Pixelworks Reports Fourth Quarter and Fiscal Year 2018 Financial

Pixelworks Reports Fourth Quarter and Fiscal Year 2018 Financial Results


PIXELWORKS, INC. RECONCILIATION OF GAAP AND NON-GAAP GROSS PROFIT MARGIN * (Figures may not sum due to rounding) (Unaudited)

	Three Months Ended						Twelve Months Ended
	December 31,		September 30,		December 31,		December 31,		December 31,
	2018		2018		2017		2018		2017
Reconciliation of GAAP and non-GAAP gross profit margin
GAAP gross profit margin	53.1	%	52.3	%	49.7	%	51.6	%	51.8	%
Amortization of acquired intangible assets	1.5	%	1.4	%	1.6	%	1.6	%	0.6	%
Stock-based compensation	0.5	%	0.4	%	0.3	%	0.4	%	0.3	%
Inventory step-up and backlog amortization	0.1	%	0.5	%	5.1	%	0.6	%	2.4	%
Deferred revenue fair value adjustment	—	%	0.2	%	0.4	%	0.1	%	0.1	%
Total reconciling items included in gross profit	2.0	%	2.5	%	7.4	%	2.7	%	3.5	%
Non-GAAP gross profit margin	55.1	%	54.7	%	56.9	%	54.2	%	55.2	%

*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.


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

	Three Months Ended									Twelve Months Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2018			2018			2017			2018			2017
Reconciliation of GAAP net income (loss) and adjusted EBITDA
GAAP net income (loss)	$	(1,641	)	$	231		$	(3,552	)	$	(4,621	)	$	(4,173	)
Stock-based compensation		1,638			1,458			1,147			5,683			4,243
Restructuring		429			414			439			1,464			1,920
Amortization of acquired intangible assets		399			399			399			1,596			665
Tax effect of non-GAAP adjustments		237			(181	)		(157	)		—			—
Inventory step-up and backlog amortization		17			97			949			475			1,965
Deferred revenue fair value adjustment		—			52			68			52			93
Fair value adjustment on convertible debt conversion option		—			—			621			—			743
Benefit related to tax reform		—			—			(343	)		—			(343	)
Discount accretion on convertible debt fair value		—			—			124			69			196
Acquisition and integration		—			—			(45	)		—			2,460
Gain on debt extinguishment		—			—			(29	)		(1,272	)		(29	)
Non-GAAP net income (loss)	$	1,079		$	2,470		$	(379	)	$	3,446		$	7,740
EBITDA adjustments:
Depreciation and amortization	$	873		$	933		$	863		$	3,555		$	3,577
Interest expense and other, net		82			112			203			556			737
Non-GAAP provision (benefit) for income taxes		(185	)		269			91			448			836
Adjusted EBITDA	$	1,849		$	3,784		$	778		$	8,005		$	12,890

*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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