Pixelworks Reports First Quarter 2018 Financial Results


PIXELWORKS, INC. RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL INFORMATION * (In thousands, except per share data) (Unaudited)

	Three Months Ended
	March 31,			December 31,			March 31,
	2018			2017			2017
Reconciliation of GAAP and non-GAAP gross profit
GAAP gross profit	$	7,802		$	9,160		$	12,392
Amortization of acquired intangible assets		298			298			—
Inventory step-up and backlog amortization		122			949			—
Stock-based compensation		66			64			53
Deferred revenue fair value adjustment		—			68			—
Total reconciling items included in gross profit		486			1,379			53
Non-GAAP gross profit	$	8,288		$	10,539		$	12,445
Non-GAAP gross profit margin		54.2	%		56.9	%		54.8	%

Reconciliation of GAAP and non-GAAP operating expenses
GAAP operating expenses	$	9,096		$	12,202		$	9,045
Reconciling item included in research and development:
Stock-based compensation		595			527			314
Reconciling items included in selling, general and administrative:
Stock-based compensation		539			556			422
Amortization of acquired intangible assets		101			101			—
Acquisition and integration		—			(45	)		—
Restructuring		19			439			—
Total reconciling items included in operating expenses		1,254			1,578			736
Non-GAAP operating expenses	$	7,842		$	10,624		$	8,309

Reconciliation of GAAP and non-GAAP net income (loss)
GAAP net income (loss)	$	(598	)	$	(3,552	)	$	2,821
Reconciling items included in gross profit		486			1,379			53
Reconciling items included in operating expenses		1,254			1,578			736
Reconciling items included in interest expense and other, net		(1,203	)		716			—
Tax effect of non-GAAP adjustments		99			(157	)		155
Benefit related to tax reform		—			(343	)		—
Non-GAAP net income (loss)	$	38		$	(379	)	$	3,765
Non-GAAP net income (loss) per share:
Basic	$	0.00		$	(0.01	)	$	0.13
Diluted	$	0.00		$	(0.01	)	$	0.12
Non-GAAP weighted average shares outstanding:
Basic		35,183			34,359			29,283
Diluted		37,306			34,359			31,146

*Set forth above are reconciliations of the non-GAAP financial measure to the most directly comparable GAAP financial measure. The non-GAAP financial measure disclosed by the company has limitations and should not be considered a substitute for, or superior to, the financial measure prepared in accordance with GAAP, and the reconciliations from GAAP to Non-GAAP actuals should be carefully evaluated. Please refer to "Non-GAAP Financial Measures” in this document for an explanation of the adjustments made to the comparable GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.

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