decreased by 7 percent from the previous quarter. GigaMedia’s GAAP fully-diluted earnings per share in the second quarter grew 10 percent to $0.19 versus $0.17 in the same period in 2007 and decreased 7 percent from the first quarter.
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 non-GAAP measures are described below and reconciliations to the corresponding GAAP measures are included at the end of this release. (See, "Use of Non-GAAP Measures," for more details.)
Non-GAAP consolidated operating income, non-GAAP consolidated net income, and non-GAAP basic and fully-diluted earnings per share all exclude non-cash share-based compensation charges. Second-quarter non-cash share-based compensation charges were $1.0 million, up from $767 thousand in the first quarter.
Non-GAAP consolidated operating income was $12.9 million in the second quarter of 2008, up 24 percent year-over-year and down 6 percent quarter-over-quarter. Non-GAAP consolidated net income in the second quarter was $12.1 million, representing an increase of 17 percent over the same period last year and a 5 percent decrease from the first quarter of 2008. Non-GAAP basic earnings per share were $0.22, a 12 percent increase from 2007 and a decrease of 6 percent quarter-over-quarter. Non-GAAP fully-diluted earnings per share were $0.20, a 17 percent increase from the same period last year and down 5 percent compared with the first quarter.
Consolidated EBITDA for the second quarter of 2008 grew 15 percent to $13.0 million versus the same period last year, and decreased 6 percent from the first quarter of 2008. Operating cash flow for the second quarter of 2008 was $11.4 million. Capital expenditures totaled $4.5 million for the period.
GigaMedia continued to maintain a robust balance sheet. Cash, cash equivalents and marketable securities-current were $81.7 million, up from $79.9 million in the first quarter of 2008. Total loans remained roughly flat and amounted to $32.3 million at the end of the second quarter of 2008.
Business Unit Results
GigaMedia Limited conducts its online entertainment business in two business segments. The gaming software segment develops and licenses online poker and casino gaming software solutions and application services, primarily targeting emerging continental European markets. The Asian online games segment operates a suite of play-for-fun online games, mainly targeting online gamers in Greater China. A third segment, other business, consists of GigaMedia’s legacy broadband ISP operations in Taiwan.
Gaming Software Business
(unaudited, 2Q08 2Q07 Change 2Q08 1Q08 Change
in US$ (%) (%)
thousands)
Revenues 36,889 29,221 26 36,889 38,301 -4
Gross Profit 31,066 25,171 23 31,066 32,754 -5
Operating Income 10,380 9,652 8 10,380 11,515 -10
Net Income Before 10,245 9,386 9 10,245 11,503 -11
Minority Interests
Net Income 10,304 9,216 12 10,304 11,396 -10
EBITDA 10,878 9,432 15 10,878 11,913 -9
The gaming software business delivered solid results despite entering the seasonally quiet summer period for online gaming activity and facing strong entertainment challenges from the 2008 European Football Championship, which began in June. Cross-selling between poker and casino is on track and driving growth. On the back of Everest Poker’s sponsorship of the World Series of Poker, GigaMedia’s Everest Poker and Everest Casino products are well positioned to sustain long-term growth.
Second-quarter revenues in the gaming software business increased 26 percent year-over-year to $36.9 million from $29.2 million and decreased 4 percent quarter-over-quarter from a record $38.3 million.
GigaMedia’s revenues from the gaming software business derived from providing poker and casino software and services to its master licensee were $17.0 million during the second quarter of 2008. This represented an increase of 34 percent from $12.7 million in 2007 and a 1 percent increase from the first quarter of 2008, which totaled $16.9 million. Such revenues are eliminated in consolidation.
Year-over-year revenue growth was driven by strong performance in both the poker and casino software businesses. Quarter-over-quarter results were affected by seasonality and the Euro 2008 soccer tournament.
Revenues in the poker software vertical were $27.4 million, up 26 percent from the same year-ago period and down 8 percent from the previous quarter. Poker software represented 74 percent of the business unit’s total second-quarter 2008 revenues. Approximately 191,000 active depositing real-money customers played on the poker platform during the second quarter, down 8 percent from the previous quarter. During the quarter, approximately 46,000 new depositing real-money poker players were added, down 32 percent quarter-over-quarter.
