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Press Release
 
November 04, 2010
 

Silicon Motion Announces Third Quarter Results for the Period Ended September 30, 2010

Financial Highlights

  --  Net sales increased 5% quarter-over-quarter to US$34.2 million from
      US$32.5 million in 2Q10
  --  Gross margin excluding stock-based compensation increased to 48.4% from
      47.7% in 2Q10
  --  Operating expenses excluding stock-based compensation,
      acquisition-related charges, and other items increased to US$13.2
      million from US$13.0 million in 2Q10
  --  Operating margin excluding stock-based compensation, acquisition-related
      charges, and other items increased to 9.8% from 7.6% in 2Q10
  --  Diluted earnings per ADS excluding stock-based compensation,
      acquisition-related charges, net foreign exchange gain (loss), and other
      items increased to US$0.16 from US$0.09 in 2Q10


Business Highlights

  --  Increased total unit shipments 13% sequentially and 57% year-over-year
      to approximately 106 million units
  --  Increased storage controller unit shipments 14% sequentially and 62%
      year-over-year
  --  Increased our SSD and embedded controller sales by almost 30%
      sequentially and continue to account for nearly 10% of total corporate
      revenue
  --  Increased our sales of 3-bits per cell controllers by about 5%
      sequentially and continue to account for approximately 25% of our total
      controller sales
  --  Began shipping our ISDB-T mobile TV SoC for Samsung's flagship Galaxy S
      Android smartphones for Brazil
  --  More than doubled our mobile TV SoC wins for Android smartphones in
      Korea


TAIPEI, Taiwan, Nov. 4, 2010 (GLOBE NEWSWIRE) -- Silicon Motion Technology Corporation (Nasdaq:SIMO) (the "Company") today announced its third quarter of 2010 financial results. For the third quarter of 2010, net sales increased 5% quarter-over-quarter to US$34.2 million from US$32.5 million in the second quarter of 2010. Net income (GAAP) for the third quarter decreased quarter-over-quarter to US$0.3 million or US$0.01 per diluted ADS from a GAAP net income of US$2.2 million or US$0.07 per diluted ADS in the second quarter of 2010.

Net income excluding stock-based compensation, acquisition-related charges, foreign exchange gain, and other items increased in the third quarter to US$5.1 million or US$0.16 per diluted ADS compared with a net income in the second quarter of US$2.9 million or US$0.09 per diluted ADS in the second quarter of 2010.

Third Quarter 2010 Financial Review

Commenting on the results of the third quarter, Silicon Motion's President and CEO, Wallace Kou, said:

"We are pleased to report another solid quarter for Silicon Motion with revenue growing 5% sequentially and 48% from a year ago. Continuing revenue growth combined with a better gross margin and tight operating expense management resulted in operating margin expanding over 200 basis points to almost 10%.

"Our mobile storage continued to perform well as revenue grew 11% sequentially and nearly 75% compared with the third quarter of 2009. Our mobile storage volume increased by nearly 15% in the third quarter while ASPs declined by a modest 3% sequentially because of growing sales of higher value-added controllers, such as advanced 3-bits per cell TLC controllers, leading edge 20nm MLC controllers, together with our unique SSD and embedded flash controllers. During this quarter, our business was constrained by both flash industry supply and consumer demand. Flash vendors limited sales of flash to maintain market price discipline while consumer demand in many end markets was lackluster. However, we saw pockets of strength, especially relating to Android and other smartphones that have card slots. Our card controller sales were exceptionally strong, growing almost 40% quarter-over-quarter, driven by bundled sales, which grew nearly 50% quarter-over-quarter and continued to account for well over half of all our card controller sales. TLC controller sales grew about 5% sequentially, as flash vendors limited their TLC flash sales to maintain price discipline, and our TLC controller sales continued to account for about 25% of our overall controller sales. USB flash drive controller sales were very weak, declining 21% quarter-over-quarter, primarily because of weak retail device sales. We continued robust controller sales for SSD and embedded business solutions used in networking equipment and industrial applications. Sales of these SSD and embedded controllers grew almost 30% sequentially. One of our largest customers started mass production of SSDs using our controllers for several tier 1 Japanese automotive telematics OEMs.

