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 May, 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 ANNOUNCES FIRST QUARTER 2003 FINANCIAL RESULTS
[GIGAMEDIA LOGO]
GIGAMEDIA REPORTS FIRST QUARTER
2003 FINANCIAL RESULTS
TAIPEI, Taiwan, May 16, 2003 - GigaMedia Limited ("GigaMedia") (Nasdaq: GIGM,
www.giga.net.tw), a diversified provider of online and offline entertainment
services in Taiwan, today announced its first quarter operating and financial
results. Quarter over quarter comparisons in this release are made based on
audited fourth quarter results and do not include certain accelerated charges
and expenses taken during the fourth quarter of 2002. See Note (A) below.
Highlights:
o Core offline music business recorded a net loss of approximately NT$29.8
million.
o Cash burn rate in broadband ISP business unit declined to NT$3.6 million.
o 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, "Our financial performance during
the first quarter continued to improve, despite softness in the economy and
declines in the overall music industry. The success of our focus on strict cost
cutting and maintaining our financial strength is clearest in our online
operations. Net loss in our online operations was less than US$1 million for the
period. We will continue to execute this strategy across our businesses in
pursuit of improved operating performance on a consolidated basis going
forward."
Chief Financial Officer Winston Hsia said, "We were pleased with our ability to
manage costs during a period of difficult operating conditions. Operating cash
burn in our online business unit continued to show a positive trend and
highlight improvements in our operating efficiency. We will remain focused on
controlling costs with capital expenditures to be made on an as needed basis
going forward."
CONSOLIDATED FINANCIAL RESULTS
(FIRST QUARTER 2003 VERSUS FOURTH QUARTER 2002)
Note (A): Fourth quarter results referred to in all text portions and related
tables within the body of this release are audited fourth quarter numbers, which
may differ from unaudited numbers reported for our offline business unit last
quarter. Note that numbers for the fourth quarter 2002 have been adjusted to
exclude a write-off of approximately NT$242.9 million during the period. Quarter
over quarter comparisons also exclude a write-off of NT$80.6 million in the
fourth quarter of 2002 related to an investment in GigaMusic in 2001.
For the first quarter of 2003, GigaMedia reported consolidated revenues of
NT$914.1 million, compared with revenues of NT$945.2 million for the fourth
quarter. The company's first quarter performance was led by results in its
offline music distribution business, which recorded revenues of NT$752.9 million
during the period.
1
Operating loss was NT$70.4 million in the first quarter compared with NT$113.5
million during the fourth quarter. The decrease in operating loss during the
quarter was evenly divided between GigaMedia's online and offline business
units.
Non-operating income during the first quarter consisted of interest income of
NT$3.7 million, foreign exchange loss of NT$193 thousand, and investment income
of NT$4.2 million. Non-operating income increased to NT$7.9 million in the first
quarter of 2003 from a loss of NT$113.0 million in the previous quarter,
primarily due to an investment loss recorded during the fourth quarter and the
impact of foreign exchange rate fluctuations on U.S. dollar denominated assets.
The company reported a net loss of NT$50.1 million for the first quarter versus
a loss of NT$154.3 million in the fourth quarter, mainly due to variations in
non-operating income between the periods, as well as inventory revaluation costs
in both online and offline business units recorded during the fourth quarter.