Revenues in the casino software vertical were a record $9.5 million during the second quarter. This represented a 34 percent increase from the same period in 2007 and an increase of 10 percent from the previous quarter. Enhancements to GigaMedia’s platform software enabling strong cross-marketing to Everest Poker players in the second quarter contributed to the strong revenue growth.
Second-quarter gross profit grew 23 percent to $31.1 million from $25.2 million in 2007 and decreased 5 percent from $32.8 million in the first quarter, with the period variations attributable to strong revenue growth and the traditional negative impact of seasonality combined with the Euro 2008 soccer impact, respectively. Gross profit margin decreased slightly year-over-year to 84.2 percent from 86.1 percent in 2007 and from 85.5 percent in the preceding quarter, due primarily to increases in platform expenses including engineering and customer service.
Total second-quarter selling and marketing expenses were $14.9 million, up 29 percent from $11.5 million in 2007 and down 6 percent quarter-over-quarter from $15.9 million. The year-over-year increase was attributable to increases in payments to marketing affiliates as a result of strong revenue growth, as well as increases in sales and marketing headcount. The quarter-over-quarter variation was largely due to a reduction in discretionary mass media promotional expenses in the second quarter of 2008 in line with the traditional downturn in online gaming activity during the summer months.
Operating income grew 8 percent to $10.4 million from $9.7 million in 2007 and decreased 10 percent quarter-over-quarter from a record $11.5 million. Operating margins declined year-over-year to 28.1 percent from 33.0 percent in 2007 and from 30.1 percent in the first quarter of 2008 reflecting lower revenues, gross margins and increases in product development and engineering expenses during the periods.
Net income rose 12 percent to $10.3 million from $9.2 million in 2007 and decreased 10 percent sequentially from $11.4 million in the first quarter. EBITDA increased 15 percent year-over-year and decreased 9 percent from the first quarter of 2008 to $10.9 million from $11.9 million. Capital expenditures totaled approximately $1.6 million for the second quarter.
Asian Online Games Business
(unaudited, 2Q08 2Q07 Change 2Q08 1Q08 Change
in US$
thousands) (%) (%)
Revenues 12,015 7,192 67 12,015 12,890 -7
Gross Profit 8,811 5,577 58 8,811 9,395 -6
Operating Income 3,160 2,310 37 3,160 3,708 -15
Net Income Before
Minority Interests 3,307 2,288 45 3,307 3,263 1
Net Income 2,639 2,272 16 2,639 2,557 3
EBITDA 3,485 2,745 27 3,485 3,665 -5
GigaMedia continued to grow its Asian online games business, with strong year-over-year results reflecting the platform’s inherent scalability. The business continues to improve its product pipeline, with multiple major game launches expected in the medium term. During the second quarter of 2008, GigaMedia increased its ownership interest in T2CN to approximately 66.3 percent from 58.5 percent.
Second-quarter revenues in the Asian online games business increased 67 percent to $12.0 million from $7.2 million a year ago and decreased 7 percent from a record $12.9 million in the previous quarter. Solid organic growth in FunTown in Taiwan and Hong Kong and consolidation of T2CN in China drove the year-over-year improvement. The quarter-over-quarter revenue variation reflected comparison with exceptionally strong results in the first quarter in both FunTown and T2CN, which benefited from surges in player activity related to product promotions and winter storms around the Chinese New Year holiday.
Second-quarter revenues from FunTown grew 10 percent to $6.6 million from $6.0 million in 2007 and decreased 6 percent from $7.0 million in the previous quarter. Year-over-year growth reflected strong contributions from its play-for-fun MahJong and casual games offerings, and appreciation of the New Taiwan dollar against the U.S. dollar. Quarter-over-quarter, revenues were down on lower revenues per customer in the second quarter of 2008 following strong promotions in the first quarter. Average monthly active paying accounts were approximately 116,000 during the second quarter, up 5 percent from the first quarter, and average monthly revenue per active paying account was $19.02 during the period, down 10 percent quarter-over-quarter. Peak concurrent users were approximately 44,000, a 2 percent increase from the first quarter.
