SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15D-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of August, 2003
Commission File Number: 000-30540
GIGAMEDIA LIMITED
122 TunHua North Road, 14th Floor
Taipei, Taiwan (R.O.C.)
(Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.)
Form 20-F [x] Form 40-F [ ]
(Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes [ ] No [x]
(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b) :82- .)
GIGAMEDIA LIMITED is furnishing under cover of Form 6-K:
GIGAMEDIA REPORTS SECOND QUARTER 2003 FINANCIAL RESULTS
(GIGAMEDIA LOGO)
GIGAMEDIA REPORTS SECOND QUARTER
2003 FINANCIAL RESULTS
TAIPEI, Taiwan, August 14, 2003 - GigaMedia Limited ("GigaMedia" or the
"Company") (Nasdaq: GIGM, www.giga.net.tw), a diversified provider of online and
offline entertainment services in Taiwan, today announced its second quarter
operating and financial results.
Key Results:
- Offline music distribution business results significantly impacted by
SARS; sales declined approximately 17% in each of April and May.
- Online consumer ISP business unit closing on breakeven; recorded
positive EBITDA of approximately NT$19.6 million.
- Cash burn rate in broadband ISP business unit declined 14% to NT$3.1
million.
- Company in a strong financial position with approximately NT$2.0
billion in total cash, short-term investments and liquid marketable
securities.
Chief Executive Officer Raymond Chang said, "During the second quarter we
continued to make progress in our financial performance. Although our offline
music distribution business was impacted by the outbreak of SARS in Taiwan,
current sales in our music stores indicate that the impact of SARS was
temporary. In our online ISP operations, as a result of tight cost controls and
increased revenues, we recorded positive EBITDA. In sum, although the overall
business environment is challenging and SARS resulted in significant sales
deterioration in this period, consistent improvements in our businesses on an
operating level demonstrate that we are tracking toward profitability."
CONSOLIDATED FINANCIAL RESULTS
(SECOND QUARTER 2003 VERSUS FIRST QUARTER 2003)
For the second quarter of 2003, GigaMedia reported consolidated revenues of
NT$725.6 million, compared with revenues of NT$914.1 million for the first
quarter. The Company's second quarter performance was led by results in its
offline music distribution business, which recorded revenues of NT$558.4 million
during the period.
Operating loss was NT$80.9 million in the second quarter compared with NT$70.4
million during the first quarter. The increase in operating loss during the
quarter was mainly related to a decline in sales recorded by GigaMedia's offline
business unit, G-Music. G-Music's sales were negatively impacted by SARS in the
second quarter. The SARS epidemic in Taiwan deterred customers from visiting
many public locations during the period, including the stores of G-Music's two
leading music store chains. Taiwan's SARS epidemic has since subsided,
1
and customer sales in the G-Music chain stores are now showing some improvement.
Non-operating income during the second quarter consisted of interest income of
NT$4.2 million, foreign exchange loss of NT$4.4 million, and investment income
of NT$4.8 million. Total non-operating income decreased to negative NT$12.5
million in the second quarter of 2003 from NT$7.9 million in the previous
quarter, primarily due to an expense of approximately NT$17.3 million during the
second quarter related to payment of an insurance deductible. This payment was
made in connection with a class action lawsuit related to the initial public
offering of our stock.
The Company reported a net loss of NT$73.7 million for the second quarter versus
a loss of NT$50.1 million in the first quarter, mainly due to payment of the
aforementioned insurance deductible.
Cash and other cash equivalents at the end of the first quarter totaled NT$1.1
billion, not including additional short-term investments totaling NT$900.0
million, compared to NT$1.1 billion and NT$842.9 million, respectively, during
the previous period, representing a total increase of approximately NT$52.7
million.
GigaMedia's long-term investments include an investment of US$10 million with a
maturity date of 2005.
