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SAN JOSE, Calif. (February 14,
2007) Techwell, Inc., (NASDAQ: TWLL) a leading provider
of mixed signal integrated circuits for multiple video applications
in the consumer, security surveillance and automotive markets,
today announced financial results for the fourth quarter
ended December 31, 2006.
Fourth Quarter and Full Year 2006 Highlights:
 Recorded quarterly revenue growth of approximately 48 percent
year-over-year in the fourth quarter
Achieved fourth quarter net income of $4.9 million, representing
$0.22 earnings per diluted share on a GAAP basis
Recorded full year revenue growth of nearly 49 percent in
2006 over 2005
Achieved full year net income of $13.2 million, representing
$0.64 earnings per diluted share on a GAAP basis
Net revenue for the fourth quarter of 2006 was $16.0 million
compared to net revenue of $15.1 million in the preceding
quarter and $10.8 million in the fourth quarter of 2005.
Net revenue in the fourth quarter for each of the Company’s
product lines consisted of $9.7 million in security surveillance,
$2.6 million in LCD display, $3.4 million in video decoders
and $268,000 in other revenue. Gross margin for the fourth
quarter of 2006 was 57 percent, compared to gross margin
of 58 percent in the preceding quarter and 55 percent in
the same period a year ago. Operating expenses for the quarter
totaled $4.8 million, or 30 percent of total revenue. This
compares to operating expenses of $4.4 million, or 29 percent
of revenue, in the preceding quarter and $4.2 million, or
39 percent of revenue, in the same period a year ago.
Net income for the fourth quarter of 2006 totaled $4.9
million, or $0.22 per diluted share, which included pre-tax
stock-based compensation expenses under Statement of Financial
Accounting Standard No. 123R (SFAS 123R) of $479,000, before
the tax effect of $8,000. This compares to net income in
the third quarter of 2006 of $4.5 million, or $0.21 per
diluted share, and net income of $1.8 million, or $0.09
per diluted share, in the fourth quarter of 2005. Shares
used to compute GAAP net income per diluted share for the
fourth quarter of 2006 totaled approximately 22.2 million
shares. Non-GAAP net income for the current quarter, which
excludes stock-based compensation charges, was $5.3 million,
or $0.24 per diluted share.
Techwell reports both GAAP and non-GAAP metrics to measure
its financial results. The non-GAAP metrics used are: net
income, excluding stock-based compensation and net income
per diluted share, excluding stock-based compensation. The
most directly comparable GAAP measures are net income and
net income per diluted share, respectively. Management believes
that, in addition to GAAP metrics, net income, excluding
stock-based compensation and net income per diluted share,
excluding stock-based compensation assist the Company in
evaluating its performance. In addition, management believes
these non-GAAP metrics are useful to investors because they
allow for a better comparison of financial results in the
current period to those in prior periods that utilized different
accounting principles in determining stock-based compensation
expense as a result of the Company’s adoption in 2006
of SFAS 123R to account for stock-based compensation. However,
non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. The calculations for these
non-GAAP metrics are in the alternative measurement reconciliation
table below.
Cash and short and long term investments increased by $4.8
million in the quarter resulting in cash and cash equivalents
and short and long-term investments of approximately $54.5
million as of December 31, 2006, compared to approximately
$49.7 million as of September 30, 2006.
Fiscal 2006 Results:
For the full year 2006 net revenue was $53.7 million, compared
to net revenue of $36.0 million in 2005.
Net revenue in 2006 for each of the Company’s product
lines consisted of $27.7 million in security surveillance,
$6.9 million in LCD display, $18.2 million in video decoders
and $932,000 in other revenue. Gross margin for 2006 was
57 percent, compared to gross margin of 52 percent in 2005.
Operating expenses for the full year totaled $17.9 million,
or 33 percent of total revenue as compared to $14.4 million,
or 40 percent of revenue, in 2005.
Net income for 2006 totaled $13.2 million, or $0.64 per
diluted share, which included pre-tax stock-based compensation
expenses under Statement of Financial Accounting Standard
No. 123R (SFAS 123R) of $2.3 million, before the tax effect
of $68,000. This compares to net income in 2005 of $4.5
million, or $0.25 per diluted share. Shares used to compute
GAAP net income per diluted share for 2006 was approximately
20.5 million shares. Non-GAAP net income for the year, which
excludes stock-based compensation charges, was $15.4 million,
or $0.75 per diluted share.
