Plans for Wholly Owned Subsidiaries for 60GHz Wireless and Services Businesses

SUNNYVALE, Calif. — (BUSINESS WIRE) — October 30, 2014 — Silicon Image, Inc. (NASDAQ: SIMG), a leading provider of multimedia connectivity solutions and services, today reported financial results for its third quarter ended September 30, 2014.

Revenue for the third quarter of 2014 was $70.3 million, compared with $59.5 million in the second quarter of 2014 and $79.3 million in the third quarter of 2013.

“In the quarter, we saw continued strength in our CE business with year-to-date performance up 38 percent over the same period last year. We saw a slight recovery in our Mobile business; however, we continue to see weakness in the mobile market as smartphone sales become more competitive among top tier and mid-range vendors,” said Camillo Martino, chief executive officer of Silicon Image, Inc. “Today we are also announcing plans to create two new subsidiaries to help unlock the value of some of our core assets.”

GAAP net income for the third quarter of 2014 was $10.3 million, or $0.13 per diluted share, compared with a GAAP net income of $1.1 million, or $0.01 per diluted share, for the second quarter of 2014 and a GAAP net income of $9.0 million, or $0.11 per diluted share, for the third quarter of 2013.

Non-GAAP net income for the third quarter of 2014 was $8.8 million, or $0.11 per diluted share, compared with a non-GAAP net income of $3.4 million, or $0.04 per diluted share, for the second quarter of 2014, and a non-GAAP net income of $9.2 million, or $0.12 per diluted share, for the third quarter of 2013. Non-GAAP net income for these periods excludes stock-based compensation expense, amortization of intangible assets, business acquisition related expenses, gain from business acquisition, gain from sale of a privately held company investment, other income from prepaid royalty settlement, other than temporary impairment of a privately-held company investment, proceeds from a legal settlement, recovery related to previously written-down inventory, restructuring charges and impairment of intangible assets.

A reconciliation of GAAP and non-GAAP items is provided in a table following the Condensed Consolidated Statements of Operations.

Wholly Owned Subsidiaries

Silicon Image today also announces plans to create two wholly owned subsidiaries: one to consolidate all of its 60GHz wireless assets and IP, and the other for its services business. These actions will better facilitate strategic partnerships with 3^rd parties, more rapidly grow the respective eco-systems, and provide more transparency starting in 2015.

Fourth Quarter Outlook

The following are Silicon Image’s financial performance estimates for the fourth quarter of 2014:

Use of Non-GAAP Financial Information

Silicon Image presents and discusses gross margin, operating expenses, net income (loss) and basic and diluted net income (loss) per share in accordance with Generally Accepted Accounting Principles (GAAP), and on a non-GAAP basis for informational purposes only. Silicon Image believes that non-GAAP reporting, giving effect to the adjustments shown in the attached reconciliation, provides meaningful information and therefore uses non-GAAP reporting to supplement its GAAP reporting and internally in evaluating operations, managing and monitoring performance, and determining bonus compensation. Further, Silicon Image uses non-GAAP information as certain non-cash charges such as stock-based compensation expense, amortization of intangible assets, gain from business acquisition, other income from prepaid royalty settlement, other than temporary impairment of a privately-held company investment, recovery related to previously written-down inventory, restructuring charges and impairment of intangible assets which do not reflect the cash operating results of the business. Silicon image also excludes certain items that are unusual and one-time events such as business acquisition related expenses, gain from sale of a privately held company investment and proceeds from a legal settlement. Silicon Image has chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of its operating results and to illustrate the results of operations giving effect to such non-GAAP adjustments. The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.