BUSINESS SEGMENT RESULTS
ONLINE ENTERTAINMENT (BROADBAND ISP)
SECOND QUARTER 2003 RESULTS COMPARED TO FIRST QUARTER 2003 RESULTS
--------------------------------------------------------------------------------------------------------------------
CATEGORY 2Q03 1Q03 VARIATION(%)
--------------------------------------------------------------------------------------------------------------------
Total revenues NT$167.2 million NT$161.2 million 4
--------------------------------------------------------------------------------------------------------------------
Access revenues NT$161.8 million NT$153.8 million 5
--------------------------------------------------------------------------------------------------------------------
Subscribers 100,677 103,375 -3
--------------------------------------------------------------------------------------------------------------------
ARPU NT$426 NT$416 2
--------------------------------------------------------------------------------------------------------------------
Total costs and expenses NT$198.3 million NT$200.0 million -1
--------------------------------------------------------------------------------------------------------------------
Operating cost NT$127.1 million NT$132.8 million -4
--------------------------------------------------------------------------------------------------------------------
SG&A NT$53.0 million NT$50.9 million 4
--------------------------------------------------------------------------------------------------------------------
Operating income (loss) (NT$31.2 million) (NT$38.6 million) 19
--------------------------------------------------------------------------------------------------------------------
Net income (loss) (NT$45.9 million) (NT$32.7 million) (Not meaningful)
--------------------------------------------------------------------------------------------------------------------
Operating cash burn NT$3.1 million NT$3.6 million -14
including capex (quarterly)*
--------------------------------------------------------------------------------------------------------------------
*We define operating cash burn including capex as EBIT plus non-cash items minus
capex.
2
Operating cash burn per month including capex declined from NT$1.2 million to
NT$1.0 million, quarter over quarter.
TOTAL REVENUES AND CORPORATE ACCESS REVENUES INCREASED
Total revenues for the quarter ended June 30, 2003 increased 4% to NT$167.2
million from NT$161.2 million during the previous quarter.
Total access revenues increased 5% to NT$161.8 million, compared with NT$153.8
million for the quarter ended March 31, 2003, due mainly to a slight increase in
ARPU in our subscriber base. The Company's continued focus on migrating users to
higher specification products helped support ARPUs during the period. GigaMedia
recognizes access revenues net of the revenue split with its cable partners.
Total corporate revenues through our wholly-owned subsidiary Koos Broadband
Telecom Limited ("KBT") increased approximately 15% during the second quarter.
The ISP business recorded content subscription revenues of NT$3.6 million during
the period, as compared to NT$4.2 million during the first quarter. Content
revenues consist mainly of subscriber revenues from GigaMedia's broadband
videostreaming site GigaTV (www.gigatv.com.tw).
Sales/rental/installation revenues in the ISP business, which include routers
and switches, increased to NT$935 thousand for the second quarter from NT$597
thousand during the first quarter.
Advertising revenues increased to NT$273 thousand in the first quarter from
NT$228 thousand for the first quarter. The Company has de-emphasized this aspect
of its business and does not expect to record significant advertising revenues
going forward.
TOTAL COSTS FLAT; OPERATING COST DECREASED
Total costs and expenses were flat at NT$198.3 million in the second quarter,
compared to NT$200.0 million in the prior period.
Operating costs decreased in the second quarter to NT$127.1 million versus
NT$132.8 million in the previous quarter, largely due to lowered cost of sales
during the second quarter. Operating costs during the period consisted mainly of
costs associated with business operations and customer service departments of
NT$25.3 million, telecommunications costs of NT$53.6 million, and depreciation
cost of network equipment other than cable modems amounting to NT$29.3 million.
Included in this quarter's operating costs was amortization of fees related to
backbone maintenance, peering arrangements and billing software, which totaled
NT$5.7 million.
3
The Company's SG&A costs were relatively flat during the second quarter,
increasing by approximately NT$2.1 million, or 4%, to NT$53.0 million as a
result of professional fees.
OPERATING LOSS NARROWED
Operating loss decreased by 19% to NT$31.2 million from NT$38.6 million, quarter
over quarter.
NET LOSS INCREASED
Net loss increased in the second quarter to a loss of NT$45.9 million from a
loss of NT$32.7 million in the prior period, resulting primarily from payment of
an insurance deductible of approximately US$500 thousand. This payment was made
in connection with a class action lawsuit related to the initial public offering
of our stock.
