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2011/07/29
 

Silicon Motion Announces Results for the Period Ended June 30, 2011

Financial Highlights

  --  Net sales increased 16% quarter-over-quarter to US$50.5 million from
      US$43.4 million in 1Q11
  --  Gross margin excluding stock-based compensation increased to 46.9% from
      46.2% in 1Q11
  --  Operating expenses excluding stock-based compensation,
      acquisition-related charges, and other items decreased to US$13.1
      million from US$13.4 million in 1Q11
  --  Operating margin excluding stock-based compensation, acquisition-related
      charges, and other items increased to 21.1% from 15.5% in 1Q11
  --  Diluted earnings per ADS excluding stock-based compensation,
      acquisition-related charges, net foreign exchange gain (loss), and other
      items increased to US$0.29, from US$0.18 in 1Q11


Business Highlights

  --  Sixth consecutive quarter of revenue growth
  --  Second highest quarter of revenue in the Company's history
  --  Total storage controller unit shipments declined 3% sequentially but
      increased 41% year-over-year
  --  Blended storage controller ASPs increased 12% sequentially
  --  Increased OEM business 40% sequentially to about 50% of mobile storage
      revenue
  --  Increased 3-bits per cell (TLC) controller revenue 45% sequentially to
      over 35% of all controller revenue
  --  Won 3 of the top 6 channel vendors for ultra high speed SD UHS-I card
      business
  --  Over 12 eMMC controller design wins for smartphones and tablets, with
      majority for the Android platform
  --  Began shipping our 4G LTE transceiver for the world's first Android LTE
      tablet


TAIPEI, Taiwan, July 29, 2011 (GLOBE NEWSWIRE) -- Silicon Motion Technology Corporation (Nasdaq:SIMO) ("Silicon Motion" or the "Company") today announced its second quarter of 2011 financial results. For the second quarter of 2011, net sales increased 16% quarter-over-quarter to US$50.5 million from US$43.4 million in the first quarter of 2011. Net income (GAAP) for the second quarter decreased quarter-over-quarter to US$4.5 million or US$0.14 per diluted ADS from a net income of US$6.4 million or US$0.21 per diluted ADS in the first quarter of 2011.

Net income excluding stock-based compensation, acquisition-related charges, foreign exchange gain (loss), and other items increased in the second quarter to US$9.9 million or US$0.29 per diluted ADS from a net income of US$5.8 million or US$0.18 per diluted ADS in the first quarter of 2011.

Second Quarter 2011 Financial Review

Commenting on the results of the second quarter, Silicon Motion's President and CEO, Wallace Kou, said:

"We are excited to report that our US$50.5 million of revenue this quarter represents the second biggest quarter of revenue in our history. For us, the achievement of this milestone demonstrates that the strategies and investments which we have made in the last two years are bearing solid results, whether relating to our mobile storage or mobile communications products.

"Our mobile storage business experienced its sixth consecutive quarter of solid growth momentum as our second quarter revenue increased 9% sequentially. This quarter, our ASPs increased 12% sequentially, and on an annual basis, our ASPs have also been growing for six consecutive quarters. These achievements are the result of our OEM strategy, emphasis on higher value-added products, and focus on new SSD+embedded solutions. Sales to our flash maker customers and other OEMs increased 40% sequentially and accounted for about half of all mobile storage sales, up from about 40% in the prior quarter. Sales of our TLC controllers, which are ideally suited for cards bundled with smartphones, increased 45% and now accounted for over 35% of all our controller sales. Well over 50% of our controllers sold are used in the management of the latest 2x nm NAND flash, whether MLC or TLC--a strong endorsement by customers of our technological excellence. Our SSD+embedded solutions grew 30% sequentially as our sales of controllers for low density industrial and networking storage applications rebounded. For our eMMC solutions, we are currently executing over 12 projects for applications, such as Android smartphones and tablets. We continue to believe in the prospects for significant growth in 2012 from our SSD+embedded business.