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$842.9
million, compared to NT$1.2 billion and NT$855.3 million, respectively, during
the previous period, representing a total decrease of approximately NT$114.8
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)
FIRST QUARTER 2003 RESULTS COMPARED TO FOURTH QUARTER 2002 RESULTS
CATEGORY 1Q03 4Q02 VARIATION (%)
----------------------------- ------------------- ------------------ ----------------
Total revenues NT$161.2 million NT$154.4 million 4
----------------------------- ------------------- ------------------ ----------------
Access revenues NT$153.8 million NT$149.1 million 3
----------------------------- ------------------- ------------------ ----------------
Subscribers 103,375 108,016 -4
----------------------------- ------------------- ------------------ ----------------
ARPU NT$416 NT$388 7
----------------------------- ------------------- ------------------ ----------------
Total costs and expenses NT$200.0 million NT$221.8 million -10
----------------------------- ------------------- ------------------ ----------------
Operating cost NT$132.8 million NT$150.7 million -13
----------------------------- ------------------- ------------------ ----------------
SG&A NT$50.9 million NT$53.3 million -4
----------------------------- ------------------- ------------------ ----------------
Operating income (loss) (NT$38.6 million) (NT$67.4 million) -43
----------------------------- ------------------- ------------------ ----------------
Net income (loss) (NT$32.7 million) (NT$70.1 million) (Not meaningful)
----------------------------- ------------------- ------------------ ----------------
Operating cash burn
including capex (quarterly)* NT$3.6 million NT$35.6 million -89
----------------------------- ------------------- ------------------ ----------------
------------------
*We define operating cash burn including capex as EBIT plus non-cash items minus
capex. Operating cash burn per month including capex declined from NT$11.9
million to NT$1.2 million, quarter over quarter.
2
TOTAL REVENUES AND CORPORATE ACCESS REVENUES INCREASED
Total revenues for the quarter ended March 31, 2003 increased 4% to NT$161.2
million from NT$154.4 million during the previous quarter.
Total access revenues increased 3% to NT$153.8 million, compared with NT$149.1
million for the quarter ended December 31, 2002, 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 42% during the first quarter.
The ISP business recorded content subscription revenues of NT$4.2 million during
the period, as compared to NT$4.9 million during the fourth 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 cable
modem, ADSL retail installation packs, net cards and routers, increased to
NT$597 thousand for the first quarter from NT$323 thousand during the fourth
quarter.
Advertising revenues decreased to NT$228 thousand in the first quarter from
NT$287 thousand for the fourth quarter. The company has de-emphasized this
aspect of its business and does not expect to record significant advertising
revenues going forward.
COSTS AND EXPENSES DECREASED
Total costs and expenses decreased by 10%, to NT$200.0 million in the first
quarter from NT$221.8 million in the prior period.
Operating costs decreased in the first quarter to NT$132.8 million versus
NT$150.7 million in the previous quarter, largely due to modem revaluation and
bad debt expenses recorded during the fourth quarter totaling approximately
NT$15.1 million. Operating costs during the period consisted mainly of costs
associated with business operations and customer service departments of NT$45.3
million, telecommunications costs of NT$52.5 million, and depreciation cost of
network equipment other than cable modems amounting to NT$29.4 million.
Included in this quarter's operating costs was amortization of our licensing
payment to our partner EMI Music Asia, which totaled NT$5.7 million. The
licensing payment is related to the development of our subsidiary GigaMusic. In
2001, GigaMedia and EMI Music Asia invested in GigaMusic to develop a paid
online music site. However, the site has not been launched and GigaMedia intends
to terminate the agreement. GigaMedia filed an application for arbitration in
Singapore on March 28, 2003 to resolve the disputes in connection with the
strategic agreement entered into by the company, GigaMusic.com, and EMI Music
Asia. The arbitration process is expected to last several months.
The company achieved its seventh straight quarter of reduced SG&A costs as it
continues to tightly monitor customer acquisition and retention costs.
GigaMedia's SG&A costs declined by approximately NT$2.4 million, or 4%, during
the quarter to NT$50.9 million.
3
OPERATING LOSS NARROWED
Operating loss decreased by 43% to NT$38.6 million from NT$67.4 million, quarter
over quarter.
NET LOSS DECREASED
Net loss decreased in the first quarter to a loss of NT$32.7 million from a loss
of NT$70.1 million, resulting primarily from a reduction in operating loss in
the period.
OPERATING CASH BURN DECREASED
Operating cash burn was NT$3.6 million during the quarter, or NT$1.2 million per
month, versus NT$35.6 million in the fourth quarter, or NT$11.9 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 first quarter to
NT$416, compared with NT$388 in the fourth quarter. This was achieved despite
strong market competition and continued price pressure. Management expects
minimal ARPU gains in the foreseeable future.