OPERATING CASH BURN DECREASED
Operating cash burn was NT$3.1 million during the period, or NT$1.0 million per
month, versus NT$3.6 million in the first quarter, or NT$1.2 million per month.
The decline in operating cash burn was driven by reduced operating losses during
the period. GigaMedia defines operating cash burn per month including capex as
EBIT plus non-cash items minus capex.
ARPU INCREASED
Blended average revenue per user ("ARPU") for GigaMedia's one-way cable, two-way
cable and ADSL broadband access services increased during the second quarter to
NT$426, compared with NT$416 in the first quarter. This was achieved despite
strong market competition and continued price pressure. Management expects
minimal ARPU gains in the foreseeable future.
One-way ARPU decreased 9% to NT$268 compared to NT$296 during the previous
quarter, due to termination of GigaMedia's no minimum meter rate package. ARPU
for two-way cable during the period increased slightly to NT$615 compared with
NT$612 during the previous period. ARPU for ADSL for the three-month period
increased 2% to NT$394 from NT$387, due primarily to an increase in the number
of subscribers to higher specification products during the period.
OFFLINE MUSIC DISTRIBUTION (G-MUSIC)
The following represents the results of the Rose Records and Tachung Records
music store chains for the three-month period.
4
G-MUSIC SECOND QUARTER 2003 RESULTS COMPARED TO FIRST QUARTER 2003 RESULTS
The following reflects the results of G-Music, not GigaMedia's 58.6% interest in
G-Music, during the periods indicated. Minority interests have not been
excluded.
--------------------------------------------------------------------------------------------------------------------
CATEGORY 2Q03 1Q03 VARIATION(%)
--------------------------------------------------------------------------------------------------------------------
Total revenues NT$558.4 million NT$752.9 million -26
--------------------------------------------------------------------------------------------------------------------
COGS NT$482.0 million NT$655.6 million -26
--------------------------------------------------------------------------------------------------------------------
Gross margin 14% 13% 8
--------------------------------------------------------------------------------------------------------------------
SG&A NT$126.2 million NT$129.0 million -2
--------------------------------------------------------------------------------------------------------------------
Total costs and expenses NT$608.1 million NT$784.6 million -22
--------------------------------------------------------------------------------------------------------------------
Operating income (loss) (NT$49.7 million) (NT$31.8 million) -56
--------------------------------------------------------------------------------------------------------------------
Net income (loss) (NT$47.5 million) (NT$29.8 million) -59
--------------------------------------------------------------------------------------------------------------------
TOTAL REVENUES DOWN
Total revenues for the quarter ended June 30, 2003 were NT$558.4 million, down
26% from the NT$752.9 million recorded during the prior period, attributable to
the impact of SARS on customer shopping behavior during the period and the
overall decline of the recorded music market. GigaMedia records offline music
business revenues under sales revenues.
COSTS AND EXPENSES DECLINED
Total COGS, net of return and allowance for the quarter ended June 30, 2003, was
NT$482.0 million, a decrease of approximately NT$173.7 million, or 26% quarter
over quarter. The decline in COGS was in line with the decline in total revenues
during the period. Gross margin for the offline music business was up slightly
at 14%, or NT$76.4 million. Gross margin in the music distribution business
remains under pressure from an overall decline in the market. GigaMedia records
COGS from its offline music business under cost of sales.
G-Music recorded a decrease in SG&A costs during the second quarter of
approximately NT$2.8 million.
GigaMedia management made a concerted effort during the SARS epidemic in Taiwan
to work with key vendors and landlords to minimize the business impact of SARS.
Management expects to see the effects of related rental concessions and business
cooperation in GigaMedia's third quarter results.
OPERATING MARGIN DECLINED
Operating margin for the quarter ended June 30, 2003 was negative 9%, or an
operating loss
5
of NT$49.7 million. This represented an increased loss of approximately NT$17.9
million over the first quarter, due primarily to lower sales recorded during the
second quarter.
NET LOSS INCREASED
Net loss increased from negative NT$29.8 million to negative NT$47.5 million,
primarily due to light sales during the second quarter.
ABOUT GIGAMEDIA
GigaMedia Limited (Nasdaq: GIGM) is a diversified provider of entertainment
services in Taiwan. The Company's online/offline business model provides the
Company multiple distribution channels, deep customer relationships and the
ability to meet future market demands as technology drives new media and
entertainment industry change.