"Our mobile communications segment delivered a phenomenal 55% sequential revenue growth, largely as a result of a rebound in mobile TV IC sales relating to Korea T-DMB market share gains and a continued ramp of our 4G LTE transceivers for Samsung Android phones, currently rolling out at Verizon and MetroPCS in the U.S. We have also started shipping our 4G LTE transceiver for the world's first Android LTE tablet."

Sales

Net sales in the second quarter were US$50.5 million, an increase of 16% compared with the previous quarter. For the quarter, mobile storage products accounted for 67% of net sales, mobile communications 25% of net sales, multimedia SoCs 7% of net sales, and others 1% of net sales.

Net sales of our mobile storage products, which primarily include flash memory cards, USB flash drives, SSD and embedded flash controllers, increased 9% sequentially in the second quarter to US$33.9 million.

Net sales of mobile communication products, which primarily include mobile TV IC solutions and handset transceivers, increased 55% from the first quarter of 2011 to US$12.8 million this quarter.

Net sales of multimedia SoC products, which are primarily embedded graphics processors, increased 10% from the first quarter of 2011 to US$3.5 million this quarter.

Gross and Operating Margins

Gross margin excluding stock-based compensation increased to 46.9% in the second quarter from 46.2% in the first quarter of 2011. GAAP gross margin increased to 46.8% from 46.2% in the first quarter of 2011.

Operating expenses excluding stock-based compensation, acquisition-related charges, and other items were US$13.1 million, which was lower than the US$13.4 million expended in the first quarter. Research and development expenditures, excluding stock-based compensation, were US$7.7 million, which was lower than the US$8.1 million in the previous quarter. Selling and marketing expenses excluding stock-based compensation were US$2.9 million, which was higher compared to the US$2.7 million reported in the previous quarter. General and administrative expenses excluding stock-based compensation and litigation expenses were US$2.5 million, which was comparable to our previous quarter. Stock-based compensation was US$2.4 million in the second quarter, which was higher than the US$0.8 million in the first quarter. Acquisition-related charges were US$0.2 million, a decrease from the US$0.6 million in the first quarter.

Operating margin excluding stock-based compensation, acquisition-related charges, and other items was 21.1%, an increase from 15.5% in the previous quarter. GAAP operating margin was 15.9%, an increase from the 12.3% in the first quarter.

Other Income and Expenses

Net total other income excluding net foreign exchange gain or loss, and other items was US$0.1 million, similar to the first quarter. GAAP net total other income was a loss of US$2.7 million, a decrease from a gain of US$2.1 million in the first quarter. The decrease in the GAAP total other income was primarily due to a foreign exchange loss in the second quarter of US$2.8 million compared to a foreign exchange gain in the first quarter of US$2.0 million.

Earnings

Net income excluding stock-based compensation, acquisition-related charges, net foreign exchange gain or loss, and other items was US$9.9 million this quarter, an increase from US$5.8 million in the first quarter. Diluted earnings per ADS excluding stock-based compensation, acquisition-related charges, net foreign exchange gain or loss, and other items were US$0.29, an increase from US$0.18 in the first quarter.

GAAP net income was US$4.5 million, a decrease from the net income of US$6.4 million in the first quarter. Diluted GAAP earnings per ADS were US$0.14, a decrease from US$0.21 in the previous quarter.

Balance Sheet

Cash, cash equivalents, and short-term investments decreased to US$55.1 million from US$57.6 million at the end of the first quarter of 2011.

