This release contains forward-looking statements, including, without limitation, the statements in Bruce Walicek's quote with respect to the Company’s growth opportunities, product shipments, product demand, customer engagements, and the Company’s potential and position for the future, 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. These statements may be identified by use of terms such as “begin,” “continue,” “will,” “believe,” and similar terms or the negative of such terms. All statements other than statements of historical fact are forward-looking statements for purposes of this release, including any projections of revenue or other financial items or any statements regarding the plans and objectives of management for future operations. Such statements are based on management's current expectations, estimates and projections about the Company's business. These statements are not guarantees of future performance and involve numerous risks, uncertainties and assumptions that are difficult to predict. Actual results could vary materially from those contained in forward looking statements due to many factors, including, without limitation: our ability to deliver new products in a timely fashion; our new product yield rates; changes in estimated product costs; product mix; supply of products from third-party foundries; failure or difficulty in achieving design wins; timely customer transition to new product designs; competitive factors, such as rival chip architectures, introduction or traction by competing designs, or pricing pressures; risks related to licensing our intellectual property; the success of our products in expanded markets; current global economic challenges; levels of inventory at distributors and customers; changes in the digital display and projection markets; changes in customer ordering patterns or lead times; seasonality in the consumer electronics market; our efforts to achieve profitability from operations; insufficient, excess or obsolete inventory and variations in inventory valuation; the outcome of any litigation related to our intellectual property rights; our limited financial resources and our ability to attract and retain key personnel. More information regarding potential factors that could affect the Company's financial results and could cause actual results to differ materially is included from time to time in the Company's Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the year ended December 31, 2014 as well as subsequent SEC filings.

The forward-looking statements contained in this release speak as of the date of this release, and we do not undertake any obligation to update any such statements, whether as a result of new information, future events or otherwise.

PIXELWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
			Three Months Ended															Six Months Ended
			June 30,					March 31,					June 30,					June 30,					June 30,
				2015					2015					2014					2015					2014
Revenue, net			$	15,078				$	14,392				$	15,166				$	29,470				$	28,707
Cost of revenue (1)				7,844					7,425					7,505					15,269					13,051
Gross profit				7,234					6,967					7,661					14,201					15,656
Operating expenses:
Research and development (2)				6,105					6,318					5,887					12,423					12,272
Selling, general and administrative (3)				3,584					3,887					3,709					7,471					7,758
Total operating expenses				9,689					10,205					9,596					19,894					20,030
Loss from operations				(2,455	)				(3,238	)				(1,935	)				(5,693	)				(4,374	)
Interest expense and other, net				(105	)				(107	)				(130	)				(212	)				(252	)
Loss before income taxes				(2,560	)				(3,345	)				(2,065	)				(5,905	)				(4,626	)
Provision for income taxes				236					19					317					255					263
Net loss			$	(2,796	)			$	(3,364	)			$	(2,382	)			$	(6,160	)			$	(4,889	)
Net loss per share - basic and diluted			$	(0.12	)			$	(0.14	)			$	(0.11	)				(0.26	)				(0.22	)
Weighted average shares outstanding - basic and diluted				23,539					23,328					22,667					23,434					22,437
——————
(1) Includes:
Stock-based compensation			$	42				$	53				$	41				$	95				$	130
Additional amortization of non-cancelable prepaid royalty				—					—					35					—					91
(2) Includes stock-based compensation				429					489					413					918					1,239
(3) Includes stock-based compensation				422					536					487					958					1,275