"Our mobile communications business improved in the third quarter driven by revenue growth in both our transceiver and our mobile TV segments. Our Korea T-DMB mobile TV SoC sales grew over 40% quarter-over-quarter as our second generation SoC began initial sales ramp. Shipments of mobile TV IC solutions to China, Brazil, and other non-Korea markets grew over 10% quarter-over-quarter and continued to exceed our IC shipments in Korea, which demonstrated our success in expanding our mobile TV sales beyond our home market."

Sales

Net sales in the third quarter were US$34.2 million, an increase of 5% compared with the previous quarter. For the quarter, mobile storage products accounted for 71% of net sales, mobile communications 17% of net sales, multimedia SoCs 11% of net sales, and others 1% of net sales.

Net sales of mobile storage products, which primarily include flash memory card, USB flash drive, SSD and embedded flash controllers, increased 11% from the second quarter of 2010 to US$24.4 million this quarter.

Net sales of mobile communication products, which primarily include mobile TV IC solutions and handset transceivers, increased 11% from the second quarter of 2010 to US$5.9 million this quarter.

Net sales of multimedia SoC products, which are primarily embedded graphics processors, decreased 10% from the second quarter of 2010 to US$3.6 million this quarter.

Gross and Operating Margins

Gross margin excluding stock-based compensation increased to 48.4% from 47.7% in the second quarter. GAAP gross margin increased to 48.3% from 47.5% in the second quarter.

Operating expenses excluding stock-based compensation, acquisition-related charges, and other items were US$13.2 million, which was higher than the US$13.0 million expended in the second quarter. Research and development expenditures, excluding stock-based compensation, were US$7.9 million, which was lower than the US$8.0 million in the previous quarter. Selling and marketing expenses excluding stock-based compensation were US$2.9 million, which was unchanged compared to the previous quarter. General and administrative expenses excluding stock-based compensation and litigation expenses were US$2.3 million, an increase from the US$2.1 million reported in the previous quarter. Stock-based compensation was US$1.8 million in the third quarter, which is higher than the US$1.5 million in the second quarter. Acquisition-related charges were US$0.5 million, unchanged from the second quarter. Litigation expenses were less than US$0.1 million in the third quarter, similar to the previous quarter.

Operating margin excluding stock-based compensation, acquisition-related charges, and other items was 9.8%, an increase from 7.6% in the previous quarter. GAAP operating margin was 2.9%, a decrease from the 5.3% in the second quarter.

Other Income and Expenses

Net total other income excluding net foreign exchange gain or loss, and other items was US$0.1 million, similar to the second quarter. GAAP net total other income was a loss of US$2.4 million compared with a net total other income of US$0.2 million in the second quarter due primarily to a foreign exchange loss of US$2.4 million in the third quarter.

Earnings

Net income excluding stock-based compensation, acquisition-related charges, net foreign exchange gain or loss, and other items was US$5.1 million this quarter, an increase from US$2.9 million in the second quarter. Diluted earnings per ADS excluding stock-based compensation, acquisition-related charges, net foreign exchange gain or loss, and other items was US$0.16, an increase from US$0.09 in the previous quarter.

GAAP net income was US$0.3 million, a decrease from the net income of US$2.2 million in the second quarter of 2010. Diluted GAAP earnings per ADS were US$0.01, a decrease from US$0.07 in the previous quarter.

Balance Sheet

Cash, cash equivalents, and short-term investments decreased to US$58.4 million from US$64.5 million at the end of the second quarter of 2010 due primarily to an increase in inventory to more normalized levels.