Total revenues for T2CN in the period were $5.4 million, representing a 361 percent increase from $1.2 million in 2007 and an 8 percent decrease from $5.9 million in the first quarter. Strong revenue growth in the year period was attributable to increased revenue from FreeStyle driven by new game patches, and the effect of three full months of consolidation of T2CN in 2008, versus one month in the second quarter last year. Appreciation of the renminbi against the U.S. dollar also contributed to the increase. Revenues were down quarter-over-quarter on lower revenues from FreeStyle following strong promotions in the first quarter. T2CN’s average monthly active paying accounts were approximately 447,000 during the second quarter, down 13 percent from the first quarter, and average monthly revenue per active paying account was $3.97 during the period, up 3 percent quarter-over-quarter. Peak concurrent users of FreeStyle were approximately 139,000, a decrease of 25 percent from the first quarter.
Second-quarter gross profit grew 58 percent to $8.8 million from $5.6 million in 2007 and decreased by 6 percent sequentially from $9.4 million as a result of the quarterly sequential revenue decrease. Gross profit margin decreased year-over-year to 73.3 percent from 77.6 percent in 2007, attributable to the increase in contributions from licensed games, which carry lower margins than self-developed games. Gross profit margin was steady quarter-over-quarter.
Total selling and marketing expenses in the second quarter grew 46 percent to $2.3 million from $1.6 million in 2007 and declined 12 percent from $2.6 million in the previous quarter. The year-over-year increase was primarily due to consolidation of T2CN. The quarter-over-quarter decrease was due to a sequential reduction in mass media promotional/advertising expenses.
Operating income grew 37 percent from the same period in 2007 to $3.2 million from $2.3 million and decreased 15 percent from the previous quarter. Second-quarter 2008 operating margin decreased to 26.3 percent from 32.1 percent in 2007 and from 28.8 percent in the previous quarter. The year-over-year decrease in operating margin reflected the aforementioned decrease in gross margin, as well as higher general and administrative expenses related to expansion and integration of the Asian online games business. The quarter-over-quarter decrease was primarily due to lowered gross profit, as well as increased general and administrative expenses, which offset the aforementioned sequential reduction in selling and marketing expenses.
Net income grew 16 percent to $2.6 million from $2.3 million in 2007 and by 3 percent sequentially from $2.6 million in the first quarter. Year-over-year results reflected the aforementioned factors impacting operating income, which more than offset increased minority interest income deductions during the period. Quarter-over-quarter results benefited from lower tax expenses in the second quarter and an increase in Gigamedia’s ownership of T2CN.
EBITDA increased 27 percent to $3.5 million from $2.7 million in the second quarter of 2007 and decreased 5 percent from $3.7 million in the first quarter. Capital expenditures totaled approximately $2.0 million for the second quarter.
Other Business -- Legacy Broadband ISP Business
(unaudited, 2Q08 2Q07 Change 2Q08 1Q08 Change
in US$ (%) (%)
thousands)
Revenues 3,565 3,658 -3 3,565 3,444 4
Gross Profit 968 1,064 -9 968 1,001 -3
Operating Income
(Loss) 257 142 81 257 214 20
Net Income (Loss) 248 540 -54 248 159 56
EBITDA 525 1,040 -49 525 400 31
Revenues in the legacy broadband ISP business in the second quarter of 2008 were $3.6 million. Revenues during the period decreased 3 percent year-over-year and grew 4 percent quarter-over-quarter. Second-quarter 2008 operating income was $257 thousand, compared to $142 thousand in the second quarter of 2007 and $214 thousand in the first quarter of 2008. Net income in the second quarter of 2008 decreased to $248 thousand from $540 thousand in the same period of 2007 and increased from $159 thousand in the first quarter of 2008.
Business Outlook
The following forward-looking statements reflect GigaMedia’s expectations as of August 12, 2008. Given potential changes in economic conditions and consumer spending, the evolving nature of gaming software, online games and broadband, 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. GigaMedia expects strong revenue growth in its gaming software business for the full year 2008. Nonetheless, the company expects third-quarter revenues to be slightly lower than those of the second quarter, in line with a general industry slowdown due to summer seasonality. The seasonal slowdown may be offset in part by the launch of new products and integration of the Everest casino and poker platform.
Asian online games business. The company expects revenues to increase in the second half of 2008 and into 2009, driven by major new game launches including Holic, NBA STREET Online, and Warhammer.
Broadband ISP business. GigaMedia has retained financial advisors to assist with the potential disposal of this legacy business unit and remains in discussions with identified buyers concerning a proposed sale of the business.
