Silicom Reports Financial Results for Q3 and 1st Nine Months of 2008

Mon Oct 27, 8:30 AM

KFAR SAVA, Israel--(BUSINESS WIRE)--Silicom Ltd. (NASDAQ and TASE: SILC) today reported its financial results for the third quarter and nine months ended September 30, 2008.

Revenues for the third quarter of 2008 were $6.1 million, a 19% increase compared sequentially with revenues of $5.2 million recorded in the second quarter of 2008 and an 8% decrease compared year-over-year with revenues of $6.6 million recorded in the third quarter of 2007. Net income for the third quarter of 2008 was $0.9 million, or $0.14 per share (basic and diluted), a 192% increase compared sequentially with $0.3 million, or $0.05 per share (basic and diluted) for the second quarter of 2008, and a 43% decrease compared year-over-year with net income of $1.6 million, or $0.25 per share (basic and diluted), for the third quarter of 2007.

Revenues for the first nine months of 2008 were $19.0 million compared with $19.3 million for the parallel period of 2007. Net income for the nine-month period was $3.0 million, or $0.44 per diluted share ($0.45 per basic share), compared with $4.5 million, or $0.72 per diluted share ($0.75 per basic share), for the first nine months of 2007.

Commenting on the results, Shaike Orbach, President and CEO, said, “We are pleased to report significant sequential growth in our revenues and profits for the third quarter – especially given the challenges inherent in today’s volatile macro market environment. This success derives from the on-track overall performance of our business, resulting in new revenues that have mitigated the effect of the appliance configuration change implemented recently by one of our significant customers. We are especially encouraged by two positive developments:

  • The increased purchases of our Fortune 100 WAN Optimization customer. Throughout the quarter, this major manufacturer increased its purchases of Silicom products in preparation for rolling out its next-generation WAN Optimization appliances, and has ‘designed in’ our BYPASS card as a standard component in one of them.
  • The steady addition of new business with new and current customers. We continue to make headway in our sales efforts, through which we continue to secure new customers and increase the range of products that we sell to existing customers. We have recently added an important new security appliance customer who we believe has the potential to become a significant customer in the future.

“These developments have enabled us to continue building our business despite the difficult market environment, making us optimistic regarding our long-term prospects.”

Conference Call Details

The Company will host a conference call to discuss these results today, Monday, October 27th, at:

9:00 a.m. Eastern Daylight Time

6:00 a.m. Pacific Daylight Time

15:00 Israel Time

To participate, please call one of the following teleconferencing numbers. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, try the international dial-in number.

US: 1 866 345 5855

UK: 0 800 404 8418

ISRAEL: 03 918 0650

INTERNATIONAL: +972 3 918 0650

For those unable to listen to the live call, a replay of the call will be available for three months from the day after the call under the investor relations section of Silicom’s website, at: www.silicom.co.il

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About Silicom

Silicom Ltd. is an industry-leading provider of high-performance server/appliances networking solutions. The Company's flagship products include a variety of multi-port Gigabit Ethernet, copper and fiber-optic, server adapters and innovative BYPASS adapters designed to increase throughput and availability of server-based systems, WAN Optimization and security appliances and other mission-critical gateway applications. For more information, please visit: www.silicom.co.il.

Statements in this press release which are not historical data are forward-looking statements which involve known and unknown risks, uncertainties, or other factors not under the Company's control, which may cause actual results, performance, or achievements of the Company to be materially different from the results, performance, or other expectations implied by these forward-looking statements. These factors include, but are not limited to, those detailed in the Company's periodic filings with the Securities and Exchange Commission. The Company disclaims any duty to update such statements.

-- FINANCIAL TABLES FOLLOW --

Silicom Ltd. Consolidated

Statements of Income

(US$ thousands, except for share and per share data)

Three-month period   Nine-month period
ended September 30, ended September 30,
2008   2007 2008   2007
Sales $6,141 $6,640 $19,016 $19,306
Cost of sales 3,723 3,990 11,364 11,624
Gross profit 2,418 2,650 7,652 7,682
 
Research and development costs 791 524 2,475 1,587
Selling and marketing expenses 568 365 1,741 1,147
General and administrative expenses 360 316 1,151 858
Total operating expenses 1,719 1,205 5,367 3,592
 
Operating income 699 1,445 2,285 4,090
 
Financial income, net 295 297 804 649
Income before income taxes 994 1,742 3,089 4,739
Income tax expense 50 96 86 279
Net income $944 $1,646 $3,003 $4,460
 
 

Basic income per ordinary share

$0.14

$0.25

$0.45

$0.75

 
Weighted average number of ordinary shares used to compute basic income per share (in thousands)

 

6,694

 

6,495

 

6,682

 

5,976

 

Diluted income per ordinary share

$0.14

$0.25

$0.44

$0.72

 
Weighted average number of ordinary shares used to compute diluted income per share (in thousands)

 

6,734

 

6,707

 

6,764

 

6,174

Silicom Ltd. Consolidated Balance Sheets

(US$ thousands)

September 30,
2008

 

December 31,
2007

Assets

 
Current assets
Cash and cash equivalents $10,080 $14,216
Marketable securities 8,150 3,516
Accounts receivables: Trade, net 5,131 6,545
Accounts receivables: Other 352 338
Inventories 4,997 4,078
Deferred tax assets 345 73
Total current assets 29,055 28,766
 
Marketable securities 19,217 15,210
Assets held for employees’ severance benefits

1,171

952

Property, plant and equipment, net 875 675
Other assets, net - 39
 
Total assets $50,318 $45,642
 
 

September 30,
2008

December 31,
2007

 

Liabilities and shareholder's equity

 
Current liabilities
Trade accounts payable $2,363 $2,997
Other accounts payable and accrued expenses

2,316

1,715

Total current liabilities 4,679 4,712
 
Liability for employees’ severance benefits

2,110

1,596

 
Total liabilities 6,789 6, 308
 
Shareholders' equity
Ordinary shares and additional paid-in capital

32,939

31,747

Treasury shares (38) (38)
Retained earnings 10,628 7,625
Total Shareholders' equity 43,529 39,334
Total liabilities and shareholders equity

$50,318

$45,642

Company Contact:
Eran Gilad, CFO
Silicom Ltd.
Tel: +972-9-764-4555
E-mail: erang@silicom.co.il
or
Investor relations contact:
Kenny Green / Ehud Helft
GK Investor Relations
Tel: 1-646-201-9246
E-mail : info@gkir.com