Cash Flow

Our cash flows were as follows:

                     3 months ended June 30, 2011
  -------------------------------------------------------------------
                                                             (In US$
                                                            millions)
  Net income                                                      4.5
  Depreciation & amortization                                     1.6
  Changes in operating assets and liabilities                  (11.5)

  Others                                                          2.5
                                                            ---------

    Net cash provided by (used in) operating activities         (2.9)
                                                            =========
  Acquisition of property and equipment                         (1.4)

  Others                                                          0.3
                                                            ---------

    Net cash provided by (used in) investing activities         (1.1)
                                                            =========


  Others                                                          0.4
                                                            ---------

    Net cash provided by (used in) financing activities           0.4
                                                            =========
  Effects of changes in foreign currency exchange rates on
   cash                                                           0.3
                                                            ---------

    Net increase (decrease) in cash and cash equivalents        (3.3)
                                                            =========

  Pro-forma adjustment for foreign exchange translation           2.1
                                                            ---------
    Pro-forma net increase (decrease) in cash and cash
     equivalents                                                (1.2)
                                                            =========

During the second quarter of 2011, we spent US$1.2 million in capital expenditures primarily relating to the purchase of testing equipments, software and design tools.

Business Outlook:

Silicon Motion's President and CEO, Wallace Kou, added:

"The second quarter exceeded our expectations as strong OEM sales more than offset weak module maker sales. We continue to believe that while NAND flash industry supply will continue to increase in the second half of 2011, incremental supply of flash could be consumed by growing demand for smartphones, tablets, and SSDs, and less by module makers for the retail market. Our rapidly growing OEM sales currently cater primarily to the increasing demand for cards bundled with smartphones, as well as low density SSD+embedded solutions. Because of the strength of our business year-to-date, we are increasing our full year guidance and believe we are on track to delivering the largest annual revenue in the Company's history."

For the third quarter of 2011, management expects:

  --  Revenue to be down 5% to up 5% sequentially
  --  Gross margin excluding stock-based compensation to be in the 46% to 48%
      range
  --  Operating expenses excluding stock-based compensation,
      acquisition-related charges, and other items of approximately US$14 to
      US$16 million


For the full year 2011, management is increasing guidance as previously announced in April and now expects:

  --  Revenue to be up 40% to 50% compared with full year 2010
  --  Gross margin excluding stock-based compensation to be in the 46% to 48%
      range
  --  Operating expenses excluding stock-based compensation,
      acquisition-related charges, and other items of approximately US$55 to
      US$58 million


Conference Call & Webcast:

The Company's management team will conduct a conference call at 8:00am Eastern Time on July 29, 2011.

     (Speakers)
     Wallace Kou, President & CEO
     Riyadh Lai, CFO
     Jason Tsai, Director of Investor
      Relations and Strategy

     PRE-REGISTRATION:
     https://www.theconferencingservic
     e.com/prereg/key.process?key=PYT8
     TYCT7
     CONFERENCE CALL ACCESS NUMBERS:
     USA (Toll Free): 1 888 679 8035
     USA (Toll): 1 617 213 4848
     Taiwan (Toll Free): 0080 144 4360
     Participant Passcode: 4094 4862

     REPLAY NUMBERS (for 7 days):
     USA (Toll Free): 1 888 286 8010
     USA (Toll): 1 617 801 6888
     Participant Passcode: 4121 5661

A webcast of the call will be available on the Company's website at www.siliconmotion.com.

Discussion of Non-GAAP Financial Measures

To supplement the Company's unaudited selected financial results calculated in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), the Company discloses certain non-GAAP financial measures that exclude stock-based compensation, acquisition-related charges and other items, including non-GAAP cost of sales, non-GAAP gross profit, non-GAAP selling, general, and administrative expenses, non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per diluted ADS. These non-GAAP measures are not in accordance with or an alternative for GAAP, and may be different from non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all the amounts associated with the Company's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measure. We compensate for the limitations of our non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.