Cash Flow

Our cash flows were as follows:

               3 months ended September 30, 2010
  -----------------------------------------------------------
                                                    (In US$
                                                    millions)
  Net income                                              0.3
  Depreciation & amortization                             1.7
  Changes in operating assets and liabilities           (9.0)

  Others                                                  0.4
                                                    ---------
    Net cash provided by (used in) operating
     activities                                         (6.6)
                                                    =========
  Acquisition of property and equipment                 (1.0)

  Others                                                (2.7)
                                                    ---------
    Net cash provided by (used in) investing
     activities                                         (3.7)
                                                    =========

  Others                                                   --
                                                    ---------
    Net cash provided by (used in) financing
     activities                                            --
                                                    =========
  Effects of changes in foreign currency exchange
   rates on cash                                          1.3
                                                    ---------

    Net decrease in cash and cash equivalents           (9.0)
                                                    =========
  Pro-forma adjustment for foreign exchange
   translation                                            1.2
                                                    ---------
    Pro-forma net decrease in cash and cash
     equivalents                                        (7.8)
                                                    =========

During the third quarter of 2010, we spent US$1.0 million in capital expenditures primarily relating to the purchase of software and design tools.

Business Outlook:

Silicon Motion's President and CEO, Wallace Kou, added:

"We've increased our revenue sequentially every quarter this year and while we would like this recovery momentum to continue in the fourth quarter, we must highlight that leading flash vendors are in the short-term tightening their sales of flash components to the market and this may affect some of our customers. The strength of our TLC, 20nm MLC, and other advanced controller technologies, as well as strong bundled card sales, especially relating to smartphones, and robust sales to the China domestic market may partially mitigate this risk. Furthermore, we expect continued recovery from our mobile TV and transceiver products in the fourth quarter."

For the fourth quarter of 2010, management expects:

  --  Revenue to be down 5% to up 5% sequentially
  --  Gross margin excluding stock-based compensation to be in the 46% to 48%
      range
  --  Operating expenses excluding stock-based compensation,
      acquisition-related charges, and other items of approximately US$12 to
      US$14 million


Conference Call & Webcast:

The Company's management team will conduct a conference call at 8:00am Eastern Time on November 4, 2010.

    (Speakers)
    Wallace Kou, President & CEO
    Riyadh Lai, CFO
    Jason Tsai, Director of Investor
     Relations and Strategy

    PRE-REGISTRATION:
    https://cossprereg.btci.com/prereg
    /key.process?key=PUBDPYMPN
    CONFERENCE CALL ACCESS NUMBERS:
    USA (Toll Free): 1 888 713 4215 begin_of_the_skype_highlighting              1 888 713 4215      end_of_the_skype_highlighting
    USA (Toll): 1 617 213 4867 begin_of_the_skype_highlighting              1 617 213 4867      end_of_the_skype_highlighting
    Taiwan (Toll Free): 0080 144 4360
    Participant Passcode: 3465 5614

    REPLAY NUMBERS (for 7 days):
    USA (Toll Free): 1 888 286 8010 begin_of_the_skype_highlighting              1 888 286 8010      end_of_the_skype_highlighting
    USA (Toll): 1 617 801 6888 begin_of_the_skype_highlighting              1 617 801 6888      end_of_the_skype_highlighting
    Participant Passcode: 6266 4136

A webcast of the call will be available on the Company's website at www.siliconmotion.com.

Discussion of Non-GAAP Financial Measures

To supplement the Company's unaudited selected financial results calculated in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), the Company discloses certain non-GAAP financial measures that exclude stock-based compensation, acquisition-related charges and other items, including non-GAAP cost of sales, non-GAAP gross profit, non-GAAP selling, general, and administrative expenses, non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per diluted ADS. These non-GAAP measures are not in accordance with or an alternative for GAAP, and may be different from non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all the amounts associated with the Company's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measure. We compensate for the limitations of our non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.

Our non-GAAP financial measures are provided to enhance the user's overall understanding of our current financial performance and our prospects for the future. Specifically, we believe the non-GAAP results provide useful information to both management and investors as these non-GAAP results exclude certain expenses, gains and losses that we believe are not indicative of our core operating results and because it is consistent with the financial models and estimates published by many analysts who follow the Company. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with our forecasts, and for benchmarking our performance externally against our competitors. Also, when evaluating potential acquisitions, we exclude the items described below from our consideration of the target's performance and valuation. Since we find these measures to be useful, we believe that our investors benefit from seeing the results from management's perspective in addition to seeing our GAAP results. We believe that these non-GAAP measures, when read in conjunction with the Company's GAAP financials, provide useful information to investors by offering:

  --  the ability to make more meaningful period-to-period comparisons of the
      Company's on-going operating results;
  --  the ability to better identify trends in the Company's underlying
      business and perform related trend analysis;
  --  a better understanding of how management plans and measures the
      Company's underlying business; and
  --  an easier way to compare the Company's operating results against analyst
      financial models and operating results of our competitors that
      supplement their GAAP results with non-GAAP financial measures.