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 operating income, net income and basic and fully-diluted earnings per share data adjusted to exclude the impact of share-based compensation. 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.
GigaMedia believes these non-GAAP financial measures provide meaningful supplemental information regarding GigaMedia’s performance by excluding certain expenses that may not be indicative of the company’s operating performance. Effective January 1, 2006, GigaMedia adopted Statement of Financial Accounting Standards No. 123(R) (“SFAS 123(R)”) regarding the expensing of share-based compensation. The company believes that the presentation of non-GAAP operating income, 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. GigaMedia believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the company’s performance and when planning and forecasting future periods. GigaMedia believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using non-GAAP operating income excluding share-based compensation expenses, net income excluding share-based compensation expenses, and basic and fully-diluted earnings per share excluding share-based compensation expenses is that these non-GAAP measures exclude share-based compensation expenses 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. In addition, EBITDA as defined by GigaMedia may not be comparable to similarly titled measures reported by other companies. Management compensates for these limitations 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, and are presented in U.S. dollars.
Consolidated financial results for the second quarter of 2008 benefited from GigaMedia’s investment in T2CN. GigaMedia increased its total equity ownership of T2CN to approximately 58 percent in July 2007 and began to consolidate T2CN financial results with those of the company in June 2007. As a result, consolidated financial results for the second quarter of 2008 may not be comparable with other periods.
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 U.S. 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.
Conference Call and Webcast
GigaMedia will hold a conference call at 8:00 p.m. Taipei/Hong Kong Time on August 12, 2008, which is 8:00 a.m. Eastern Daylight Time on August 12, 2008 in the United States, to discuss the company’s second-quarter 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 the world’s largest online MahJong game site in terms of revenue, and T2CN, a leading online sports game operator in China. More information on GigaMedia can be obtained from 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. GigaMedia cautions readers that forward-looking statements are based on the company’s current expectations and involve a number of risks and uncertainties. Actual results may differ materially from those contained in such forward-looking statements. Information as to certain factors that could cause actual results to vary can be found in GigaMedia’s Annual Report on Form 20-F filed with the United States Securities and Exchange Commission in June 2008.
-- Tables to Follow --
GIGAMEDIA LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended
6/30/2008 3/31/2008 6/30/2007
unaudited unaudited unaudited
USD USD USD
Operating revenues
Gaming software and service revenues 36,889,479 38,300,753 29,220,597
Online game and service revenues 12,014,730 12,889,501 7,191,863
Internet access and service revenues 3,560,347 3,435,122 3,646,204
Other revenues 3,585 3,920 4,725
52,468,141 54,629,296 40,063,389
Operating costs
Cost of gaming software and service
revenues 5,823,047 5,546,637 4,050,000
Cost of online game and service
revenues (includes share-based
compensation expenses under SFAS
123(R) of $13,266, $12,919, and
$3,372, respectively) 3,202,907 3,490,688 1,622,142
Cost of Internet access and service
revenues (includes share-based
compensation expenses under SFAS
123(R) of $1,387, $1,387, and $906,
respectively) 2,584,072 2,427,279 2,519,135
Cost of other revenues 13,572 15,903 73,920
11,623,598 11,480,507 8,265,197
Gross profit 40,844,543 43,148,789 31,798,192
Operating expenses
Product development and engineering
expenses (includes share-based
compensation expenses under SFAS
123(R) of $126,187, $97,110, and