Our non-GAAP financial measures are provided to enhance the user's overall understanding of our current financial performance and our prospects for the future. Specifically, we believe the non-GAAP results provide useful information to both management and investors as these non-GAAP results exclude certain expenses, gains and losses that we believe are not indicative of our core operating results and because it is consistent with the financial models and estimates published by many analysts who follow the Company. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with our forecasts, and for benchmarking our performance externally against our competitors. Also, when evaluating potential acquisitions, we exclude the items described below from our consideration of the target's performance and valuation. Since we find these measures to be useful, we believe that our investors benefit from seeing the results from management's perspective in addition to seeing our GAAP results. We believe that these non-GAAP measures, when read in conjunction with the Company's GAAP financials, provide useful information to investors by offering:

-- the ability to make more meaningful period-to-period comparisons of the Company's on-going operating results;

-- the ability to better identify trends in the Company's underlying business and perform related trend analysis;

-- a better understanding of how management plans and measures the Company's underlying business; and

-- an easier way to compare the Company's operating results against analyst financial models and operating results of our competitors that supplement their GAAP results with non-GAAP financial measures.

The following are explanations of each of the adjustments that we incorporate into our non-GAAP measures, as well as the reasons for excluding each of these individual items in our reconciliation of these non-GAAP financial measures:

Stock-based compensation expense consists of non-cash charges related to the fair value of stock options and restricted stock units awarded to employees. The Company believes that the exclusion of these non-cash charges provides for more accurate comparisons of our operating results to our peer companies due to the varying available valuation methodologies, subjective assumptions and the variety of award types. In addition, the Company believes it is useful to investors to understand the specific impact of share-based compensation on its operating results.

Acquisition-related charges consist of non-cash charges that can be impacted by the timing and magnitude of our acquisitions. We consider our operating results without these charges when evaluating our ongoing performance and forecasting our earnings trends, and therefore excludes such charges when presenting non-GAAP financial measures. We believe that the assessment of our operations excluding these costs is relevant to our assessment of internal operations and comparisons to the performance of our competitors. Acquisition-related charges include the following:

-- Amortization of intangible assets relates to the amortization of core technology, customer relationship, and other intangibles acquired as part of an acquisition.

Litigation expenses consist of legal expenses relating to intellectual property disputes, commercial claims and other types of litigation. While litigation may arise in the ordinary course of our business, we nevertheless consider litigation to be an unusual, non-recurring and unplanned activity and therefore exclude these types of charges when presenting non-GAAP financial measures.

Gain from settlement of litigation relates to the one-time payment in connection with a favorable settlement of certain litigation with ASE and ANP.

Foreign exchange gains and losses consists of translation gains and/or losses of non-NT$ denominated current assets and current liabilities, as well as certain other balance sheet items which result from the appreciation or depreciation of non-NT$ currencies against the NT$. We do not use financial instruments to manage the impact on our operations from changes in foreign exchange rates, and because our operations are subject to fluctuations in foreign exchange rates, we therefore exclude foreign exchange gains and losses when presenting non-GAAP financial measures.

Impairment of long-term investments relates to the other-than-temporary, non-operating write down of the Company's minority stake investments. We do not consider these investments which were made before 2007 to be strategic and exclude the performance of these investments when evaluating our ongoing performance and forecasting our earnings trends, and therefore excludes losses (and gains) from the investments when presenting non-GAAP financial measures.

                           Silicon Motion Technology Corporation
                             Consolidated Statements of Income
               (in thousands, except percentages and per ADS data, unaudited)


                                               For the Three Months Ended
                                ---------------------------------------------------------

                                                                  Jun.     Mar.    Jun.
                                 Jun. 30,   Mar. 31,   Jun. 30,    30,     31,      30,
                                   2010       2011       2011     2010     2011    2011
                                  (NT$)      (NT$)      (NT$)     (US$)    (US$)    (US$)
                                ---------  ---------  ---------  -------  ------  -------
  Net Sales                     1,035,398  1,271,926  1,458,150   32,488  43,396   50,542

  Cost of sales                   543,452    684,604    775,744   17,052  23,357   26,888
                                ---------  ---------  ---------  -------  ------  -------
  Gross profit                    491,946    587,322    682,406   15,436  20,039   23,654