The following are explanations of each of the adjustments that we incorporate into our non-GAAP measures, as well as the reasons for excluding each of these individual items in our reconciliation of these non-GAAP financial measures:

Stock-based compensation expense consists of non-cash charges related to the fair value of stock options and restricted stock units awarded to employees. The Company believes that the exclusion of these non-cash charges provides for more accurate comparisons of our operating results to our peer companies due to the varying available valuation methodologies, subjective assumptions and the variety of award types. In addition, the Company believes it is useful to investors to understand the specific impact of share-based compensation on its operating results.

Acquisition-related charges consist of non-cash charges that can be impacted by the timing and magnitude of our acquisitions. We consider our operating results without these charges when evaluating our ongoing performance and forecasting our earnings trends, and therefore excludes such charges when presenting non-GAAP financial measures. We believe that the assessment of our operations excluding these costs is relevant to our assessment of internal operations and comparisons to the performance of our competitors. Acquisition-related charges include the following:

  --  Amortization of intangible assets relates to the amortization of core
      technology, customer relationship, and other intangibles acquired as
      part of an acquisition.


Litigation expenses consist of legal expenses relating to intellectual property disputes, commercial claims and other types of litigation. We consider litigation to be an unusual, non-recurring activity that does not occur regularly in the normal course of our business and therefore exclude these types of charges when presenting non-GAAP financial measures.

Gain from settlement of litigation relates to the one-time payment in connection with a favorable settlement of certain litigation with ASE.

Impairment of long-term investments relates to the other-than-temporary, non-operating write down of the Company's minority stake investments. We do not consider these investments which were made before 2007 to be strategic and exclude the performance of these investments when evaluating our ongoing performance and forecasting our earnings trends, and therefore excludes losses (and gains) from the investments when presenting non-GAAP financial measures.

Foreign exchange gains and losses consists of translation gains and/or losses of non-NT$ denominated current assets and current liabilities, as well as certain other balance sheet items which result from the appreciation or depreciation of non-NT$ currencies against the NT$. We do not use financial instruments to manage the impact on our operations from changes in foreign exchange rates, and because our operations are subject to fluctuations in foreign exchange rates, we therefore exclude foreign exchange gains and losses when presenting non-GAAP financial measures.

                             Silicon Motion Technology Corporation
                               Consolidated Statements of Income
               (in thousands, except percentages and per share data, unaudited)


                                                  For the Three Months Ended
                                  ----------------------------------------------------------

                                                                    Sep.     Jun.     Sep.
                                   Sep. 30,   Jun. 30,   Sep. 30,    30,      30,      30,
                                     2009       2010       2010     2009     2010     2010
                                    (NT$)      (NT$)      (NT$)     (US$)    (US$)    (US$)
                                  ---------  ---------  ---------  -------  -------  -------
  Net Sales                         759,427  1,035,398  1,092,485   23,132   32,488   34,204

  Cost of sales                     394,448    543,452    565,147   12,015   17,052   17,694
                                  ---------  ---------  ---------  -------  -------  -------
  Gross profit                      364,979    491,946    527,338   11,117   15,436   16,510

  Operating expenses
   Research & development           279,293    280,579    285,238    8,507    8,804    8,930
   Sales & marketing                 94,200    103,705    106,210    2,869    3,254    3,325
   General & administrative          89,926     79,219     87,205    2,739    2,486    2,730
   Amortization of intangibles
    assets                           48,151     17,316     17,316    1,467      543      542
   Gain from settlement of
    litigation                           --   (43,500)        100       --  (1,365)        3
                                  ---------  ---------  ---------  -------  -------  -------
  Operating income (loss)         (146,591)     54,627     31,269  (4,465)    1,714      980

  Non-operating income (expense)