One-way ARPU increased 28% to NT$296 compared to NT$231 during the previous
quarter, due to termination of GigaMedia's no minimum meter rate package. ARPU
for two-way cable during the period decreased slightly to NT$612 compared with
NT$618 during the previous period. ARPU for ADSL for the three-month period
increased 6% to NT$387 from NT$363, 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.
G-MUSIC FIRST QUARTER 2003 RESULTS COMPARED TO FOURTH QUARTER 2002 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.
4
CATEGORY 1Q03 4Q02 VARIATION (%)
----------------------------- ------------------- ------------------ ----------------
Total revenues NT$752.9 million NT$790.8 million -5
----------------------------- ------------------- ------------------ ----------------
COGS NT$655.6 million NT$689.2 million -5
----------------------------- ------------------- ------------------ ----------------
Gross margin 13% 13% 0
----------------------------- ------------------- ------------------ ----------------
SG&A NT$129.0 million NT$147.7 million -13
----------------------------- ------------------- ------------------ ----------------
Total costs and expenses NT$784.6 million NT$836.9 million -6
----------------------------- ------------------- ------------------ ----------------
Operating income (loss) (NT$31.8 million) (NT$46.1 million) 31
----------------------------- ------------------- ------------------ ----------------
Net income (loss) (NT$29.8 million) (NT$49.0 million) 39
----------------------------- ------------------- ------------------ ----------------
TOTAL REVENUES DOWN
Total revenues for the quarter ended December 31, 2002 were NT$752.9 million,
down 5% from the NT$790.8 million recorded during the prior period, attributable
to the overall decline in Taiwan's 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 March 31, 2003,
was NT$655.6 million, a decrease of approximately NT$33.6 million, or 5% 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 flat at 13%,
or NT$97.3 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 first quarter of
approximately NT$18.7 million, primarily related to inventory revaluation costs
recorded under SG&A during the fourth quarter.
OPERATING MARGIN IMPROVED
Operating margin for the quarter ended March 31, 2003 was negative 4%, or an
operating loss of NT$31.8 million. This represented a decrease of approximately
NT$14.3 million over the fourth quarter, due primarily to lowered SG&A costs
during the first quarter.
NET LOSS DECREASED
Net loss decreased from negative NT$49.0 million to negative NT$29.8 million,
primarily due to lowered SG&A costs during the first quarter.
BUSINESS OUTLOOK
There has been a recent outbreak of Severe Acute Respiratory Syndrome ("SARS")
in Taiwan where GigaMedia's revenues are derived and where the company's
employees are located. The company is continuing to monitor the possible
implications of the SARS outbreak, but at this time it is difficult to
5
quantify the future impact on the business. For example, the SARS outbreak could
result in quarantines or closures of some of the company's offices, which would
severely disrupt the company's operations. In addition, the SARS outbreak is
impacting consumer behavior. Due to the uncertainty surrounding the SARS
outbreak, GigaMedia cannot at this time provide clear and accurate guidance on
expected financial results in the coming months.
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 50% market share in Taiwan.
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 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
June 2002.