  Operating expenses
    Research & development        280,579    250,776    262,709    8,804   8,556    9,106
    Sales & marketing             103,705     82,815     99,853    3,254   2,826    3,461
    General & administrative       79,219     79,477     82,620    2,486   2,712    2,864
    Amortization of
     intangibles assets            17,316     17,316      5,772      543     591      200
   Gain from settlement of
    litigation                   (43,500)         --         --  (1,365)      --       --
                                ---------  ---------  ---------  -------  ------  -------
  Operating income                 54,627    156,938    231,452    1,714   5,354    8,023

  Non-operating income
   (expense)

    Gain on sale of
     investments                        5         34         21       --       1        1
    Interest income, net            2,264      2,031      2,307       71      69       79
    Impairment of long-term
     investments                  (4,100)         --         --    (129)      --       --
    Foreign exchange gain
     (loss), net                    7,077     58,416   (79,609)      222   1,993  (2,759)

    Others, net                       967        813      (711)       31      28     (24)
                                ---------  ---------  ---------  -------  ------  -------

    Subtotal                        6,213     61,294   (77,992)      195   2,091  (2,703)
                                ---------  ---------  ---------  -------  ------  -------
  Income before income tax         60,840    218,232    153,460    1,909   7,445    5,320

  Income tax expense (benefit)   (10,835)     29,526     23,647    (340)   1,007      820
                                ---------  ---------  ---------  -------  ------  -------

  Net income                       71,675    188,706    129,813    2,249   6,438    4,500
                                =========  =========  =========  =======  ======  =======

  Basic earnings per ADS            $2.45      $6.25      $4.20    $0.08   $0.21    $0.15
  Diluted earnings per ADS          $2.36      $6.01      $4.03    $0.07   $0.21    $0.14

  Margin Analysis:
  Gross margin                      47.5%      46.2%      46.8%    47.5%   46.2%    46.8%
  Operating margin                   5.3%      12.3%      15.9%     5.3%   12.3%    15.9%
  Net margin                         6.9%      14.8%       8.9%     6.9%   14.8%     8.9%

  Additional Data:
  Weighted avg. ADS
   equivalents[1]                  29,224     30,195     30,874   29,224  30,195   30,874
  Diluted ADS equivalents          30,313     31,393     32,207   30,313  31,393   32,207


  ----------------------------
  [1]  Assumes all outstanding ordinary shares are represented by ADSs. Each ADS
   represents four ordinary shares.


                             Silicon Motion Technology Corporation
                     Reconciliation of GAAP to Non-GAAP Operating Results
                 (in thousands, except percentages and per ADS data, unaudited)


                                                     For the Three Months Ended
                                        -----------------------------------------------------

                                                             Jun.     Jun.     Mar.     Jun.
                                        Jun. 30,  Mar. 31,    30,      30,      31,     30,
                                          2010      2011     2011     2010     2011     2011
                                         (NT$)     (NT$)     (NT$)    (US$)    (US$)    (US$)
                                        --------  --------  -------  -------  -------  ------
  GAAP net income                         71,675   188,706  129,813    2,249    6,438   4,500
  Stock-based compensation:
    Cost of sales                          1,551       808    1,961       49       27      68
    Research and development              26,651    12,280   40,716      836      419   1,411
    Sales and marketing                   10,014     4,041   15,460      314      138     536

    General and administrative             9,388     5,122   11,684      295      175     405
                                        --------  --------  -------  -------  -------  ------

       Total stock-based compensation     47,604    22,251  69, 821    1,494      759   2,420
                                        --------  --------  -------  -------  -------  ------

  Acquisition related charges:
    Amortization of intangible assets     17,316    17,316    5,772      543      591     200
  Litigation expenses                      2,543       293       40       80       10       1
  Gain from settlement of litigation    (43,500)        --       --  (1,365)       --      --
  Foreign exchange loss (gain),net       (7,077)  (58,416)   79,609    (222)  (1,993)   2,759

  Impairment of long-term investments      4,100        --       --      129       --      --
                                        --------  --------  -------  -------  -------  ------

  Non-GAAP net income                     92,661   170,150  285,055    2,908    5,805   9,880
                                        ========  ========  =======  =======  =======  ======