   Gain on sale of investments           22          5         25        1       --        1
   Interest income, net               4,328      2,264      1,704      132       71       53
   Impairment of long-term
    investments                     (6,472)    (4,100)         --    (197)    (129)       --
   Foreign exchange gain
    (loss),net                     (49,402)      7,077   (77,862)  (1,506)      222  (2,438)

   Others, net                            6        967       (32)       --       31      (1)
                                  ---------  ---------  ---------  -------  -------  -------

   Subtotal                        (51,518)      6,213   (76,165)  (1,570)      195  (2,385)
                                  ---------  ---------  ---------  -------  -------  -------
  Income (loss) before income
   tax                            (198,109)     60,840   (44,896)  (6,035)    1,909  (1,405)

  Income tax expense (benefit)     (44,971)   (10,835)   (55,495)  (1,370)    (340)  (1,737)
                                  ---------  ---------  ---------  -------  -------  -------

  Net income (loss)               (153,138)     71,675     10,599  (4,665)    2,249      332
                                  =========  =========  =========  =======  =======  =======

  Basic earnings (loss) per ADS     ($5.51)      $2.45      $0.36  ($0.17)    $0.08    $0.01
  Diluted earnings (loss) per
   ADS                              ($5.51)      $2.36      $0.35  ($0.17)    $0.07    $0.01

  Margin Analysis:
  Gross margin                        48.1%      47.5%      48.3%    48.1%    47.5%    48.3%
  Operating margin                  (19.3%)       5.3%       2.9%  (19.3%)     5.3%     2.9%
  Net margin                        (20.2%)       6.9%       1.0%  (20.2%)     6.9%     1.0%

  Additional Data:
  Weighted avg. ADS
   equivalents(1)                    27,775     29,224     29,226   27,775   29,224   29,226
  Diluted ADS equivalents            27,775     30,313     30,446   27,775   30,313   30,446


  ------------------------------
  (1) Assumes all outstanding ordinary shares are represented by ADSs. Each ADS represents
   four ordinary shares.

                             Silicon Motion Technology Corporation
                      Reconciliation of GAAP to Non-GAAP Operating Results
                (in thousands, except percentages and per share data, unaudited)


                                                      For the Three Months Ended
                                        ------------------------------------------------------

                                                              Sep.     Sep.     Jun.     Sep.
                                         Sep. 30,  Jun. 30,    30,      30,      30,     30,
                                           2009      2010     2010     2009     2010     2010
                                          (NT$)     (NT$)     (NT$)    (US$)    (US$)    (US$)
                                        ---------  --------  -------  -------  -------  ------
  GAAP net income (loss)                (153,138)    71,675   10,599  (4,665)    2,249     332
  Stock-based compensation:
   Cost of sales                            3,223     1,551    1,870       98       49      59
   Research and development                39,265    26,651   31,909    1,196      836     999
   Sales and marketing                     15,066    10,014   12,024      459      314     376

   General and administrative              15,700     9,388   11,140      478      295     349
                                        ---------  --------  -------  -------  -------  ------

     Total stock-based compensation        73,254    47,604   56,943    2,231    1,494   1,783
                                        ---------  --------  -------  -------  -------  ------

  Acquisition related charges:
   Amortization of intangible assets       48,151    17,316   17,316    1,467      543     542
  Litigation expenses                       1,073     2,543    1,544       32       80      48
  Gain from settlement of litigation           --  (43,500)      100       --  (1,365)       3
  Foreign exchange loss (gain),net         49,402   (7,077)   77,862    1,506    (222)   2,438

  Impairment of long-term investments       6,472     4,100       --      197      129      --
                                        ---------  --------  -------  -------  -------  ------


  Non-GAAP net income (loss)               25,214    92,661  164,364      768    2,908   5,146
                                        =========  ========  =======  =======  =======  ======

  Shares used in computing non-GAAP
  basic earnings per ADS                   27,775    29,224   29,226   27,775   29,224  29,226
                                        =========  ========  =======  =======  =======  ======
  Shares used in computing non-GAAP
  diluted earnings per ADS                 31,641    32,027   32,237   31,641   32,027  32,237
                                        =========  ========  =======  =======  =======  ======