Offline, GigaMedia operates Taiwan's two largest music store chains, Rose
Records and Tachung Records through its subsidiary G-Music. These businesses
were acquired in February and September of 2002, respectively, and together hold
approximately a 50% share of Taiwan's music retail market.
Online, the Company operates a leading broadband ISP, providing Internet access
service and broadband content with multiple delivery technologies. The Company's
access products consist of premium cable modem and ADSL offerings, giving the
company the ability to deliver superior broadband connections island-wide.
GigaMedia's cable modem is a world-class platform capable of offering broadband
Internet access at speeds of up to 100 times faster than traditional dial-up
services. With 21 cable system partners, the Company's cable modem business
passes more than 3.1 million Taiwan households, as well as 417,000 small and
medium businesses. In addition, the Company offers interactive Chinese-language
multimedia Web sites through its Web destination http://www.gigigaga.com.
Other subsidiary companies of GigaMedia include Koos Broadband Telecom Limited,
a broadband service provider focused exclusively on corporate subscribers in
Taiwan.
Strategic investors of GigaMedia include the Koos Group, a major player in
Taiwan's manufacturing, finance, telecommunications, media, and cable
industries.
More information on GigaMedia can be obtained from < http://ir.giga.net.tw >.
The directors of GigaMedia (including any director who may have delegated
detailed supervision of this announcement) have taken all reasonable care to
ensure that the facts stated and opinions expressed in this announcement are
fair and accurate and that no material facts have been omitted from this
announcement (the omission of which would render any statement in this
announcement misleading in any material respect), and they jointly and severally
accept responsibility accordingly. Where any information has been extracted from
published or publicly available sources, the sole responsibility of the
directors of GigaMedia has been to ensure through reasonable enquiries that such
information is accurately extracted from such sources or, as the case may be,
reflected or reproduced in this announcement.
6
The statements included above and elsewhere in this press release that are not
historical in nature are "forward-looking statements" within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. GigaMedia cautions readers that forward-looking statements are based on
the company's current expectations and involve a number of risks and
uncertainties. Actual results may differ materially from those contained in such
forward-looking statements. Information as to those factors that could cause
actual results to vary can be found in GigaMedia's Registration Statement on
Form 20-F filed with the United States Securities and Exchange Commission in
July 2003.
CONTACT:
GIGAMEDIA LIMITED
Brad Miller, Investor Relations Director
886-2-8770-7966 ext. 1107
bradley_miller@corp.giga.net.tw
(Tables to follow)
================================================================================
7
GIGAMEDIA LIMITED CONSOLIDATED STATEMENT OF OPERATIONS
JUNE 30 AND MARCH 31, 2003
---------------------------------------
2Q03 1Q03
---------------------------------------
NT$ NT$
---------------------------------------
OPERATING REVENUE
ACCESS REVENUE 161,783,213 153,747,807
SALES/RENTAL/INSTALLATION 548,515,430 738,490,527
WEB DEVELOPMENT REVENUES
ADVERTISING AND PROMOTIONAL REVENUE 11,109,431 15,212,351
SUBSCRIPTION REVENUE 3,573,448 4,151,738
OTHER REVENUE 583,340 2,475,581
---------------------------------------
TOTAL 725,564,862 914,078,004
---------------------------------------
COST AND EXPENSES
OPERATING COST 127,117,305 132,819,405
COST OF SALES/RENTAL/INSTALLATION 490,013,739 660,596,334