PIXELWORKS, INC.
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL INFORMATION *
(In thousands, except per share data)
(Unaudited)
			Three Months Ended															Six Months Ended
			June 30,					March 31,					June 30,					June 30,					June 30,
				2015					2015					2014					2015					2014
Reconciliation of GAAP and non-GAAP gross profit
GAAP gross profit			$	7,234				$	6,967				$	7,661				$	14,201				$	15,656
Stock-based compensation				42					53					41					95					130
Additional amortization of non-cancelable prepaid royalty				—					—					35					—					91
Total reconciling items included in cost of revenue				42					53					76					95					221
Non-GAAP gross profit			$	7,276				$	7,020				$	7,737				$	14,296				$	15,877
Non-GAAP gross profit margin				48.3	%				48.8	%				51.0	%				48.5	%				55.3	%
Reconciliation of GAAP and non-GAAP operating expenses
GAAP operating expenses			$	9,689				$	10,205				$	9,596				$	19,894				$	20,030
Reconciling item included in research and development:
Stock-based compensation				429					489					413					918					1,239
Reconciling item included in selling, general and administrative:
Stock-based compensation				422					536					487					958					1,275
Total reconciling items included in operating expenses				851					1,025					900					1,876					2,514
Non-GAAP operating expenses			$	8,838				$	9,180				$	8,696				$	18,018				$	17,516
Reconciliation of GAAP and non-GAAP net loss
GAAP net loss			$	(2,796	)			$	(3,364	)			$	(2,382	)			$	(6,160	)			$	(4,889	)
Reconciling items included in cost of revenue				42					53					76					95					221
Reconciling items included in operating expenses				851					1,025					900					1,876					2,514
Tax effect of non-GAAP adjustments				(46	)				(20	)				(47	)				(66	)				(85	)
Non-GAAP net loss			$	(1,949	)			$	(2,306	)			$	(1,453	)			$	(4,255	)			$	(2,239	)
Non-GAAP net loss per share - basic and diluted			$	(0.08	)			$	(0.10	)			$	(0.06	)			$	(0.18	)			$	(0.10	)
Non-GAAP weighted average shares outstanding - basic and diluted				23,539					23,328					22,667					23,434					22,437

* Our non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP operating expenses, non-GAAP net loss and non-GAAP net loss per share differs from GAAP gross profit, GAAP operating expenses, GAAP net loss and GAAP net loss per share due to the exclusion of stock-based compensation expense and additional amortization of a non-cancelable prepaid royalty. Pixelworks' management believes the presentation of non-GAAP gross profit, non-GAAP operating expenses, non-GAAP net loss and non-GAAP net loss per share provides useful information to investors regarding Pixelworks' results of operations by allowing investors to better evaluate underlying cash flow dynamics. Pixelworks' management also uses each of these non-GAAP measures internally to better evaluate underlying cash flow dynamics. Pixelworks, however, cautions investors to consider these non-GAAP financial measures in addition to, and not as a substitute for, our GAAP financial measures.

PIXELWORKS, INC.
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL INFORMATION *
(In thousands)
(Unaudited)
			Three Months Ended															Six Months Ended
			June 30,					March 31,					June 30,					June 30,					June 30,
				2015					2015					2014					2015					2014
Reconciliation of GAAP net loss and adjusted EBITDA
GAAP net loss			$	(2,796	)			$	(3,364	)			$	(2,382	)			$	(6,160	)			$	(4,889	)
Stock-based compensation				893					1,078					941					1,971					2,644
Additional amortization of non-cancelable prepaid royalty				—					—					35					—					91
Tax effect of non-GAAP adjustments				(46	)				(20	)				(47	)				(66	)				(85	)
Non-GAAP net loss			$	(1,949	)			$	(2,306	)			$	(1,453	)			$	(4,255	)			$	(2,239	)
EBITDA adjustments:
Depreciation and amortization			$	1,041				$	1,098				$	1,141				$	2,139				$	2,285
Interest expense and other, net				105					107					130					212					252
Non-GAAP provision for income taxes				282					39					364					321					348
Adjusted EBITDA			$	(521	)			$	(1,062	)			$	182				$	(1,583	)			$	646

* Adjusted EBITDA differs from GAAP net loss due to the exclusion of stock-based compensation expense, additional amortization of a non-cancelable prepaid royalty, interest expense and other, net, income tax provision and depreciation and amortization. Pixelworks' management believes the presentation of adjusted EBITDA provides useful information to investors regarding Pixelworks' results of operations by allowing investors to better evaluate underlying cash flow dynamics and core operating results and are used by Pixelworks' management for these purposes. Pixelworks, however, cautions investors to consider these non-GAAP financial measures in addition to, and not as a substitute for, our GAAP financial measures.

PIXELWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
			June 30, 2015				December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents			$	14,432			$	17,926
Accounts receivable, net				4,733				4,648
Inventories				2,875				2,898
Prepaid expenses and other current assets				1,239				888
Total current assets				23,279				26,360
Property and equipment, net				7,030				6,402
Other assets, net				926				1,382
Total assets			$	31,235			$	34,144
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable			$	4,004			$	3,154
Accrued liabilities and current portion of long-term liabilities				9,185				8,539
Current portion of income taxes payable				187				197
Short-term line of credit				3,000				3,000
Total current liabilities				16,376				14,890
Long-term liabilities, net of current portion				919				1,476
Income taxes payable, net of current portion				2,079				2,094
Total liabilities				19,374				18,460
Shareholders’ equity				11,861				15,684
Total liabilities and shareholders’ equity			$	31,235			$	34,144

« Previous Page 1 | 2 | 3  Next Page »