  Non-GAAP basic earnings (loss) per
   ADS                                      $0.91     $3.17    $5.62    $0.03     0.10    0.18
                                        =========  ========  =======  =======  =======  ======
  Non-GAAP diluted earnings (loss) per
   ADS                                      $0.80     $2.89    $5.10    $0.02     0.09    0.16
                                        =========  ========  =======  =======  =======  ======

  Non-GAAP gross margin                     48.5%     47.7%    48.4%    48.5%    47.7%   48.4%
  Non-GAAP operating margin                (3.2%)      7.6%     9.8%   (3.2%)     7.6%    9.8%


  --------------------------------------------------------------------------------------------

                 Silicon Motion Technology Corporation
                   Consolidated Statements of Income
          (in thousands, except percentages, and per ADS data)
                               (unaudited)


                                      For the Nine Months Ended
                               ---------------------------------------

                                                                Sep.
                                Sep. 30,   Sep. 30,  Sep. 30,    30,
                                  2009       2010      2009     2010
                                 (NT$)      (NT$)     (US$)     (US$)
                               ---------  ---------  --------  -------
  Net Sales                    2,165,076  2,958,655    64,972   92,690

  Cost of sales                1,155,769  1,548,871    34,683   48,524
                               ---------  ---------  --------  -------
  Gross profit                 1,009,307  1,409,784    30,289   44,166
  Operating expenses
   Research & development        762,968    805,525    22,896   25,236
   Sales & marketing             261,924    308,849     7,860    9,676
   General & administrative      275,401    248,404     8,265    7,782
   Amortization of intangible
    assets                       144,109     51,928     4,325    1,627
   Gain from settlement of
    litigation                        --   (43,400)        --  (1,360)
                               ---------  ---------  --------  -------
  Operating income (loss)      (435,095)     38,478  (13,057)    1,205

  Non-operating expense
   (income)
   Gain on sale of
    investments                      223         40         7        1
   Interest income, net           15,066      6,482       452      203
   Foreign exchange gain
    (loss), net                 (78,365)   (77,265)   (2,352)  (2,421)
   Impairment of long-term
    investments                  (6,472)    (6,401)     (194)    (201)

   Others, net                   (2,132)    (3,119)      (64)     (98)
                               ---------  ---------  --------  -------

   Subtotal                     (71,680)   (80,263)   (2,151)  (2,516)
                               ---------  ---------  --------  -------
  Income (loss) before income
   tax                         (506,775)   (41,785)  (15,208)  (1,311)
  Income tax expense
   (benefit)                   (101,259)   (54,208)   (3,039)  (1,700)
                               ---------  ---------  --------  -------

  Net income (loss)            (405,516)     12,423  (12,169)      389
                               =========  =========  ========  =======

  Basic earnings (loss) per
   ADS                          ($14.68)      $0.43   ($0.44)    $0.01
                               =========  =========  ========  =======
  Diluted earnings (loss) per
   ADS                          ($14.68)      $0.42   ($0.44)    $0.01
                               =========  =========  ========  =======

  Margin Analysis:
  Gross margin                     46.6%      47.7%     46.6%    47.7%
  Operating margin               (20.1%)       1.3%   (20.1%)     1.3%

  Weighted average ADS:
  Basic                           27,619     28,969    27,619   28,969
  Diluted                         27,619     29,738    27,619   29,738

                       Silicon Motion Technology Corporation
               Reconciliation of GAAP to Non-GAAP Operating Results
           (in thousands, except percentages and per ADS data, unaudited)



                                              For the Nine Months Ended
                                    ---------------------------------------------

                                                                           Sep.
                                      Sep. 30,      Sep. 30,    Sep. 30,    30,
                                        2009          2010        2009     2010
                                       (NT$)         (NT$)       (US$)     (US$)
                                    ------------  ------------  --------  -------
  GAAP net income (loss)               (405,516)        12,423  (12,169)      389
  Stock-based compensation:
   Cost of sales                           8,746         4,211       262      132
   Research and development              106,271        73,157     3,189    2,292
   Sales and marketing                    36,242        34,856     1,088    1,092