  Shares used in computing non-GAAP
   basic earnings per ADS                 29,224    30,195   30,874   29,224   30,195  30,874
                                        ========  ========  =======  =======  =======  ======
  Shares used in computing non-GAAP
   diluted earnings per ADS               32,027    32,209   33,530   32,027   32,209  33,530
                                        ========  ========  =======  =======  =======  ======


  Non-GAAP basic earnings per ADS          $3.17     $5.63    $9.23     0.10    $0.19   $0.32
                                        ========  ========  =======  =======  =======  ======

  Non-GAAP diluted earnings per ADS        $2.89     $5.28    $8.50     0.09    $0.18   $0.29
                                        ========  ========  =======  =======  =======  ======

  Non-GAAP gross margin                    47.7%     46.2%    46.9%    47.7%    46.2%   46.9%
  Non-GAAP operating margin                 7.6%     15.5%    21.1%     7.6%    15.5%   21.1%


  -------------------------------------------------------------------------------------------

                Silicon Motion Technology Corporation
                  Consolidated Statements of Income
   (in thousands, except percentages, and per ADS data, unaudited)


                                     For the Six Months Ended
                              -------------------------------------

                                                     Jun.     Jun.
                               Jun. 30,   Jun. 30,    30,     30,
                                 2010       2011     2010     2011
                                (NT$)      (NT$)     (US$)    (US$)
                              ---------  ---------  -------  ------
  Net Sales                   1,866,171  2,730,076   58,479  93,882

  Cost of sales                 983,725  1,460,348   30,826  50,218
                              ---------  ---------  -------  ------
  Gross profit                  882,446  1,269,728   27,653  43,664
  Operating expenses
    Research & development      520,288    513,485   16,304  17,658
    Sales & marketing           202,639    182,668    6,350   6,282
    General & administrative    161,199    162,097    5,051   5,574
    Amortization of
     intangible assets           34,612     23,088    1,085     794
    Gain from settlement of
     litigation                (43,500)         --  (1,363)      --
                              ---------  ---------  -------  ------
  Operating income                7,208    388,390      226  13,356

  Non-operating expense
   (income)
    Gain on sale of
     investments                     15         55       --       2
    Interest income, net          4,779      4,338      149     149
    Foreign exchange gain
     (loss), net                    597   (21,193)       19   (729)
    Impairment of long-term
     investments                (6,401)         --    (201)      --

    Others, net                 (3,087)        102     (96)       4
                              ---------  ---------  -------  ------

    Subtotal                    (4,097)   (16,698)    (129)   (574)
                              ---------  ---------  -------  ------
  Income before income tax        3,111    371,692       97  12,782

  Income tax expense              1,287     53,173       40   1,829
                              ---------  ---------  -------  ------

  Net income                      1,824    318,519       57  10,953
                              =========  =========  =======  ======


  Basic earnings per ADS          $0.06     $10.43    $0.00   $0.36
                              =========  =========  =======  ======

  Diluted earnings per ADS        $0.06     $10.02    $0.00   $0.35
                              =========  =========  =======  ======

  Margin Analysis:
  Gross margin                    47.3%      46.5%    47.3%   46.5%
  Operating margin                 0.4%      14.2%     0.4%   14.2%

  Weighted average ADS:
  Basic                          28,841     30,535   28,841  30,535
  Diluted                        29,877     31,800   29,877  31,800

                  Silicon Motion Technology Corporation
           Reconciliation of GAAP to Non-GAAP Operating Results
     (in thousands, except percentages and per ADS data, unaudited)


                                          For the Six Months Ended
                                     ----------------------------------

                                                Jun.     Jun.     Jun.
                                     Jun. 30,    30,      30,     30,
                                       2010     2011     2010     2011
                                      (NT$)     (NT$)    (US$)    (US$)
                                     --------  -------  -------  ------
  GAAP net income                       1,824  318,519       57  10,953
  Stock-based compensation:
    Cost of sales                       2,340    2,769       73      95
    Research and development           41,249   52,996    1,292   1,822
    Sales and marketing                22,832   19,501      716     671