CONTACT:
GIGAMEDIA LIMITED
Brad Miller, Investor Relations Director
886-2-8770-7966 ext. 1107
bradley_miller@corp.giga.net.tw
(Tables to follow)
================================================================================
6
GIGAMEDIA LIMITED
CONSOLIDATED STATEMENT OF OPERATIONS
for the quarters ended March 31, 2003 and December 31, 2002
1Q03 4Q02
----------- -----------
NT$ NT$
----------- -----------
Operating revenue
Access revenue 153,747,807 149,081,083
Sales/rental/installation 738,490,527 775,860,937
Web development revenues 0
Advertising and promotional revenue 15,212,351 15,507,137
Subscription revenue 4,151,738 4,869,220
Other revenue 2,475,581 (146,840)
----------- -----------
Total 914,078,004 945,171,537
----------- -----------
Cost and expenses
Operating cost 132,819,405 150,219,742
Cost of sales/rental/installation 660,596,334 693,854,827
Web development expenses 0
Product development and
engineering expenses 10,797,099 13,189,531
Selling and marketing expenses 129,290,997 152,567,113
General and administrative expenses 50,623,777 42,027,340
Bad debt expenses 303,006 6,813,574
Goodwill valuation expenses 323,565,023
Other costs 0 302,414,178
----------- -----------
Total 984,430,618 1,382,237,150
----------- -------------
Operating loss (70,352,614) (437,065,613)
----------- -----------
Non-operating income (expense)
Interest income 3,690,985 9,714,076
Foreign exchange gain (loss)-net (192,975) (5,953,611)
Investment income 4,183,675 (91,080,130)
Gain from disposal of property, plant, equity (38,620) (24,521,767)
Interest income (expense) (1,203,740) (1,131,494)
Other non-operating income (expense) 1,454,658 20,942
----------- -----------
Total non-operating income-net 7,893,983 (112,951,984)
----------- -----------
Income tax (expense) 0 4,866,083
----------- -----------
Minority interest income 12,318,028 67,681,679
----------- -----------
Pre-acquisition earnings 0 (359,798)
----------- -----------
Net income (loss) (50,140,603) (477,829,633)
=========== ============
Net loss per common share (1.00) (9.53)
=========== ============
Average shares outstanding 50,154,000 50,154,000
7
GIGAMEDIA LIMITED
CONSOLIDATED BALANCE SHEET
March 31, 2003 and December 31, 2002
1ST QUARTER 2003 4TH QUARTER 2002
---------------- ----------------
ASSETS NT$ NT$
-------------- ---------------- ----------------
CURRENT ASSETS Consolidated Consolidated
Cash and cash equivalents 1,138,717,490 1,241,156,606
Short-term investments 842,866,066 855,272,747
Accounts receivable 150,565,490 133,307,781
Receivable from related parties 0 0
Inventories-net 307,151,203 360,216,481
Prepaid expenses 20,647,818 19,868,580
Restricted cash 28,000,000 100,449,047
Other current assets 149,534,687 167,443,092
------------- -------------
Total Current Assets 2,637,482,754 2,877,714,334
------------- -------------
INVESTMENT
Total investments 921,229,025 641,088,040
----------- -----------
PROPERTY, PLANT AND EQUIPMENT-NET
Net 708,288,706 738,938,134
----------- -----------
INTANGIBLE ASSETS-NET
Net 259,544,027 267,401,149
----------- -----------
OTHER ASSETS
Total Other Assets 168,024,800 170,896,219
----------- -----------
TOTAL ASSETS 4,694,569,312 4,696,037,876
============= =============
LIABILITIES & SHAREHOLDERS' EQUITY NT$ NT$
---------------------------------- ------------ ------------
Consolidated Consolidated
------------ ------------
CURRENT LIABILITIES
Loan 0 93,000,000
Accounts payable 461,260,844 473,077,742
Payable to related parties 0 18,078,815
Payable to equipment suppliers 0 441,236
Accrued salaries and bonus 19,750,840 44,609,960
Accrued expenses 52,735,963 53,150,057
Lease obligations 0 0
Other current liabilities 41,000,555 117,953,781
---------- -----------
Total Current Liabilities 574,748,202 800,311,591
----------- -----------
OTHER LIABILITIES
Total Other Liabilities 51,624,149 48,668,859
---------- ----------
Total Liabilities 626,372,351 848,980,450
----------- -----------
Minority interest 214,862,350 227,180,378
----------- -----------
SHAREHOLDERS' EQUITY
Total Shareholders' Equity 3,853,334,612 3,619,877,048
------------- -------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 4,694,569,313 4,696,037,876
============= =============
8
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: May 16, 2003 By: /s/ Hsia, Winston
------------------ ------------------------------
(Signature)
Name: Hsia, Winston
Title: Chief Financial Officer