   General and administrative             49,940        27,880     1,499      873
                                    ------------  ------------  --------  -------
     Total stock-based
      compensation                       201,199       140,104     6,038    4,389
                                    ------------  ------------  --------  -------

  Acquisition related charges:
   Amortization of intangible
    assets                               144,109        51,928     4,325    1,627
  Litigation expenses                      3,902         6,249       117      196
  Gain from settlement of
   litigation                                 --      (43,400)        --  (1,360)
  Impairment of long-term
  investments                              6,472         6,401       194      201
  Foreign exchange loss (gain),
   net                                    78,365        77,265     2,352    2,421
                                    ------------  ------------  --------  -------


  Non-GAAP net income                     28,531       250,970       857    7,863
                                    ============  ============  ========  =======

  Weighted avg. ADS (non-GAAP):

   Basic                                  27,619        28,969    27,619   28,969
                                    ============  ============  ========  =======

   Diluted                                30,401        30,907    30,401   30,907
                                    ============  ============  ========  =======


  Non-GAAP basic earnings per ADS          $1.03         $8.66     $0.03    $0.27
                                    ============  ============  ========  =======
  Non-GAAP diluted earnings per
   ADS                                     $0.94         $8.12     $0.03    $0.25
                                    ============  ============  ========  =======

  Non-GAAP gross margin                    47.0%         47.8%     47.0%    47.8%

  Non-GAAP operating margin               (4.0%)          6.5%    (4.0%)     6.5%
  --------------------------------  ------------  ------------  --------  -------

                                           Silicon Motion Technology Corporation
                                                Consolidated Balance Sheet
                                                      (In thousands)
                                                       (unaudited)


                                                                                                           Sep. 30, 2010
                              Sep. 30, 2009   Jun. 30, 2010   Sep. 30, 2010  Sep. 30, 2009  Jun. 30, 2010
                                  (NT$)           (NT$)           (NT$)          (US$)          (US$)          (US$)
                             --------------  --------------  --------------  -------------  -------------  -------------
  Cash and cash equivalents       1,932,867       2,058,362       1,770,267         59,601         64,183         56,414
  Short-term investments             33,143          11,175          61,193          1,022            348          1,950
  Accounts receivable (net)         610,342         625,707         693,236         18,820         19,511         22,092
  Inventories                       517,689         377,340         701,416         15,963         11,766         22,352
  Refundable deposits -
   current                           66,167         138,800         214,355          2,040          4,328          6,831
  Deferred income tax
   assets (net)                      80,298           4,417          18,081          2,476            138            576
  Prepaid expenses and
   other current
  assets                            102,925         132,503         134,057          3,175          4,132          4,272
                             --------------  --------------  --------------  -------------  -------------  -------------
  Total current assets            3,343,431       3,348,304       3,592,605        103,097        104,406        114,487

  Long-term investments              17,908           6,271           6,271            552            196            200
  Property and equipment
   (net)                            858,085         760,698         754,247         26,460         23,720         24,036
  Goodwill and intangible
   assets(net)                    2,499,051       1,226,527       1,209,211         77,061         38,245         38,535

  Other assets                      312,997         249,776         303,755          9,650          7,788          9,679
                             --------------  --------------  --------------  -------------  -------------  -------------

  Total assets                    7,031,472       5,591,576       5,866,089        216,820        174,355        186,937
                             ==============  ==============  ==============  =============  =============  =============

  Accounts payable                  299,688         443,066         580,686          9,241         13,816         18,505
  Income tax payable                 38,713          22,925          24,277          1,194            715            774
  Accrued expenses and
   other current
   liabilities                      426,336         419,659         449,007         13,146         13,085         14,308
                             --------------  --------------  --------------  -------------  -------------  -------------
  Total current liabilities         764,737         885,650       1,053,970         23,581         27,616         33,587

  Other liabilities                 106,859         100,324         101,094          3,295          3,128          3,222
                             --------------  --------------  --------------  -------------  -------------  -------------
  Total liabilities                 871,596         985,974       1,155,064         26,876         30,744         36,809