    General and administrative         16,740   16,806      525     578
                                     --------  -------  -------  ------
       Total stock-based
        compensation                   83,161   92,072    2,606   3,166
                                     --------  -------  -------  ------

  Acquisition related charges:
    Amortization of intangible
     assets                            34,612   23,088    1,085     794
  Litigation expenses                   4,705      333      147      11
  Gain from settlement of
   litigation                        (43,500)       --  (1,363)      --
  Impairment of long-term
   investments                          6,401       --      201      --

  Foreign exchange loss (gain), net     (597)   21,193     (19)     729
                                     --------  -------  -------  ------


  Non-GAAP net income                  86,606  455,205    2,714  15,653
                                     ========  =======  =======  ======

  Weighted avg. ADS (non-GAAP):

    Basic                              28,841   30,535   28,841  30,535
                                     ========  =======  =======  ======

    Diluted                            31,705   32,870   31,705  32,870
                                     ========  =======  =======  ======


  Non-GAAP basic earnings per ADS       $3.00   $14.91    $0.09   $0.51
                                     ========  =======  =======  ======

  Non-GAAP diluted earnings per ADS     $2.73   $13.85    $0.09   $0.48
                                     ========  =======  =======  ======

  Non-GAAP gross margin                 47.4%    46.6%    47.4%   46.6%
  Non-GAAP operating margin              4.6%    18.5%     4.6%   18.5%


  ---------------------------------------------------------------------

                             Silicon Motion Technology Corporation
                                   Consolidated Balance Sheet
                                   (In thousands, unaudited)


                                                                     Jun.     Mar.     Jun.
                                    Jun. 30,   Mar. 31,   Jun. 30,    30,      31,      30,
                                      2010       2011       2011     2010     2011     2011
                                     (NT$)      (NT$)      (NT$)      (US$)    (US$)    (US$)
                                   ---------  ---------  ---------  -------  -------  -------
  Cash and cash equivalents        2,058,362  1,660,280  1,591,905   64,183   56,319   55,064
  Short-term investments              11,175     38,097         --      348    1,292       --
  Accounts receivable (net)          625,707    837,402    901,696   19,511   28,406   31,190
  Inventories                        377,340    745,174    994,416   11,766   25,277   34,397
  Refundable deposits - current      138,800    448,482    439,145    4,328   15,213   15,190
  Deferred income tax assets
   (net)                               4,417    115,003    114,048      138    3,901    3,945
  Prepaid expenses and other
   current assets                    132,503     72,672    111,853    4,132    2,465    3,869
                                   ---------  ---------  ---------  -------  -------  -------
  Total current assets             3,348,304  3,917,110  4,153,063  104,406  132,873  143,655

  Long-term investments                6,271      5,400      5,400      196      183      187
  Property and equipment (net)       760,698    742,722    743,636   23,720   25,194   25,722
  Goodwill and intangible
   assets(net)                     1,226,527  1,174,579  1,168,807   38,245   39,843   40,429

  Other assets                       249,776    170,839    170,283    7,788    5,796    5,890
                                   ---------  ---------  ---------  -------  -------  -------

  Total assets                     5,591,576  6,010,650  6,241,189  174,355  203,889  215,883
                                   =========  =========  =========  =======  =======  =======

  Accounts payable                   443,066    539,998    484,177   13,816   18,317   16,748
  Income tax payable                  22,925     38,965     30,285      715    1,322    1,048
  Accrued expenses and other
   current liabilities               419,659    407,840    453,084   13,085   13,835   15,672
                                   ---------  ---------  ---------  -------  -------  -------
  Total current liabilities          885,650    986,803    967,546   27,616   33,474   33,468

  Other liabilities                  100,324     77,600     80,581    3,128    2,632    2,787
                                   ---------  ---------  ---------  -------  -------  -------
  Total liabilities                  985,974  1,064,403  1,048,127   30,744   36,106   36,255