$62,804, respectively) 3,707,216 3,366,548 1,881,345
Selling and marketing expenses
(includes share-based compensation
expenses under SFAS 123(R) of
$58,595, $44,176, and $37,951,
respectively) 17,758,510 19,063,717 13,829,089
General and administrative expenses
(includes share-based compensation
expenses under SFAS 123(R) of
$807,435, $611,810, and $182,795,
respectively) 7,398,631 7,723,154 5,858,573
Bad debt expenses 68,599 87,992 138,385
28,932,956 30,241,411 21,707,392
Income from operations 11,911,587 12,907,378 10,090,800
Non-operating income (expense)
Interest income 308,810 601,397 325,633
Gain on sales of marketable securities 7,346 355,645 81,817
Interest expense (252,200) (277,120) (152,883)
Foreign exchange gain (loss) -- net 51,987 (237,284) (200,552)
Loss on disposal of property, plant
and equipment (27,818) (33,565) (12,260)
Proportionate share of loss under the
equity method 0 0 (29,441)
Other 76,845 91,451 497,621
164,970 500,524 509,935
Income before income taxes and
minority interest 12,076,557 13,407,902 10,600,735
Income tax expense (267,701) (517,787) (336,226)
Minority interest (609,243) (813,036) (186,855)
Net income 11,199,613 12,077,079 10,077,654
Earnings per share:
Basic 0.21 0.22 0.19
Diluted 0.19 0.20 0.17
Weighted average shares outstanding:
Basic 54,049,298 53,817,644 52,773,728
Diluted 60,363,939 60,445,440 59,963,289
GIGAMEDIA LIMITED
CONSOLIDATED BALANCE SHEETS
6/30/2008 3/31/2008 6/30/2007
unaudited unaduited unaudited
USD USD USD
Assets
Current assets
Cash and cash equivalents 76,682,114 75,372,555 61,108,967
Marketable securities -- current 4,972,892 4,550,637 11,264,342
Notes and accounts receivable -- net 18,174,762 20,532,896 18,804,249
Prepaid expenses 17,875,368 14,192,730 2,650,394
Restricted cash 3,983,726 6,615,992 3,864,428
Other receivables 2,988,970 4,070,840 6,806,257
Other current assets 2,992,073 2,909,000 625,342
Total current assets 127,669,905 128,244,650 105,123,979
Marketable securities -- noncurrent 24,017,482 24,017,482 10,000,000
Investments 5,110,993 5,043,466 5,126,122
Property, plant & equipment -- net 15,452,942 14,336,714 11,283,444
Goodwill 89,227,014 87,056,365 78,046,461
Intangible assets -- net 29,168,135 27,531,011 25,965,580
Prepaid licensing and royalty fees 19,309,073 18,240,842 9,317,751
Other assets 6,189,980 2,047,466 1,652,599
Total assets 316,145,524 306,517,996 246,515,936
Liabilities & shareholders’ equity
Short-term borrowings 32,294,135 32,231,080 24,344,370
Notes and accounts payable 1,822,957 1,817,471 4,667,369
Accrued compensation 5,093,276 4,717,482 3,607,858
Accrued expenses 9,016,440 10,010,213 9,602,689
Player account balances 33,956,994 32,244,664 19,277,891
Other current liabilities 14,692,433 17,416,758 20,518,284
Total current liabilities 96,876,235 98,437,668 82,018,461
Other liabilities 1,371,410 1,491,673 2,648,022
Total liabilities 98,247,645 99,929,341 84,666,483
Minority interests 9,275,413 10,749,268 4,941,254
Shareholders’ equity 208,622,466 195,839,387 156,908,199
Total liabilities & shareholders’
equity 316,145,524 306,517,996 246,515,936
GIGAMEDIA LIMITED
Reconciliations of Non-GAAP Results of Operations
Three months ended
6/30/2008 3/31/2008 6/30/2007
unaudited unaudited unaudited
USD USD USD
Income from operations
GAAP result 11,911,587 12,907,378 10,090,800
Adjustment: share-based
compensation 1,006,870 767,402 287,828
Non-GAAP result 12,918,457 13,674,780 10,378,628
Net income
GAAP result 11,199,613 12,077,079 10,077,654
Adjustment: share-based
compensation 939,391 735,553 254,033
Non-GAAP result 12,139,004 12,812,632 10,331,687
Basic earnings per share
GAAP result 0.21 0.22 0.19
Adjustment: share-based
compensation 0.01 0.02 0.01
Non-GAAP result 0.22 0.24 0.20
Diluted earnings per share
GAAP result 0.19 0.20 0.17
Adjustment: share-based
compensation 0.01 0.01 0.00
Non-GAAP result 0.20 0.21 0.17
Reconciliation of Net Income to
EBITDA
Net income 11,199,613 12,077,079 10,077,654
Depreciation 601,787 571,939 574,639
Amortization 986,008 960,721 725,062
Interest (income) expense 53,990 (97,960) (325,917)
Tax expense 196,068 416,982 274,640
EBITDA 13,037,466 13,928,761 11,326,078
For further information contact:
Brad Miller
Investor Relations Director
Tel: +8862-2656-8016
Email: brad.miller@gigamedia.com.tw