  Shareholders' equity            6,159,876       4,605,602       4,711,025        189,944        143,611        150,128
                             --------------  --------------  --------------  -------------  -------------  -------------
  Total liabilities &
   shareholders' equity           7,031,472       5,591,576       5,866,089        216,820        174,355        186,937
                             ==============  ==============  ==============  =============  =============  =============


  ----------------------------------------------------------------------------------------------------------------------

Note: The Company maintains its accounts and expresses its financial statements in New Taiwan dollars. For convenience only, U.S. dollar amounts presented in the income statement have been translated from New Taiwan dollars, using an average exchange rate of NT$32.83 to US$1 for 3Q09, NT$31.87 to US$1 for 2Q10, and NT$31.94 to US$1 for 3Q10 based on the average of the historical exchange rates reported by the Oanda Corporation. Amounts from the balance sheet have been translated using the ending exchange rate for the period. The exchange rate was NT$32.43 to US$1 at the end of 3Q09, NT$32.07 to US$1 at the end of 2Q10 and NT$31.38 to US$1 at the end of 3Q10.

About Silicon Motion:

We are a fabless semiconductor company that designs, develops and markets high performance, low-power semiconductor solutions for the multimedia consumer electronics market. We have three major product lines: mobile storage, mobile communications, and multimedia SoCs. Our mobile storage business is composed of microcontrollers used in NAND flash memory storage products such as flash memory cards, USB flash drives, SSDs, and embedded flash applications. Our mobile communications business is composed primarily of mobile TV IC solutions and handset transceivers. Our multimedia SoCs business is composed primarily of embedded graphics processors.

Forward-Looking Statements:

This press release contains "forward-looking statements" 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, including without limitation, statements about Silicon Motion's expected fourth quarter 2010 revenue, gross margin and operating expenses, all of which reflect management's estimates based on information available at this time of this press release. While Silicon Motion believes these estimates to be meaningful, these amounts could differ materially from actual reported amounts for the fourth quarter. Forward-looking statements also include, without limitation, statements regarding trends in the multimedia consumer electronics market and our future results of operations, financial condition and business prospects. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue," or the negative of these terms or other comparable terminology. Although such statements are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on them. These statements involve risks and uncertainties, and actual market trends or our actual results of operations, financial condition or business prospects may differ materially from those expressed or implied in these forward looking statements for a variety of reasons. Potential risks and uncertainties include, but are not limited to the unpredictable volume and timing of customer orders, which are not fixed by contract but vary on a purchase order basis; the loss of one or more key customers or the significant reduction, postponement, rescheduling or cancellation of orders from these customers; general economic conditions or conditions in the semiconductor or consumer electronics markets; decreases in the overall average selling prices of our products; changes in the relative sales mix of our products; changes in our cost of finished goods; the availability, pricing, and timeliness of delivery of other components and raw materials used in our customers' products; our customers' sales outlook, purchasing patterns, and inventory adjustments based on consumer demands and general economic conditions, including the general global economic slowdown as it effects the Company, its customers and consumers; our ability to successfully develop, introduce, and sell new or enhanced products in a timely manner; and the timing of new product announcements or introductions by us or by our competitors. For additional discussion of these risks and uncertainties and other factors, please see the documents we file from time to time with the Securities and Exchange Commission, including our Annual Report on Form 20-F filed on June 25, 2010. We assume no obligation to update any forward-looking statements, which apply only as of the date of this press release.

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Silicon Motion Technology Corporation

CONTACT: Silicon Motion Technology Corporation
Investor Contacts:
Jason Tsai, Director of IR and Strategy
+1 408 519 7259 begin_of_the_skype_highlighting              +1 408 519 7259      end_of_the_skype_highlighting
Fax: +1 408 519 7101
jtsai@siliconmotion.com
Investor Relations
Selina Hsieh
+886 3 552 6888 begin_of_the_skype_highlighting              +886 3 552 6888      end_of_the_skype_highlighting x2311
Fax: +886 3 560 0336
ir@siliconmotion.com
Media Contact:
Sara Hsu, Project Manager
+886 2 2219 6688 begin_of_the_skype_highlighting              +886 2 2219 6688      end_of_the_skype_highlighting x3509
Fax: +886 2 2219 6868
sara.hsu@siliconmotion.com

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