WEB DEVELOPMENT EXPENSES 0 0
PRODUCT DEVELOPMENT AND ENGINEERING EXPENSES 9,725,991 10,797,099
SELLING AND MARKETING EXPENSES 121,277,291 129,290,997
GENERAL AND ADMINISTRATIVE EXPENSES 57,929,088 50,623,777
BAD DEBT EXPENSES 380,133 303,006
GOODWILL VALUATION EXPENSES
OTHER COSTS 0 0
---------------------------------------
TOTAL 806,443,547 984,430,618
---------------------------------------
OPERATING LOSS (80,878,685) (70,352,614)
---------------------------------------
NON-OPERATING INCOME (EXPENSE)
INTEREST INCOME 4,242,682 3,690,985
FOREIGN EXCHANGE GAIN (LOSS)-NET (4,374,364) (192,975)
INVESTMENT INCOME 4,797,288 4,183,675
GAIN FROM DISPOSAL OF PROPERTY, PLANT AND EQUITY (2,771,837) (38,620)
INTEREST INCOME (EXPENSES) (35,780) (1,203,740)
OTHER NON-OPERATING INCOME(EXPENSE) (14,320,973) 1,454,658
---------------------------------------
TOTAL NON-OPERATING INCOME-NET (12,462,984) 7,893,983
---------------------------------------
INCOME TAX (EXPENSE) (53,027) 0
---------------------------------------
MINORITY INTEREST INCOME 19,720,058 12,318,028
---------------------------------------
PRE ACQUISITION EARNINGS 0 0
---------------------------------------
NET INCOME (LOSS) (73,674,638) (50,140,603)
=======================================
NET LOSS PER COMMON SHARE (1.47) (1.00)
=======================================
AVERAGE SHARES OUTSTANDING 50,154,000 50,154,000.00
8
GIGAMEDIA LIMITED
CONSOLIDATED BALANCE SHEET
June 30 and March 31, 2003
2ND QUARTER, 2003 1ST QUARTER, 2003
----------------- -----------------
NT$ NT$
ASSETS Consolidated Consolidated
----------------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
CASH AND CASH EQUIVALENTS 1,134,183,302 1,138,717,490
SHORT-TERM INVESTMENTS 900,053,561 842,866,066
ACCOUNTS RECEIVABLE 154,744,679 150,565,490
RECEIVABLE FROM RELATED PARTIES 0 0
INVENTORIES-NET 245,162,115 307,151,203
PREPAID EXPENSES 27,466,547 20,621,033
RESTRICTED CASH 63,378,217 62,920,826
OTHER CURRENT ASSETS 65,095,637 109,940,896
------------- -------------
TOTAL CURRENT ASSETS 2,590,084,058 2,632,783,004
------------- -------------
INVESTMENT
TOTAL INVESTMENT 580,085,354 582,575,728
------------- -------------
PROPERTY, PLANT AND EQUIPMENT-NET
NET 678,152,450 709,350,229
------------- -------------
INTANGIBLE ASSETS-NET
NET 251,686,904 259,544,027
------------- -------------
OTHER ASSETS ------------- -------------
TOTAL OTHER ASSETS 185,601,689 167,983,830
============= =============
TOTAL ASSETS 4,285,610,455 4,352,236,818
============= =============
----------------- -----------------
NT$ NT$
LIABILITIES & SHAREHOLDERS' EQUITY Consolidated Consolidated
----------------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
LOAN 0 0
ACCOUNTS PAYABLE 464,588,362 461,260,844
PAYABLE TO RELATED PARTIES 0 0
PAYABLE TO EQUIPMENT SUPPLIERS 101,070 0
ACCRUED SALARIES AND BONUS 28,719,694 19,750,840
ACCRUED EXPENSES 46,358,915 52,814,959
LEASE OBLIGATIONS 0 0
OTHER CURRENT LIABILITIES 61,614,372 41,000,555
------------- -------------
TOTAL CURRENT LIABILITIES 601,382,413 574,827,198
------------- -------------
OTHER LIABILITIES ------------- -------------
TOTAL OTHER LIABILITIES 54,555,938 51,624,149
------------- -------------
TOTAL LIABILITIES 655,938,351 626,451,347
------------- -------------
MINORITY INTEREST 195,142,292 214,862,350
------------- -------------
SHAREHOLDERS' EQUITY ------------- -------------
TOTAL SHAREHOLDERS' EQUITY 3,434,529,812 3,510,923,122
============= =============
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 4,285,610,455 4,352,236,818
------------- -------------
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GigaMedia Limited
-----------------
(Registrant)
Date: August 14, 2003 By: /s/ Hsia, Winston
--------------------- ---------------------
(Signature)
Name: Hsia, Winston
Title: Chief Financial Officer