Cash and short and long term investments increased by $37.7
million during the year resulting in cash and cash equivalents
and short and long-term investments of approximately $54.5
million as of December 31, 2006, compared to approximately
$16.8 million as of December 31, 2005. The increase includes
proceeds of $18 million realized through the Company’s
initial public offering in June 2006.
“This year was one of great success for Techwell.
Highlighted by our successful 2006 initial public offering,
we reported strong revenue and earnings growth throughout
the year, and I am happy to report that during 2006, we
met all of our financial objectives,” stated Hiro Kozato,
Founder and Chief Executive Officer of Techwell, Inc. “In
addition to delivering solid revenue growth, we successfully
executed on our strategy to introduce new and innovative
products throughout the year. We expect to build upon the
momentum established in 2006 and achieve another strong
year in 2007.”
Mr. Kozato further commented, “Our security surveillance
revenue has shown very strong growth as we continue to secure
more silicon content in security surveillance systems. Within
automotive, earlier design wins are now beginning to contribute
meaningful revenue as the number of LCD panels that are
designed into cars increases. Overall, we anticipate expected
seasonality in the first quarter but demand remains strong
in the markets we serve. We look forward to 2007, and appreciate
the ongoing support of our customers as well as our shareholders.”
Fourth Quarter 2006 Financial Results Conference Call and
Web Cast
Techwell, Inc. will host a conference call with the financial
community today February 14, 2007 at 2:15 P.M. Pacific Time
(PT), 5:15 P.M. Eastern Time (ET). The conference call will
be broadcast live on the Company’s Investor Relations
website at http://www.techwellinc.com. Those parties interested
in participating via telephone should dial 866-543-6407
with the conference ID number 57714940. International participants
should dial 617-213-8898 and provide the same pass code
at the prompt. A telephone replay of the call will be available
approximately two hours after the end of the call and will
be available until midnight (ET) Thursday, February 21,
2007. The replay number is 888-286-8010 with a pass code
of 97601742. International callers should dial 617-901-6888
and enter the same pass code at the prompt. An archived
version of the Web cast will also be available on the Company’s
web site.
Forward-Looking Statements
This press release and related conference call contain
forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements
may be identified by terminology such as may, will, could,
should, anticipate and expect and the negative of these
terms or other similar expressions. These are statements
that relate to future events and include, but are not limited
to the continued growth of the security surveillance market,
Techwell’s product development progress and anticipated
development schedule, continued growth in 2007, increases
in LCD Display products designed into automobiles, expected
seasonality, continued strength in margins and statements
related to anticipated revenues and operating expenses for
2007 and the first quarter of 2007. Forward-looking statements
are subject to risks and uncertainties that could cause
actual results to differ materially from those discussed
in these forward-looking statements. These risks and uncertainties
include, but are not limited to: Techwell’s dependence
on increased demand for digital video applications for the
consumer, security surveillance and automotive markets,
the potential decline in average selling prices for Techwell’s
products, competition, dependence on key and highly skilled
personnel, the ability to develop new products and enhance
existing products, as well as other risks detailed from
time to time in its SEC filings, including those described
in Techwell’s Quarterly Report on Form 10-Q filed with
the Securities and Exchange Commission on November 13, 2006.
Statements included in this release are based upon information
known to Techwell as of the date of this release, and Techwell
assumes no obligation to update information contained in
this press release.
About Techwell
Techwell is a fabless semiconductor company that designs,
markets and sells mixed signal integrated circuits for multiple
video applications in the consumer, security surveillance
and automotive markets. Techwell designs both general purpose
and application specific products that enable the conversion
of analog video signals to digital form and perform advanced
digital video processing to facilitate the display, storage
and transport of video content. Headquartered in San Jose,
CA, Techwell currently has over 90 employees in the U.S.,
Korea, Taiwan, China and Japan. Please visit www.techwellinc.com
for more information.