  Shareholders' equity             4,605,602  4,946,247  5,193,062  143,611  167,783  179,628
                                   ---------  ---------  ---------  -------  -------  -------
  Total liabilities &
   shareholders' equity            5,591,576  6,010,650  6,241,189  174,355  203,889  215,883
                                   =========  =========  =========  =======  =======  =======

  Note: The Company maintains its accounts and expresses its financial statements in New
   Taiwan dollars. For
  convenience only, U.S. dollar amounts presented in the income statement have been
   translated from New Taiwan
  dollars, using an average exchange rate of NT$31.87 to US$1 for 2Q10, NT$29.31 to US$1 for
   1Q11, and NT$28.85 to
  US$1 for 2Q11 based on the average of the historical exchange rates reported by the Oanda
   Corporation.
  Amounts from the balance sheet have been translated using the ending exchange rate for the
   period. The
  exchange rate was NT$32.07 to US$1 at the end of 2Q10, NT$29.48 to US$1 at the end of 1Q11
   and NT$28.91 to US$1
  at the end of 2Q11.

About Silicon Motion:

We are a fabless semiconductor company that designs, develops and markets high performance, low-power semiconductor solutions for the multimedia consumer electronics market. We have three major product lines: mobile storage, mobile communications, and multimedia SoCs. Our mobile storage business is composed of microcontrollers used in NAND flash memory storage products such as flash memory cards, USB flash drives, SSDs, and embedded flash applications. Our mobile communications business is composed primarily of mobile TV IC solutions and handset transceivers. Our multimedia SoCs business is composed primarily of embedded graphics processors.

Forward-Looking Statements:

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation, statements about Silicon Motion's expected third quarter 2011 revenue, gross margin and operating expenses, all of which reflect management's estimates based on information available at this time of this press release. While Silicon Motion believes these estimates to be meaningful, these amounts could differ materially from actual reported amounts for the second quarter. Forward-looking statements also include, without limitation, statements regarding trends in the multimedia consumer electronics market and our future results of operations, financial condition and business prospects. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue," or the negative of these terms or other comparable terminology. Although such statements are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on them. These statements involve risks and uncertainties, and actual market trends or our actual results of operations, financial condition or business prospects may differ materially from those expressed or implied in these forward looking statements for a variety of reasons. Potential risks and uncertainties include, but are not limited to the unpredictable volume and timing of customer orders, which are not fixed by contract but vary on a purchase order basis; the loss of one or more key customers or the significant reduction, postponement, rescheduling or cancellation of orders from these customers; general economic conditions or conditions in the semiconductor or consumer electronics markets; decreases in the overall average selling prices of our products; changes in the relative sales mix of our products; changes in our cost of finished goods; the availability, pricing, and timeliness of delivery of other components and raw materials used in our customers' products; our customers' sales outlook, purchasing patterns, and inventory adjustments based on consumer demands and general economic conditions, including the general global economic slowdown as it effects the Company, its customers and consumers; our ability to successfully develop, introduce, and sell new or enhanced products in a timely manner; and the timing of new product announcements or introductions by us or by our competitors. For additional discussion of these risks and uncertainties and other factors, please see the documents we file from time to time with the Securities and Exchange Commission, including our Annual Report on Form 20-F filed on June 30, 2011. We assume no obligation to update any forward-looking statements, which apply only as of the date of this press release.

CONTACT: Investor Contact:
Jason Tsai
Director of IR and Strategy
Tel: +1 408 519 7259
Fax: +1 408 519 7101
E-mail: jtsai@siliconmotion.com
Investor Contact:
Selina Hsieh
Investor Relations
Tel: +886 3 552 6888 x2311
Fax: +886 3 560 0336
E-mail: ir@siliconmotion.com
Media Contact:
Sara Hsu
Project Manager
Tel: +886 2 2219 6688 x3509
Fax: +886 2 2219 6868
E-mail: sara.hsu@siliconmotion.com


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