Techwell, Inc. and the Techwell, Inc. logo are trademarks
of Techwell, Inc. All other trademarks are the property
of their respective owners.
TECHWELL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 2006 2005
----------- ----------- ----------- ---------
(unaudited) (unaudited) (unaudited) (audited)
Revenues $16,010 $10,792 $53,712 $36,051
Cost of Revenues 6,865 4,860 22,977 17,304
----------- ----------- ----------- ---------
----------- ----------- ------------ ---------
Gross Profit 9,145 5,932 30,735 18,747
----------- ----------- ------------ ---------
Operating Expenses
Research and
development 2,199 2,566 9,183 8,684
Selling, general and
administrative 2,638 1,683 8,702 5,730
----------- ----------- ----------- ---------
Total operating
expenses 4,837 4,249 17,885 14,414
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Income from operations 4,308 1,683 12,850 4,333
Interest income 646 120 1,670 368
----------- ----------- ----------- ---------
Income before income
taxes 4,954 1,803 14,520 4,701
Provision for income
taxes 104 40 1,298 160
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Net Income $4,850 $1,763 $13,222 $4,541
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Net income per share
Basic $0.24 $0.41 $1.04 $1.14
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Diluted $0.22 $0.09 $0.64 $0.25
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Shares used in
computing net income
per share
Basic 20,187 4,281 12,772 3,993
Diluted 22,206 18,772 20,538 18,434
TECHWELL, INC.
RECONCILIATION OF GAAP NET INCOME
TO NON-GAAP NET INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
2006 2005 2006 2005
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GAAP net income $4,850 $1,763 $13,222 $4,541
Stock-based compensation:
Cost of revenues 45 5 117 31
Research and development 191 112 1,100 427
Selling, general and administrative 243 177 1,050 442
-------- ------- -------- -------
Total stock-based compensation
expenses 479 294 2,267 900
-------- ---------------- -------
Tax effect on stock-based
compensation (8) - (68) -
Non-GAAP net income $5,321 $2,057 $15,421 $5,441
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Non-GAAP net income per share
Basic $0.26 $0.48 $1.21 $1.36
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Diluted $0.24 $0.11 $0.75 $0.30
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Shares used in computing
Non-GAAP net income per share
Basic 20,187 4,281 12,772 3,993
Diluted 22,206 18,772 20,538 18,434
Non-GAAP Financial Information
In addition to disclosing financial results calculated in accordance
with U. S. generally accepted accounting principles (GAAP), the
operating results presented contain non-GAAP financial measures that
exclude the income statement effects of stock-based compensation,
including the effect of our adoption of SFAS 123R.
We exclude stock-based compensation to calculate non-GAAP net income
and non-GAAP earnings per share for the fourth quarter and twelve
months of 2006 to allow for a better comparison of results in the
current period to those in prior periods that did not include SFAS
123R stock-based compensation.
TECHWELL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
2006 2005
----------- -----------
(unaudited) (audited)
Assets
Current Assets
Cash and cash equivalents $13,201 $15,982
Short-term investments 36,364 804
Accounts receivable 2,765 3,052
Inventory 4,584 3,113
Prepaid expenses and other assets 1,406 2,224
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Total Current Assets 58,320 25,175
Property and equipment - net 625 434
Long term-investments 4,963 -
Other assets 85 35
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Total $63,993 $25,644
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Liabilities, Redeemable Convertible
Preferred Stock
and Stockholders' Equity (Deficit):
Current Liabilities:
Accounts payable $3,503 $1,336
Accrued expenses 3,344 2,687
----------- ---------
Total Current Liabilities 6,847 4,023
Deferred rent - 54
----------- ---------
Total Liabilities 6,847 4,077
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Redeemable Convertible Preferred Stock - 40,777
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Stockholders' Equity (Deficit):
Common stock 21 4
Additional paid in capital 67,734 5,355
Deferred stock-based compensation (546) (1,323)
Accumulated other comprehensive loss (39) -
Accumulated deficit (10,024) (23,246)
Net income -
----------- ---------
Total Stockholders' Equity (Deficit) 57,146 (19,210)
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Total $63,993 $25,644
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